higher SWR

[RobLJ]

Just curious if anyone here 1) Calculates the inflation adjustment 2) Spends the inflation adjustment.
YMMV

With the solar panels and the Bolt/RAV PHEV, energy inflation is pretty much gone. That leaves food and travel, but the latter hasn't amounted to much in COVID. I wouldn't say we are inflation-proof, but it doesn't really touch us. My 89 year old mother & sister and my oldest son with 2 kids and one on the way, are wacked by inflation, so I feel lucky and we help out regularly. What are we going to spend it on--Wagyu beef? (Edit: as an answer to the question, we withdraw to the top of the 12% tax bracket and stick the unused $ into a taxable brokerage to blow or for emergencies. Later when there is no left-over we may start withdrawing the inflation adjustment.)

 

[COcheesehead]

We spend all we want. We’re not cheap or frugal by some of the standards on here. We buy freely in categories that we value like travel, good outdoor gear, good wine, dining out, we fund a college scholarship at my alma mater every year and we are at a 2.4 ish percent withdrawal rate.

I want to bump things up by traveling business or first class on international trips. Other than that we are really pretty happy. To get to 4%+ I am not sure how we’d blow the dough.

 

[CRLLS]

We use 4% SWR till we expire but leave 96% of wealth on the table?

There are a couple of 4% rules that people use. Gumby mentioned the most often quoted version. Another is to simply take 4% of last year's close. And do that every year. 4%, 4%, 4%..... making no adjustment for inflation. Using this you will never run out of money, no matter how long you live or how the markets do. Of course, annual income will vary significantly. And there will be lots of the "last Dec31st" balance left for the heirs. It is used by those who have other sources of income that support their basic needs.

As in Pirates of the Caribbean, it is more of a guideline than a rule.

 

[W2R]

Just curious if anyone here 1) Calculates the inflation adjustment 2) Spends the inflation adjustment.

1) no
2) no

I planned to do all that but when retirement was a reality, I found it wasn't necessary.

Like you, I just don't need or desire to spend the full 4%. The "trick" for me has been genuinely not wanting very much. I buy everything I want or need and have never even spent 3%. I haven't spent between 2% and 3% since 2013 (which I did for the first four years, but not since then).

Also, and maybe even more important, I was lucky enough to retire in 2009, into the beginnings of a newly booming market after the recession. Retiring in the middle of a bad recession like that worked like sort of the opposite of the infamous "sequence of returns risk".

 

[Live Large]

Still Saving! Spend it ALL MOTTO

I've been spending at 5 to 7% since I retired 8 years ago. Yes, I have more dough now than when I retired, thanks to 80% equities.

Have no desire to die broke, but I did buy a yacht -

Mahalo! That’s for the Islanders post! Nice…

This ER forum is so much FUN to read and get the interesting perspectives. So Yes, I began drawing down savings & my % is higher than 4% the Amt.
is monthly $3000k. The wd began last July@55.
I’ll guesstimate I’m at 6% -equities took a hit but I use a Bucket method so long term holds are long?!?
Besides, I’m fortunate to have a pension retired LEO.
I was fortunate after 30yrs checked out at age 51.
I concur most that post here over saved! We’ve Peter Lynched Father Graham Napoleon Hill’d ~Spend it…

IMHO ~ Life is really short so I don’t get to caught up in All the numbers. Basics covered down pretty well. I still like a Fancy car or two:dance Boat? A Cruise!
Pass on some cash while I’m here give it away Sure few assets left when I’m gone but I’m trying to spend ALL the Cash. Tried first class flights back when Virgin Air was not absorbed by Alaska nice rate! Indulge in things DW & I like. Traveling a bit more now double boosted play it safe?
No place like our two homes, 75 miles apart. Read we’re not alone in that ER category either works for us. Oh, forgive me…Zig Ziegler & Earl Nightingale

Bless others good to give, many of us posting here have done so well made many sacrifices but it’s always good to give. In the end Die Broke / Die with Zero! U actually Do!

 

[Koolau]

1) no
2) no

I planned to do all that but when retirement was a reality, I found it wasn't necessary.

Like you, I just don't need or desire to spend the full 4%. The "trick" for me has been genuinely not wanting very much. I buy everything I want or need and have never even spent 3%. I haven't spent between 2% and 3% since 2013 (which I did for the first four years, but not since then).

Also, and maybe even more important, I was lucky enough to retire in 2009, into the beginnings of a newly booming market after the recession. Retiring in the middle of a bad recession like that worked like sort of the opposite of the infamous "sequence of returns risk".

Oh, don't remind me! I retired in 2005 and then moved to the Islands in 2007 - just in time for the great recession! It was a bit scary, especially because we immediately started remodeling our Island town house. Fortunately, we sold our mainland house just before we moved. That gave us the cash to survive and also remodel. So nice when things work out that way. But I have to admit it was our scariest time (financially) through out ER. YMMV

 

[W2R]

Oh, don't remind me! I retired in 2005 and then moved to the Islands in 2007 - just in time for the great recession! It was a bit scary, especially because we immediately started remodeling our Island town house. Fortunately, we sold our mainland house just before we moved. That gave us the cash to survive and also remodel. So nice when things work out that way. But I have to admit it was our scariest time (financially) through out ER. YMMV

Yikes! You're a brave man, Koolau. If I retired when you did, I think I would have been pretty scared as the market plunged downwards from 2007 until around 2009, when we started coming out of the recession.

 

[Koolau]

Yikes! You're a brave man, Koolau. If I retired when you did, I think I would have been pretty scared as the market plunged downwards from 2007 until around 2009, when we started coming out of the recession.

Heh, heh, "brave" is probably the wrong word. Naive or maybe just stewpidd - My folks in the lab at Megacorp labeled my hard hat: Stewart J. Pidd. Heh, heh, not everyone in the plant got it.

But speaking of stupid, DW and I decided as soon as we moved into our Island town house that we wanted to redo the kitchen. It was old and the cabinet fronts were pressed wood. Each morning, we had to sweep up "saw dust" around the cabinets as they had shed over night.

We decided we could do the tear out, ourselves. So with implements of destruction, we tore everything out, ending up with the kitchen sink resting on the floor (hanging by the water lines, actually). THEN we decided we'd better find someone to build it back. Stewpidd!

Some would say we were "lucky" we would say "blessed" when we found a young guy from Big Island who was staying on Oahu to complete cancer treatments. He needed money and we needed help. He was the proverbial jack of all trades. Long story short, he w*rked with us for about 2 months. It was more a friendship (we stayed in contact when he went home to Big Island) than employee/employer. When he was finished, we ordered cabinets and counter tops which all went in in 4 days. He prep'd both BRs and tiled everything that wasn't carpeted as well. He even built the cabinets for the guest bath. I say it so often that I've considered it for my tag line: I'd rather be lucky (actually blessed) than good. YMMV

 

[teejayevans]

I use 4% as a guideline, but far exceed it to buy expensive items (vehicles, real estate, etc), since these items are optional I wait until investments are up. If we go into a recession, I can drop down to less than 4%.

 

[mpeirce]

We don’t follow the standard 4% rule, but rather the following:

We look back at the average of the last three years and target spending 4½% of that. This smooths out the largest swings both up and down and protects us from spending too much if we’re in a sustained downturn, but also allows us to spend more as our wealth builds.

It’s also not an ironclad rule. There have been years where we’ve spent more and years we’ve spent less. More of a guideline - there’s no one out there who’ll put us in retirement jail if we break the rule.

 

[Sue J]

As my Dunlops Disease has not gone into remission, that extra 4 inches is a little bit of heaven. (Dunlops Disease: Dat's where da belly dun lops over da belt, mon.) YMMV

Ha! This made me snort my coffee!

We are still in the position of a negative withdrawl rate. DHs COLAed pension more than covers our monthly expenses and we save and invest everything that's left.

I read topics like this one because someday (inflation and aging) our expenses may increase to the point where we live beyond our income and need to have a withdrawl rate.