Initial Withdrawal Percent?


Recycles dryer sheets
Oct 5, 2002
With all the discussion around initial withdrawal rates, it would be interesting to hear from those already ER'd or very soon to be ER'd, what their initial withdrawal rate was/will be in the first year.

I'll go first. My initial withdrawal will be approx. 4.25%, with the abiliity to drop below 4% if economy turns negative.

I ER'd in March, my wife in September -- both this year. I am 49 and she is 48.

I estimate that our initial withdrawal rate will be ~3.6%. I'm probably overestimating our actual spending to come up with that figure. If I try to place a current value on pensions and social security payments that are due come to us (pensions starting at age 55, SS starting at age 62), then our initial withdrawal rate falls to about 2.6%.
well, firecalc reports it as 10.3%, but I calculate it as 1.8%. That is due to a fixed pension component. The total, which equals pension + withdrawal divided by portfolio is 10.3% and is meaningless. The withdrawal divided by portfolio is 1.8%, but since the pension is not inflation adjusted, my withdrawal increases at a rate greater than inflation - it increases by inflation times (pension + withdrawal) each year.

So, since individual circumstances are so different, I'm not sure there is a way to compare withdrawal rates. But those are mine...

Mine will be about 3.5% of the portfolio. And I do rely upon Social Security to be there. It will account for about 40% of my income after age 62.
FireCalc shows 4.2%, but that is overstating it for the longer term. Near term, we have the last childs-worth of 4 years of college expenses starting up next year. After that is over, our expenses drop down to just the two of us. And a small pension starts. So the rate will then drop into the lower 3's using my own spreadsheet, assuming 3% inflation, 6% growth (3% real growth). When SS starts, withdrawals dropping below 2%. All subject to whatever, of course!

You wrote:

Mine will be about 3.5% of the portfolio. And I do rely upon Social Security to be there. It will account for about 40% of my income after age 62.

If you can survive on 3.5% or your portfolio, why would you need to count on SS being there? Or are you using an estimated present value of your SS in your current portfolio calc?

My plan calls for withdrawing about 3.5% per year from the portfolio (plus inflation) on average over the entire retirement period. I read your original question again, and I see that you're only asking about the first year. For me that will be about 4.3%. When my pension kicks in shortly thereafter, that will drop.

I have found Quicken Financial Planner to be a great way to visualize cash flow and see where the money will likely come from in each individual year. I'm using a very conservative real return of 2.5% (3.5% inflation and 6% return), so my results in real life will hopefully be better than that. I kept the old version of QFP that came with Quicken 99. The charts are much better and more detailed in the older version of QFP.
I am currently in my 4th year of retirement; now in our early 50's. At the time I retired, I had a plan which was not really based on SWR of initial portfolio value, but rather QFP forecasts; similar to Bob_Smith.

These days, I base my "annual budget" on 3% of 'portfolio value + NPV of pension and Social Security estimates'. Wife still works part-time which reduces withdrawal from the portfolio. Looks as if for this year, we will only be spending approximately 1.2% of last January's portfolio value + NPV estimates.

So as we did before retirement, we seem to continue to live below our means. During our 50's I intend to limit our "budget" to 3% of whatever the Jan 1 asset value offers. I know that someday we will have to replace the car and need to spend large dollars for the purchase.

As long as I don't stray too far from my QFP benchmark, I'll feel farily comfortable to this strategy. I figure that when we turn 60, I'll probably up the budget to 3.5% of assets. And if we find our portfolio getting too fat, I guess we will just have to splurge on something.


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