Most conservative, yet sensible, SWR and/or methods

[Moemg]

I do the 4% of portfolio on Jan,1 .I have used this method since I retired in 2008 just before the big drop .I did have to take a reduced amount due to the drop but it was not extremely painful .At 4% a 100,000 drop only equals 4 thousand dollars so a big drop of $500,000 is $20,000 hit to your budget . Most of us can handle that easily without eating cat food .

 

[NW-Bound]

... At 4% a 100,000 drop only equals 4 thousand dollars so a big drop of $500,000 is $20,000 hit to your budget . Most of us can handle that easily without eating cat food .

I lost more than $500K, even back in the recession of 2002-2003. A $500K loss is a much smaller percentage now for me. And $500K then is worth $685K now, due to inflation.

But $20K still buys a lot of steaks, and has left-over for an European vacation.

OK. I would keep the steak, and forgo the vacation.

 

[NW-Bound]

What was I talking about?

I would start SS, and continue to go on long European vacations. Wasn't that what I said I would do?

By the way, from the market top of Jan 26, 2018 to less than 2 weeks later on Feb 08, 2018, the market dropped more than 10%. I lost a few hundred $K, but not yet $500K.

 

[pb4uski]

What was I talking about?

I would start SS, and continue to go on long European vacations. Wasn't that what I said I would do?

By the way, from the market top of Jan 26, 2018 to less than 2 weeks later on Feb 08, 2018, the market dropped more than 10%. I lost a few hundred $K, but not yet $500K.

My equities only lost 8.2% between those dates, but I have a lot of international equities as well so perhaps that made a difference.

 

[NW-Bound]

When the loss came right after a ridiculous gain of the S&P of 7.4% from the beginning of year to that top day of Jan 26, it was not too bad (but I still kicked myself for not selling).

Anyway, back on WR, with the market as volatile as it is, one needs to not take the current value of his stash for granted. Some kind of withdrawal averaging will be needed. I do not use Audrey's method, but that is not a bad way to do it.

Personally, my expenses are somewhat stabilized now. If I decide to "blow some dough", it will be for non-recurrent items, which will of course be cut in bad years. And I don't even feel the need to blow any dough.

 

[NW-Bound]

As often mentioned here, I have no formal budget, nor any strict WR amount I get each year. I simply transfer money from my investable accounts to my checking account as needed. And it is about once a month, or every 2 months.

I use Quicken to download and classify my expenses. This allows me to keep an eye on the expenses to spot any bad trend. And I found that my expenses were quite lumpy. One year, I spent more on home remodeling/repair, and another year I spent more on travel or purchases.

But if looking back 1 year, 2 years, 3 years, if the expenses added up to a reasonable percentage of the assets, it's all OK to me. And I have found that it went down ever since I stopped working. As I keep saying, Bernicke is right.

 

[pb4uski]

Similar here. My withdrawals these days are my monthly "paychecks"... transfers from retirement funds to the credit union account we use to pay our bills... more often than not those and my small pension are more than sufficient to cover our spending.

Said withdrawals are ~3% of our retirement date funds and 2.4% of our BOY funds.

 

[Moemg]

What was I talking about?

I would start SS, and continue to go on long European vacations. Wasn't that what I said I would do?

.

That is exactly what I did . I started SS early and still took vacations .

 

[Dtail]

I do the 4% of portfolio on Jan,1 .I have used this method since I retired in 2008 just before the big drop .I did have to take a reduced amount due to the drop but it was not extremely painful .At 4% a 100,000 drop only equals 4 thousand dollars so a big drop of $500,000 is $20,000 hit to your budget . Most of us can handle that easily without eating cat food .

Yes no cat food, but 20k right now would wipe out my complete travel budget.
So that is why I will use (at least try it next year) the Clyatt 95% of prior year protection on the downside. I feel good about this concept, since my WR% will probably be 3% vs. the 4%/95% standard Clyatt formula.

 

[NW-Bound]

But if you know that you can take $20K off and not change other aspects of your life, that's meaningful knowledge to have. Perhaps you could still cut something else to eke out a lower amount for a domestic car trip, for example...

As said earlier, I have no planned budget, but just looking at my Quicken screen summarizing the classified expenses, I know how much I spent on essentials such as housing, food, health, etc..., vs. discretionary items such as gift and donation, travel, purchases, home update, etc...

After I convinced myself that my essentials were so low, I stopped worrying about not having enough.

 

[W2R]

Yes no cat food, but 20k right now would wipe out my complete travel budget.

No travel budget here since I don't like traveling. But, if I needed any more dental implants they'd have to wait, and so much for that new SUV I have been thinking about getting at some point.

 

[Moemg]

No travel budget here since I don't like traveling. But, if I needed any more dental implants they'd have to wait, and so much for that new SUV I have been thinking about getting at some point.

Yes but if you take out 4% every year and deposit any excess in a safe place for future use your Suv or dental implants come out of that even in down years ,