Pulling from investments 4% rule

[audreyh1]

Safe withdrawal rate is independent of other sources of income. You don't automatically withdraw a lower % because you have other sources of income. Some people may be taking 100% of their income from a retirement fund. Another person may only need 25% more above their pension. This latter person can retire with a much smaller savings. They may still both withdraw at the same rate.

The longevity thing - well none of us know. Even someone battling a tough disease may be blessed with remission. Most of us have no idea what the chances are.

 

[Lsbcal]

I suppose SWR depends on how one defines "safe". VPW defines the withdrawal rate based on a clear model. True, it only considers your spendable portfolio for withdrawals. But you do have the variable of "depletion years" which can be used to select your level of safety. If one has an income source that is substantial (pension, SS, etc.) then one might select the lower number for depletion years. This has the effect of raising the allowed withdrawal rates over the years. So in this sense, SWR does depend on other income sources.

For example, I've set the VPW depletion years to a number such that the portfolio is depleted at age 110. If I look at the graph of inflation adjusted balance, it stays above 50% of my current portfolio out to age 80. This is for a start year of 1968 which was one of the worst times to retire in history. I could make a mid-course adjustment if I want to. For my age, the VPW model allows me to take a 4.5% withdrawal this year.

If I had terminal cancer and only had a few years left, you can bet I would not set the depletion to age 110. Thankfully, I'm in excellent health and firmly knocking on wood as I type this.

 

[RobLJ]

I'm planning on taking 3% in a few months on semi-retirement (I'm 56) while the DW is working, increasing to 5 or even 6% when she retires, until I take SS, then cutting back to 4%, then 4% when she goes on SS and putting the unspent in a taxable account in munis or short-term.
Everyone is different.

 

[old woman]

Last year was my first year and I took about 1% because everyone says if you retire into a down market that is bad so I waited to see if it was a down market. Now I have made about 100K since retirement and spent about 10K with a little over a million left. I might spend 20-30K this year if I want to but I only need about 10K to meet my cost of living anything else is extras. I think if I stay under 4% for 5 years I will never worry about running out of money if I stay under 2% it will be sooner to loosen spending. I don't have big normal wants so expect to do lumpy withdrawals like to buy a different house then pause spending a year or two, etc.
My worry for people who take 4% is they may live longer than 30 years when they retire under 60.

 

[RobLJ]

I don't think I'll be spending much other than on health at 90, if I make it, which is a possibility given my genes (despite my behaviors).

 

[RobLJ]

My Okie granddad could hike up the mountain and flyfish until his early 80's, so you never know.