safe withdrawal experience

[winpplui]

looking for your inputs about safe withdrawal rate

Lets put my situation in perspective:
Married, 57 and 55 years, aiming to retire in one or two years

We will have three streams of income:
1-canada pension/employment pension (around 45k combined after tax)
2-Rental income (expected 45k after tax)
3-Investment, 90% nasdaq etf, rest in tesla/apple (around 1.5M combined in Tax free/RRSP/non registered)

The idea is to have no liabilities when we retire. Also, we would like to inherit to our three kinds the $3M combined between rental and investment -not taking in account any inflation,

I know last decade investments were booming. ( i do not expect to have returns of over 25% as i had last three years)
But everyone is expecting to have an average return of 8% (just to have a number)

Is the 4% safe withdrawal rate a real number?
I was reading that now most advisors lower that rate to 3.2%

I think that i could "dream" in my situation to have a safe withdrawal rate of 6%
My risk tolerance is kind of higher

BTW, we are frugal, i like to spend when i can, and we know that we can not spend when is not the proper time to do it (we can live well with pension/rental without touching any investment)

 

[youbet]

SWR only refers to your investment portfolio. Your pensions and your rental income are what they are and will be what they will be with no relationship to the WR from your investment portfolio.

Yes, some financial "experts" are recommending less than a 4% WR going forward. And that depends on the details of your chosen AA, time frame, etc. You could use 3.5% to be conservative. Just remember that that percentage applies only to your investment assets. And your 100%

I'd worry more about the reliability of the rental income than about the WR of your investment portfolio assuming you pick some reasonable WR such as 3.5% - 4%.

 

[DrRoy]

I have stuck to a max 3% WR, and do not need that every year (RE @57). My non-investment income is only about a third of yours. With your other income, you might still be ok at 4%, but I think long term future investment returns are likely to be only about half the historical rate.

 

[VanWinkle]

4% was based on a 65 year old with no more than 30 years of retirement. You may have more than 35-40 years so 3-3.5% seems more realistic. It was also determined with a 50/50 allocation that would guard against big drops in equities.

VW

 

[Markola]

^^^^^^And a domestic-only 50/50 at that.

 

[ERD50]

Is the pension COLA'd? Have you put these numbers into FIRECalc? firecalc.com/

Is the rental income expected to continue and is it after all expenses (including big maint items, etc)?

Has your spending included future big items? New cars, housing, etc?

-ERD50

 

[RobbieB]

I've practiced an "unsafe" WR of 5-7% for 7 years. Thanks to an 80% equities position, I have more dough now than I started with. A lot more, 40%

Safe rates?

There is no safety. There is life and risk and joy and happiness, but no safety.

 

[winpplui]

Is the pension COLA'd? Have you put these numbers into FIRECalc? firecalc.com/

Is the rental income expected to continue and is it after all expenses (including big maint items, etc)?

Has your spending included future big items? New cars, housing, etc?

-ERD50

Pension is 1/2 cola

I put them, I take in consideration just the investment, and I feel comfortable with a 4.5% return (67500 per year with 1.5M). I think that nasdaq and SP500 will increase at least 6.5 % on average in the long run

Rental is giving me 6% after income tax and paying all the bills, I have them for more than 12 years.
Rentals properties are worth 1M
If I own the properties the return is 6%

But I can get mortgage, and invest the equity
I can have a 800k Mortgage, leaving 200M in the properties . Those 200k will give me a return of 20% (40k) and I could invest the remaining 800k expecting a return of 6% ( 48k, but I will have to pay property gains, so I assume that it will be around 40k) . Doing this I would get 40k+40k =80k instead of 60k.

I do not need big items, I am still running an old 2008 caravan work a 2008 civic.
My plan is to travel, but I will prefer to travel were my Canadian dollars worth more than local money..
I won't stay out of the country longer than 4 months, my wife wants to keep all our relationship, and it will be hard to do it if we are absent for longtime

 

[winpplui]

I've practiced an "unsafe" WR of 5-7% for 7 years. Thanks to an 80% equities position, I have more dough now than I started with. A lot more, 40%

Safe rates?

There is no safety. There is life and risk and joy and happiness, but no safety.

I like that, you were lucky.
I know that people that were conservative with a withdrawal of 4% now they have more money in their banks, so they are reconsidering what to do in the future

 

[chassis]

looking for your inputs about safe withdrawal rate

Lets put my situation in perspective:
Married, 57 and 55 years, aiming to retire in one or two years

We will have three streams of income:
1-canada pension/employment pension (around 45k combined after tax)
2-Rental income (expected 45k after tax)
3-Investment, 90% nasdaq etf, rest in tesla/apple (around 1.5M combined in Tax free/RRSP/non registered)

The idea is to have no liabilities when we retire. Also, we would like to inherit to our three kinds the $3M combined between rental and investment -not taking in account any inflation,

I know last decade investments were booming. ( i do not expect to have returns of over 25% as i had last three years)
But everyone is expecting to have an average return of 8% (just to have a number)

Is the 4% safe withdrawal rate a real number?
I was reading that now most advisors lower that rate to 3.2%

I think that i could "dream" in my situation to have a safe withdrawal rate of 6%
My risk tolerance is kind of higher

BTW, we are frugal, i like to spend when i can, and we know that we can not spend when is not the proper time to do it (we can live well with pension/rental without touching any investment)

Yes, a withdrawal rate higher than 4% is sustainable. You said you have a "higher" risk tolerance. That's good.

What are your living expenses? What is your rental real estate worth? Do you have loans or debt of any type, including mortgages?

Multiply by 17 to calculate your required assets required to support a 6% withdrawal rate. You will need to have a high equity allocation to do this.

A number of posters on this site have started retirement with a withdrawal rate higher than 6%.

 

[winpplui]

Yes, a withdrawal rate higher than 4% is sustainable. You said you have a "higher" risk tolerance. That's good.

What are your living expenses? What is your rental real estate worth? Do you have loans or debt of any type, including mortgages?

Multiply by 17 to calculate your required assets required to support a 6% withdrawal rate. You will need to have a high equity allocation to do this.

A number of posters on this site have started retirement with a withdrawal rate higher than 6%.

What are your living expenses?
We make $120k after tax. And we used to travel 4 times a year. We use to save 20-30k before the covid. So living expenses? Maybe 80-90.


What is your rental real estate worth?
I will keep just 4 or 6 property, worth maybe $1M

Do you have loans or debt of any type, including mortgages?

Basically, I will have 1M in rentals, 1.5 in investment and $500k house.


At this time all the rentals are mortgaged, but I have 16 units. I will sell the problematics and keep just the good ones ( equity from bad ones will pay balance of good ones, and maybe some extra cash for investment)

Again, I could have my house paid, or I could mortgage it and invest the balance. Mortgages are cheap, 2-4% and I do not think that they will increase in the near future. If investment are returning 6-8% is a no brainer to take the risk.