gummy inquires:
I can understand that you may use SWR to estimate eventual portfolio requirements and/or make adjustments to your portfolio contributions (before retirement) and/or adjust asset allocation (while you're making investments).
BUT, when you eventually DO retire (and start withdrawing) you will continue to calculate a SWR to determine withdrawals?
I am retired early (6 years ago at 50). I've used the Sensible WR as ballpark figure to aim at all along. My husband was comfortable with my using 5% (which is outside the range of the SWR studies), but I just figured about 4% was something worth aiming at. Not the only criterion for retiring, however. I was mainly fed up with working and could think of a whole slew of things to do instead.
I retired with a lot of "slosh" in my budget. Sort of like gummy's budgets which depend on how things are doing that year. For instance, last year I had 2 unexpected costs and one expected new cost. I was starting up a new "hobby" - bird rehabbing which required a lot of fixed costs up front. Then I had serious dental problems. Then one of the kids decided to buy a house and I pitched in. So I got really close to spending a little too much. But I have plenty of places I can cut costs out of my budget, hence the slosh.
I figure these things kind of even out over time. Some years I spend a lot less than I planned. I'm hoping this is one of those years :
I still look at what percentage of my assets I'm spending, but it is just one of several checks I use. I also keep an eye on various parts of my budget over time, such as food, medical
, vacation
, and so on. It helps me catch unnecessary spending, but it also indicates area that I have to plan for increases in the future - such as vet bill for elderly cats - they are increasing over time.
I also try to think ahead about other costs that may crop up but I don't have now. Like increased trips to the parents as their health requires (if they'd just get off that dang island in Maine!). Also an increasing number of grandchildren increases the budget a bit - I think gummy can relate to that.
Anyhoo - yeah, I looked at SWR before I retired as a ballpark figure to aim at (but not to depend on) and I sort of watch the percentage of assets spent now that I'm retired. But I'm not fanatical about it. And I realize that the risks can't be quantified, so why the heck try?
Too much babble.
arrete