SWR?

M

malakito

Recycles dryer sheets
Joined
Jan 5, 2004
Messages
159
Hi all,

My own home-brewed spreadsheet tells me that if I retire right now I need a 2,113% withdrawal rate. At least it is a positive number (a personal milestone for me). I should be able to get it down below 1,000% in a month or two, and under 100% in a few years.

malakito.
 
My own home-brewed spreadsheet tells me that if I retire right now I need a 2,113% withdrawal rate.
Click to expand...

Houston, we have a problem!

Seriously, that's an interesting way of looking at it. Right now, i'd probably need about an 70% withdrawal rate, lol.
 
I like to look at what kind of income my portfolio will generate at this point. Right now I can safely generate $250 a month (whoo-hoo!), but by the end of the year, it will approach $400. It's a nice way to see progress.
 
That brings up an interesting idea. Many people here are looking to build up enough net worth to be able to retire completely on a 4% or less SWR. For some, this may not happen until age 50 or 60.

Does it make more sense to consider a semi-retirement at a younger age, say 35 or 40, if you can take a 4% SWR and work less hours?

What is the goal anyway? Isn't it to maximize your total free time until date of death?
 
The problem is that I can imagine I would not want to go back to work after cutting the current corporate job out..... and while I might work part time (maybe for no money) I do not want to be dependent on that income.

In addition I would be stopping in my peak earning years where maybe 1-2 years would compare to 10 years (or more) part time income/savings.

Cheers!
 
Does it make more sense to consider a semi-retirement at a younger age, say 35 or 40, if you can take a 4% SWR and work less hours?
Click to expand...

Perhaps, but I suspect that paying for health insurance could be a big stumbling block.
 
Perhaps, but I suspect that paying for health insurance could be a big stumbling block.
Click to expand...
I keep forgeting that most people here are not self-employed as I am. I pay for health insurance anyway, so it's part of my non-retirement as well as my retirement budget.

And you are right, health insurance is a killer expense that seems to have no end in yearly increases. I hate to think about the tens of thousands of dollars I've paid for health insurance since I became self-employed with hardly any benefit claims. But at the same time I'm grateful I haven't had any claims and hope it's one expense that I will never fully use.
 
Houston, we have a problem!

Seriously, that's an interesting way of looking at it.  Right now, i'd probably need about an 70% withdrawal rate, lol.
Click to expand...

If it helps, I'm 35 and not planning on retiring until about 55 when that number drops to 4%.

malakito.
 
I paid my own health care for 3 years until I married and got covered under my wifes health plan. If you're in your 40's its actually not too expensive...depending on what state you live in. I was paying ~175 for an HMO plan with a $50 deductible and no prescription drug benefit...$230 would have made it a $20 per visit plan with prescriptions. For about $140 I could get a high deductible plan with no office visits or prescriptions from BC/BS. As you get older, the rates get pretty stiff though.

There is a limit to the ever increasing annual fees. The limit is where most people will stop paying and 'go bare'. At that point, the prices will have to come down to attract customers, or medical care will have to be socialized.
 
That brings up an interesting idea. Many people here are looking to build up enough net worth to be able to retire completely on a 4% or less SWR. For some, this may not happen until age 50 or 60.

Does it make more sense to consider a semi-retirement at a younger age, say 35 or 40, if you can take a 4% SWR and work less hours?

What is the goal anyway? Isn't it to maximize your total free time until date of death?
Click to expand...
Very good question. It's one I've been pondering for the past few months. To try to keep it short, 3 possible options for me--age 35--are:

1. Continue to work 35-40 hrs/week until I have enough saved to live on a "safe" WR
2. Work multiple jobs or a higher paying & longer hours job to save more sooner
3. Work part time--either in a permanent position or odd jobs--and work less per month but for a longer working career

Option 2 is out for me. No way. If I had to, okay, but I've never liked the idea of working more than 40 hrs per week.

Option 1 is the default. It got me here--debt free and with tax-deferred savings in the amount of 2 years' expenses--and I'm most familiar with this path, and it's the path of my peers. (Well, the peers that aren't in debt.)

Option 3 is very tempting. I'm not sure how realistic it is, but I might be able to work just enough to cover expenses and let my nest egg grow until a later full retirement, or perhaps continue to work option 1 until some point several years from now and then take early withdrawls supplemented by working part time.

Ideally the part time work would be odd jobs instead of steady 20 hrs per week or such, because I'd want to be able to travel for several days to a couple of weeks and then work for a period of time.

I think you nailed the goal: maximize free time and enjoyment until time of death.

I keep wondering about the pitfalls of such an approach, but it sounds like a great idea.
 
Hey BMJ, you forgot to include my "option", i.e.
just quit and work it all out on the fly. It worked
for me, but is not for the faint of heart.

JG
 
From BigMoneyJim: Option 3 - Work part time--either in a permanent position or odd jobs--and work less per month but for a longer working career .

This is what my husband and I would like to do, but we are struggling with the insurance question. To do this, it seems that we would have to self-insure, not go from employer to employer picking up insurance.

We can get BC/BS for $308 per month with a 1k deductible each and 80% coverage. Is that good? We are 55 and 59, in excellent health. How have other people handled this?
 
Theres also the "other" option. Marry a nurse with a purse, knock her up, and stay home and watch the baby... :-X
 
Come on GDER...You KNOW I used a "special tool" to point me in this direction.

Come to think of it, my special tool is what created this situation... :eek:
 
Oh man, are we dancing close to the line of disgusting banter...

Ok, I'll play along...

All the way back to 1871 my man!!! :eek: 8)
 
My tool is more powerful than your tool.

You know it's true.
 
Great...now the troll is going back and editing its posts to make follow on posts look stupid...
 
ROFL at the direction this thread is heading. Meanwhile, back to the subject:

Hey BMJ, you forgot to include my "option", i.e.
just quit and work it all out on the fly. It worked
for me, but is not for the faint of heart.
Click to expand...
I almost did that a couple of times. At my age and savings I'd have to find income somewhere, but before Christmas I was close to just quitting, moving back to Texas and 'working it out on the fly'.

Scary sounding thought, but the scary events of my life always turned out so well so far.....it's tempting. Scares the crap out of my friends and family, though.

From BigMoneyJim: Option 3 - Work part time--either in a permanent position or odd jobs--and work less per month but for a longer working career .

This is what my husband and I would like to do, but we are struggling with the insurance question. To do this, it seems that we would have to self-insure, not go from employer to employer picking up insurance.

We can get BC/BS for $308 per month with a 1k deductible each and 80% coverage. Is that good? We are 55 and 59, in excellent health. How have other people handled this?
Click to expand...
Insurance--or at least adequate health coverage of some sort--is the big question mark for me, too. I don't have answers, but I'd probably start looking at ....uh, I forget the site, but it's a web site with health insurance information by state. Been mentioned here a couple of times. I expect someone will post it shortly. I might also check into that alliance of doctors that agrees to take cash at set prices...also mentioned here before, and also link not handy for me at the moment. Then there's the Unclemick plan...scary, but doable. Not sure I'd do it at age 35, though.
 
That's the problem with these boards, you know? There's always some guy trying to pull things back on topic. It never fails.
 
GD-ER is right on the mark. Years ago I took a run at it
because I was under the foolish assumption that was
how it was done. I got NOTHING of value from the experience, except confirmation that I should handle my own money, thank you very much...............

JG
 
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