Those with no kids & no relatives to leave money, is your withdrawal rate still 4%?

[steelyman]

I’m in a similar situation. I do have estate documents that outline where assets are to go and charitable organizations are listed (subject to change in the future).

I maintain a mix of tax-deferred and tax-free money in retirement accounts. In a perfect world, the money going to charity will be largely tax-deferred (I would have never paid tax on it).

 

[finnski1]

I have no kids so I guess my estate would be inherited by some distant relatives that I've never met. I spend well under 4% and don't plan to change that because spending more $$ doesn't make me any happier. When I do have a major expense, it's nice knowing that I don't have to worry about it.
Actually, I don't want my money going to far distant relatives, so I better get a will made and have it all go to some charities.

+1 on the "spending more money doesn't make me any happier"
Yes get the will done.
My wife and I have not finished our will either and I need to get this done.
I am 61 DW is 64. She has one brother who is married but had no kids either.
I have 5 brothers and sisters all of whom are married with kids.
I think I have 13 nephews and nieces ( have to recount in my head) and at last count 16 grand nephews and nieces!
However I don't plan on leaving any of our estate to any of them, not because of any spite or animosity buit mostly just because they are all doing well and don't need any help. Most likely whatever is left will be going to charities like The Nature Conservancy etc.

 

[Chuckanut]

I am reminded of Bob Brinker (the Money Talk guy) who would get calls from people in their 70's with SS benefits, an ample secure pension, and $2.7 Million dollars invested in stocks, bonds and CD's. They were wondering if they could afford to pay for a two week cruise along the scenic rivers of Lower Slobovia with their kids and grand kids.

His advice was always " You need to spend more!".

 

[Chuckanut]

A lot of us need to spend more.

 

[ShokWaveRider]

No Kids here. We could not spend 4% of our stash. It is not that grand either. We (67, 62 Resp.) simply spend what we want to, when we want/need to. When we take SS in about another ~3 years, we will re-evaluate.

 

[goingtotravel]

No kids, no family we like enough to enrich after we're gone. All/any remaining $ will go to charities. We plan on VPW for the most part. We want to travel a lot and comfortably during the go-go years. We could easily survive on a 3.5% WR but we are planning on around a 4.5% WR plus pensions from FIRE to 62. That is the WR VPW is suggesting.

At 62 a small portion of our pensions go away but then what's left has a COLA. Eventually we will also have 2 SS payments. From 62 until SS we may go above 4.5% if we are still traveling frequently.

After we slow down we will drop below 3.5%. We will have a paid off house by SS age that can more than adequately fund LTC for both of us if we run short on funds eventually. That's our pre-FIRE plan. We plan to remain flexible and have both wiggle room in the budget plus the ability to move from our HCOL area if needed.

 

[Sunset]

+1 on the "spending more money doesn't make me any happier"
Yes get the will done.
My wife and I have not finished our will either and I need to get this done.
I am 61 DW is 64. She has one brother who is married but had no kids either.
I have 5 brothers and sisters all of whom are married with kids.
I think I have 13 nephews and nieces ( have to recount in my head) and at last count 16 grand nephews and nieces!
However I don't plan on leaving any of our estate to any of them, not because of any spite or animosity buit mostly just because they are all doing well and don't need any help. Most likely whatever is left will be going to charities like The Nature Conservancy etc.

In this situation, I would leave some amount like $15K to each grand nephews and nieces just so they could pay off some College debt.

Not sure how a Will could leave $$ to the yet to be born grandchildren

 

[OldShooter]

... Not sure how a Will could leave $$ to the yet to be born grandchildren

Not difficult but maybe it takes a testamentary trust to hold the assets until the grandchildren appear and, if they do not appear, specify a decision date and an alternate beneficiary. But that kind of a very simple trust would probably be safe to have a family member trustee, so no fees. Attorneys will know; I'm just SGOTI.

 

[kcowan]

This year we have spent heavily on donations to food banks and animal welfare orrganizations. Just spending a portion of the excess portfolio returns so far.

We are also expecting a 10 to 15% rollback in equities.

 

[NoiseBoy]

@Oldshooter
Thanks for the community foundation link. There is one in my area and I do like the idea of keeping it local and being able to see the results.

I do not have anyone to directly leave money to. My sister will receive her husband's COLA'd pension and Soc Sec, so she will be set. Her two daughters were successful students, but have not done to well in the working world after graduating with non-marketable degrees. I care about them, but I do not see any reason to make them instantly rich, so more charitable giving is in my future. To the OP's question; I have 2 modest pensions, Soc Sec, and my portfolio. I can live on the annuity sources, so my portfolio is for fun and life's unexpected situations. I have a hazy notion of increased charitable giving as I age.

On the spending side, I've bought a few upgrades for around the house lately, but really this is just my unspent travel budget getting redirected to subwoofers! Like many here, I do take pleasure in watching my portfolio grow and a lifetime of being frugal is hard to change. Speaking of which, does anybody know what it costs to rent a private jet to Europe? It's good to have savings goals!

 

[Bamaman]

We're raising a 9 year old granddaughter full time and it's permanent. We'll be almost 80 when she graduates high school. And she has a brother we have every other weekend, and he's being raised by his father--mostly.

So we have to be prepared to take care of these kids financially and otherwise. Whatever their mother would have inherited is slated to go to them in trust.

Unfortunately, this is not an uncommon situation and we're okay with it.

 

[OldShooter]

@Oldshooter
Thanks for the community foundation link. There is one in my area and I do like the idea of keeping it local and being able to see the results. ...

Please report back after visiting. I think these are small organizations (mine has four staff) so that means that the "personality" of the organizations might vary a lot. Hence my curiosity re your experience.

 

[O2Bfree]

I just checked my WR for the past 6 months. With the market run-up and my reduced spending due to Covid restrictions, I'm at 0.63%. Dang, need to get busy spending!

 

[Al in Ohio]

So, I have no kids, and all my siblings are doing well .. essentially, I'm fine with having $0.00 balance on my nest egg the day I croak and leave the physical universe.



I know many people who have kids are trying to preserve their capital and say 2.5% or 3.00% is the safe withdrawal rate now, so they can leave millions of dollars to their kids and relatives. Well, I don't need to do that .. should I keep my projection at 4% withdrawal ??



Just wanted to hear from people who are like me - no plan to leave their nest egg to anybody .. and absolutely nobody.

I have a bunch of kids and relatives. My goal is to die with a zero balance. My kids have my genes. They will make wealth too.

 

[Perryinva]

Hmm, I might be the odd one out, I have no trouble spending my money on what ever I want, and it makes me happy. I was never very frugal, just realistic. I have 2 step kids & siblings all who are money clueless so leaving anything to them is a waste. Only been retired 14months, but that included severance pay the whole time plus pension. This was the first month just on pensions and DW SS. I’ll see after a year of spending whatever I want, what my rate ends up. I expect it to be a bit higher than 4% with a $180k chunk put aside for use as SS replacement until I plan to file for SS in 6 years, (69) so I have room for Roth conversions.

 

[RobbieB]

I have 2 step kids too. They will probably make out real good even though I'm planning on leaving them nothing.

 

[bada bing]

Just wanted to hear from people who are like me - no plan to leave their nest egg to anybody .. and absolutely nobody.

That's me, no legacy needs at all. There will be some left for charity, most likely. After a couple years of reading and planning, I have given myself "permssion" to spend up to 6-7% of remaining portfolio balance annually for the next 8 years. I plan to transition to relying mostly on SS and pension starting at age 70 (pension is delay-able until age 72). At age 72, SS + pension will keep me from starving even if I screw the rest up.

I sort of doubt my spending will average 6% though. I believe in the "Bernicke's Reality Retirement Plan" with declining spending desires as I age. Spending a bit more early is important to me. I retire in 27 days . I also am getting a severance/deferred comp. package that pays about my first 2 years spending, so withdrawal from existing portfolio shouldn't start for ~2 years.

If I was younger (I'm 62 in Dec) and attempting FIRE, I'd probably keep below 4% WR. As it is, I sort of have worked too long and accumulated more than needed. That is caused in part by the lucky unforeseen package offer that is juicing up my retirement numbers that I wouldn't have gotten without staying this long. Catch 22

 

[Global Wizzo]

Keeping some

Just an FYI,
Long term medical costs can be a bit staggering. DW’s brother has Alzheimer’s his son is adding 20K a month to augment a good medical plan. Full time live in care giver, etc.

Hope none of us ever has to experience this. But keeping money available can make life for you better even in a really lousy situation.

Enjoy living!

 

[Pellice]

No kids or relatives who need support. I do need to make sure my money lasts, though - I don't have the kind of wealth that is beyond the need for planning and care. My initial years of retirement ended up giving me more money than I had when I was saving for retirement, so for now I'm still enjoying that slightly greater income. My FA has said it's possible I could withdraw more, but I don't want to start worrying. Also, I want mylong term and end-of-life care to be of good quality, and I have endeavored to plan for that with a LTC policy and enough other sources of income so that my nieces and I will be able to arrange that.

I doubt much will be left over, and what there is, some will go to family and some to charitable causes - it's been nice to discover the little perks that "legacy" members of organizations get!

 

[levindb]

Withdrawals based on arithmetic....

DW and I expect our last check to bounce. We have advised 3 sons not to expect anything...and each of them are doing very well financially.

The arithmetic we use:
1. Everything in Today's dollars, it is much easier to understand
2. Plan investment ROI as 3% over inflation
3. Plan to live to age 105

Use spreadsheet "what if" feature to determine how much we CAN spend each year to run out of money at age 105. With SSA benefits at age 70, and rental income, we can meet our very basic needs. The IRA withdrawals have given us the opportunity to do a World Cruise, spend 6 weeks on Africa Safaris, and we still needed to spend more money, so we bought another home in Hilton Head...this will be our "forever" home with an elevator to help us as we age......and we still do not have a detailed plan to spend it all...but recalculating each year, and doing Roth conversions help us minimize our payments to the government.

We have given all grandchildren their birthday and Christmas gifts, from birth to age 18, as low cost basis stock a few years ago to avoid having to pay capital gains ta ourselves. Much more useful than a toy or dress that may last a few months.

Maybe we will replace my 13 year old car...

The 4% rule helped us determine when we could retire, but we no longer refer to that...arithmetic works for us...it may not be the right approach for others.

 

[Old Microbiologist]

It is a problem. We have kids but I never considered leaving my kids anything. Their mother (my ex-wife #2) is far richer than I am and is a high powered corporate attorney who absconded with all our assets which she hid from me in overseas accounts. Getting divorced from a lesbian lawyer is not an easy task and is very expensive. She had access to free attorneys from her sisterhood so I tossed in the towel and let her keep everything except my pensions. Our divorce was because of her frequent lesbian relationships and her wanting to move a girlfriend into the bedroom and me into the basement. So, an intolerable problem.

My third wife and I have over a million in cash and equities we have never touched spread over several IRA's and brokerage accounts. I also mined several Bitcoins as a hobby back when you could do it at home and haven't touched them either. Our problem, if you can call it that, is our pensions are already about 50% higher than our living expenses. My wife is 5 years older and had to start the mandatory withdrawals from her IRA's and I am coming up on it soon. But, that is really just moving it into a brokerage account and not an actual withdrawal.

My kids who are not especially friendly to me are my least concern. They were in their young teens and were poisoned by my ex so haven't ever actually recovered from that. We left the US and live in Hungary which makes seeing them problematic and I have zero desire to visit the US. My son; however, emigrated to Israel so is only a 2 hour flight away so I do see him regularly at least up until this year. We have gotten closer but it is still touchy and both feel I am over-critical of their lifestyle and career choices. Anyway, they are not a part of my planning scenario. My wife had two children but they both died tragically and her relatives are in the oligarch class in Russia.

Our problem is my military pension comes to our Hungarian bank and because of FATCA rules we must keep the balances below $10K or face onerous reporting requirements, which if you fail to do, can result in a 50% loss of all assets. This is my benevolent government serving me as a citizen. So, we end up moving money around between accounts and spending down the overseas account as much as possible. We have shifted to using Transferwise which has saved us quite a bit in fees.

So, not being able to travel this year and probably next year as well, we have been spending a lot on other items. I already sent to both kids our Coronavirus stimulant money so I think my role as a parent is met more or less. They are now 30 and 28 so IMHO are on their own. I left home at 17 myself and never returned except to visit and never got anything from any relatives ever. So, I believe in individual accomplishments hence my criticisms of them as they are always broke and working shitty low paying jobs. All advice has been ignored so I have no guilt over how they have ended up. They probably will inherit a lot but it is not my plan for them to do so. It is inconceivable for me to imagine expecting anything from a parent after the age of 18. I have a PhD, 2 Master's, a BS and an AS all paid for by me as well as a Commercial/Instrument Pilot license and an ICC (International Certificate of Competence) for yachting. It never even occurred to me to seek financial help from parents. In fact, I supported my mother for the last 25 years of her live and she lived in our house up until last year when we were forced to send her to a facility in the US as Hungarian elderly care is heavily dependent on speaking Hungarian which she didn't learn. She died peacefully this June at the age of 95. My father died back in 2001 and while he left a large fortune his second family absconded with it all. My lawyer brother (who is not a good lawyer) crewed up our part badly as he is a kind and trusting man but they were awful people. In fact they cheated each other a great deal so even my half brother and half sister were equally cheated by their step sisters.

Life is interesting.

 

[Rambler]

I retired about 8 years ago. The balance is higher now than it was then, by a nice margin. We’ve helped kids with down payments on homes, bought them reliable cars, paid for their schooling, etc. We also take them on vacations from time to time, including their spouses and kids. We have noticed over the years, certain fiscal irresponsibility from both of them. So while we’ve tried to help them get ahead by gifting them enough for a 35% down payment on heir homes, they keep shooting themselves in the foot with poor but not serious financial decisions. A few years back, I mentioned to my wife that I’d like to be able to leave each of them about a million, if we could, to help with their retirements. However, subsequently, they’ve taken the little money they have and spent it rather unwisely. So we’ve decided that rather than leave them a pile of cash, we want to leave them with experiences and memories, while we are alive, and try to unwind the portfolio a bit as we age. The SWR percentage that you use will be influenced by legacy (or not) issues, as well as your current age. So the answer for a 72 year old will be different than the answer for a 58 year old, and by your own health and medical record, and to an extent, family history. I have 84 year old parents, who seem like they’ve still got some years ahead of them, so I expect, currently, to need to fund myself until age 90ish, maybe longer. DW’s dad passed at 69, and her mom at 82. She has had a few medical issues and doesn’t expect to be long lived, but then again, she lives more healthfully than her folks ever did. Anyway, most years so far, for us, since we began at age 51, have been more on the order of 2.25 on the low end to 3% on the very high end (new car year).

 

[Old Microbiologist]

Rambler - My kids are the same. They make very poor financial choices and my son before moving to Israel was addicted to alcohol and Shisha. My fear for him is he gets too much money he will go back to his old ways. He has been sober and working for 3 years now without problems but I know the reality is alcoholics only very rarely completely recover and the first serious pressure on them they revert fast. In my military career I dealt with hundreds of cases of substance abuse and in only 1 single case did that person recover completely and that was through religion. So, I am supportive but not optimistic.

My daughter more or less despises me after the divorce as I was for some reason blamed for the entire divorce. Maybe someday she will see my side of it but it doesn't look that way. She calls her mother daily at a minimum and me maybe twice a year. So, I feel no guilt at leaving her nothing. She has become a flaming liberal and I cannot relate to her at all now. So, for me it best to leave things alone. What is ironic is her mother will leave everything to some gay cause or her multiple lesbian partners and nothing for the children. Maybe my daughter doesn't care about it.

 

[Dd852]

Our problem is my military pension comes to our Hungarian bank and because of FATCA rules we must keep the balances below $10K or face onerous reporting requirements, which if you fail to do, can result in a 50% loss of all assets. This is my benevolent government serving me as a citizen. So, we end up moving money around between accounts and spending down the overseas account as much as possible. We have shifted to using Transferwise which has saved us quite a bit in fees.
.

there’s an awful lot in your message and I wouldn’t dream of stepping into any of the personal stuff, but just a note that FACTA requirements are different from what you quote and are based on aggregate values not the value in any one account (see link https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers). FBAR is here https://www.irs.gov/businesses/smal...t-of-foreign-bank-and-financial-accounts-fbar But also - having filed FACTA and FBAR reports for many years - I should say that these are the easiest forms the IRS has and not worth trying to dodge - as long as all the money in the accounts has a good provenance and you declare the interest etc

 

[Kroeran]

Having spent my career in a slice of the do-gooder sector I am very skeptical about third party charity. I suspect most of it is naive at best, corrupt at worst, likely to get redirected to progressive regressive causes, and highly unlikely to generate measurable positive outcomes.

I think it’s more effectively moral to be excessively generous with tipping and overpaying the working poor in your daily life, generous with commercial arrangements disputes when things go wrong through no fault.

I think estates should follow traditional lineage when their are children, even if estranged, but with trust restrictions if there are concerns, to avoid adding additional psychic harm.

Cutting out lineage children and others actually in your life feels like something dark to me.

Strikes me odd the lack of concern for a 10 year bear market or change of direction in history when assessing relative benefit of an annuity for middle income retirees.

Getting more pleasure from a spreadsheet balance than life experience may be problematic. I think you are here to have shared life experiences and you may be scolded for wasting opportunities at your life review if you accept NDE research. It is an explicit violation of gospel guidance.