What is your Withdrawal Rate for the Year

@plank2505 - you state assumptions that seem to be false when you say people are bragging about low withdrawal rates... This crowd tends to be data/math oriented.... Which is why the first several pages of this thread contain discussions of methodology

You also fail to consider that many (me included) planned a more frugal retirement... But market gains have changed the denominator.... If your nest egg grows, you can spend more **AND** have a lower withdrawal rate.

Folks on this forum range in budget from Super Skinny FIRE to Hefty Fat FIRE. No one size fits all.

Perhaps you should explore the board a bit more before making blanket statements that are argumentative. But ... You do you.
 
You also fail to consider that many (me included) planned a more frugal retirement... But market gains have changed the denominator.... If your nest egg grows, you can spend more **AND** have a lower withdrawal rate.
I’ll do my best to avoid a possibly inevitable and incredibly boring semantics argument.

When I talk about underwithdrawal, one way to define that is to intentionally withdraw meaningfully less than SWR. SWR is set at the time you retire and then the dollar amount is increased annually by inflation. If the market goes up or down, it does not change this withdrawal rate (real dollars per year). In fact the whole point of the SWR is to be a withdrawal strategy that can be successful within the range of ups and downs as we have historically understood them.

So if you set your withdrawal rate at or near SWR based on your portfolio size the day you retired, great! That’s not relevant to what I’m taking about.

Of course there are many withdrawal strategies and some do vary a % of current portfolio size each year. I’m not rhetorically skilled enough to articulate a unified form of my point that would apply in every withdrawal strategy simultaneously, so you’ll have to translate the principles to your particular withdrawal strategy. But I don’t think it’s accurate to say I am unaware that markets can go up.
 
I just discovered it's a lot easier to ignore a forum member with the new website software. Click on the name, hit Ignore, done.

...

@plank2505, you're making a strawman argument. Some people may celebrate underwithdrawal, but not anyone here as far as I have seen. I'd be interested in links to, or quotes from, any posts from anyone that supports your assertion.

Also, you might want to read the room a little. You just made your 12th post on this board, and you're engaging with people who literally have 2000 posts for every one of yours. There are people here who have studied FIRE and SWR topics for decades. Teaching us the basics of SWR (and inaccurately at that) is pretty tone deaf.
 
What a bizarre judgement ...first of all show me one poster "bragging' about a low SWR,it's merely a number not an indication of a happy life. No one anywhere, tells me how much money I must spend to be happy. It's not my job to tell someone when to stop working .It's also not your job to tell anyone they worked too long .
I think you're confusing SWR with WR.
 
0% WR for 2024 plus we had saved up for new car and when we bought it we qualified for 0% financing.
So we put the money for car in our after-tax fund and it earned 50% of the cost of payments for the year. :dance:
So I guess it was really a negative WR for 2024.
 
It’s always interesting to see everyone tossing around withdrawal rates like they’re one-size-fits-all. Let’s face it—“withdrawal rate” seems to mean something completely different depending on who’s talking. And, of course, the size of your bankroll makes a big difference in those numbers. Plus, not everyone includes the same stuff in their expenses, so it’s not exactly a fair comparison.

For me, I like to keep things simple. I use what I call my “spend ratio". It’s what I spent for the year divided by my previous year’s ending cash and investment balances. I track that year over year, and I also keep an eye on my annual return.

But what really matters to me is the net difference between the two. As long as that net stays positive, I figure I’m on the right track. Nine years into retirement, and every single year has been in the green. I’m not too worried about comparing my numbers to anyone else’s—I’m just focused on keeping that green streak alive. If I can do that, I’d say I’m ahead of the game. 😉
 
It’s always interesting to see everyone tossing around withdrawal rates like they’re one-size-fits-all. Let’s face it—“withdrawal rate” seems to mean something completely different depending on who’s talking. And, of course, the size of your bankroll makes a big difference in those numbers. Plus, not everyone includes the same stuff in their expenses, so it’s not exactly a fair comparison.

For me, I like to keep things simple. I use what I call my “spend ratio". It’s what I spent for the year divided by my previous year’s ending cash and investment balances. I track that year over year, and I also keep an eye on my annual return.

But what really matters to me is the net difference between the two. As long as that net stays positive, I figure I’m on the right track. Nine years into retirement, and every single year has been in the green. I’m not too worried about comparing my numbers to anyone else’s—I’m just focused on keeping that green streak alive. If I can do that, I’d say I’m ahead of the game. 😉
Yes, you are.
 
About 1.5%. We can’t break the habit of frugality.

I think it's being frugal if you aren't spending part of your assets on something you really want or could use, and you have the means to spend that amount.

At times, it's hard to fight the sense that you *may* need more of your assets in the future, especially if you watched your parents or other family members deal with high expenses late in life.
 
It’s always interesting to see everyone tossing around withdrawal rates like they’re one-size-fits-all. Let’s face it—“withdrawal rate” seems to mean something completely different depending on who’s talking. And, of course, the size of your bankroll makes a big difference in those numbers. Plus, not everyone includes the same stuff in their expenses, so it’s not exactly a fair comparison.

For me, I like to keep things simple. I use what I call my “spend ratio". It’s what I spent for the year divided by my previous year’s ending cash and investment balances. I track that year over year, and I also keep an eye on my annual return.

But what really matters to me is the net difference between the two. As long as that net stays positive, I figure I’m on the right track. Nine years into retirement, and every single year has been in the green. I’m not too worried about comparing my numbers to anyone else’s—I’m just focused on keeping that green streak alive. If I can do that, I’d say I’m ahead of the game. 😉

You had a positive investment return in 2022? Most people did not.
 
My WR, which is really more of a spending ratio (spending divided by portfolio's year-end value), has risen and fallen over the years. It was higher (between 1.8% and 2.6%) when my portfolio's value was lower, from 2009-2019.

On the spending side, my medical costs (mainly health insurance) were higher in those years, both pre-ACA and in its first 6 years, the last 3 when I went over the premium subsidy cliff. In late 2019, I sold off my actively-managed stock fund, one I had since 1996, and bought into a similar index fund. I paid a heavy tax bill for 20+ years of unrealized cap gains, but the benefits were huge. I got back on the ACA premium subsidy train in 2020 which shrunk my net HI premium while eventually reducing my income taxes due.

Then, last April, my state (New York) raised its income limit to qualify for its Essential Plan from 200% to 250% of FPL, allowing me to enroll in it. This has further reduced my HI costs which, back in 2019, were my highest category of expenses, higher than housing.

So, my WR has decreased thanks to 3 HI changes (ACA, stock fund switch, NY Essential Plan) and my portfolio's value more than doubling since 2009.

One more thing: I put a condition on my being able to ER which said there would be no changes to my everyday lifestyle. If I needed to go on a mild spending spree once in a while (like a micro-BTD), I would have enough of a cushion in my budget to handle that with no problem. And in the last year or so, I have been doing a little more of that micro-BTD, averaging about $100 a month to enjoy life a little more. Its effect on my WR is negligible.
 
You had a positive investment return in 2022? Most people did not.
Ah, yes, 2022—what a memorable year. 😲 In my head, I knew what I meant, but I probably should’ve clarified—“on a running total basis” being the key there. Looking at each year individually, I’m happy to see 8 out of 9 in the green, all while keeping a solid travel budget to enjoy life while we can. And the best part? My cash and investment balance is still ahead of my original retirement forecast. Can't complain about that! 🎉
 
It’s always interesting to see everyone tossing around withdrawal rates like they’re one-size-fits-all. Let’s face it—“withdrawal rate” seems to mean something completely different depending on who’s talking. And, of course, the size of your bankroll makes a big difference in those numbers. Plus, not everyone includes the same stuff in their expenses, so it’s not exactly a fair comparison.

For me, I like to keep things simple. I use what I call my “spend ratio". It’s what I spent for the year divided by my previous year’s ending cash and investment balances. I track that year over year, and I also keep an eye on my annual return.

But what really matters to me is the net difference between the two. As long as that net stays positive, I figure I’m on the right track. Nine years into retirement, and every single year has been in the green. I’m not too worried about comparing my numbers to anyone else’s—I’m just focused on keeping that green streak alive. If I can do that, I’d say I’m ahead of the game. 😉
Thanks, I've added this in my spreadsheet along side my WR tracking.
 
10 pages in, there seems to have been a "side skew" in the topic of discussion in this thread ("underwithdrawing" and the psychology behind it). In reading it, another idea/side topic popped into my head (a previous poster a page back alluded to it) so I'll throw it out now. Interested in the responses.

As was pointed out, many of us are FIRE'ed as a strong result of allegiance to LBYM for decades. I/we certainly were (me, moreso that DW). But my question is, after retiring, did/does that LBYM ideal stay with you (WR aside)? Do you still harbor that mentality in your daily deci$ion$?

I for one, don't. Sure, I track EVERYTHING about our finances and use the retirement modelers religiously. But LBYM now? Hell no. I dreamt of these days for decades working in corporate. It's Go-Time. LAYM (figure that one out). I/we am hammering this portfilio as hard as we can, leveling up lifestyle in every way that I can as long as the numbers work. For us, it is a lot of non tangibles, travel and dining out mostly. If the portfolio will take a 10% WR hit and the models still show we'll make it (with a pretty big margin mind you), well hell, we are going to find a way to spend at 10%! I FIRED 8 years ago this month, DW retired just 2 years ago. 2024 was one of the best years of our lifetimes, I could probably write a book with all the travel and experiences that we had.

So I just wonder (without judgement) who embraces our approach, vs. those who just continue the LBYM mentality after retiring and "Stay in their lane".
 
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^ I've been FIREd about 9 years now.

If the market is doing well, I had been trying not to spend so as to accumulate more and not jinx it. If the market is doing poorly, I had been trying not to spend in order to preserve what was left. Mind you, this is all in the context of a WR% that is between 0% and 2% for those 9 years.

A few weeks ago I decided to BTD on a cruise, and the market has gone down ever since. I'm not sure what I'll do next.

In general I think I'd rather spend more as long as it's still "safe" in my view, which at 55 is at least 3% and should be more if I could tell my IBG to quiet down.
 
Short answer will be

4.5% from ages 63-67.
2.25% from age 67+ til RMD's kick in.

Not retired yet, but planning to at the end of the year. Will be 62 still (63 three months later, so starting at 63 in my spreadsheet)

So I am running a lot of scenarios through a spreadsheet, with one of the goals ensuring that my wife will be in a good position when I pass. In both our families, the men tend to pass 20 years before the wife. I hope to break that tradition, but who knows. It sure as heck complicates the planning.

So defining withdrawal rate as the amount of monety withdrawn from my retirement accounts, based on their beginning year balance.

My current budget is a withdrawl rate of 4.5% for the first four years (til I am 67)

Will start SS withdrawals at that time, and will reduce the withdrawal rate to 2.25% until RMDs kick in at age 75.

I am not counting about 75K we have in a Roth IRA account in the portfolios. That is our emergency funds, which will remain untapped unless needed (new furnace, unexpected large expenses of any sort)

What we withdraw that we do not need for monthly living expenses will be put into liquid savings of some sort, such as short term CD's and savings. That is, we will save up for things like trips, or new cars, etc. out of that 4.5% monthly income.

One other note, from age 63-65, our insurance costs will be $1400/month. But that will drop some when I turn 65, allowing for more savings (or spending if needed). But I plan on getting some supplemental insurance in addition to medicare, for both me and my wife, so there will still be medical insurance costs, but not sure what exactly. (wife is 3 years younger).

I'm glad I have a year to plan, as the other thing that can change all of that is I am considering doing some Conversion from the 401K to Roth IRAS in those first 4 years as well. It will provide no benefit if I live to be 90, as it will be taxed at 24% federal and 10% state. However, if I die at 67 and everything is in the tax deferred accounts, my wife will hit the 2.6xIRMAA rate at age 67 and 3.2x at age 72, and also the 32% federal tax bracket at age 76. As the women in her family seem to live to be 90, doing the conversion is a consideration. With the conversion, she will avoid both the 32% fed tax and the 3.2x irmaa rates.

The other consideration is for estate planning. We have four kids, and four Roth IRA's, if we do *not* need to use the $$, accumulating for 20 years, would be a nice inheritance for them. And if we do need the $$ in old age we would have that.

Lots' to plan out this coming year. I don't know if I will do the conversions or not, but if so, then the first four years WR will be quite a bit larger.
 
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we did roth conversion and I dont like games that make me cry LMAO. Id rather not know this year. I will play in a "normal" year. Seems like Uncle Sam will spend more of my 2024 money than I did.
 
It’s always interesting to see everyone tossing around withdrawal rates like they’re one-size-fits-all. Let’s face it—“withdrawal rate” seems to mean something completely different depending on who’s talking. And, of course, the size of your bankroll makes a big difference in those numbers. Plus, not everyone includes the same stuff in their expenses, so it’s not exactly a fair comparison.

For me, I like to keep things simple. I use what I call my “spend ratio". It’s what I spent for the year divided by my previous year’s ending cash and investment balances. I track that year over year, and I also keep an eye on my annual return.

But what really matters to me is the net difference between the two. As long as that net stays positive, I figure I’m on the right track. Nine years into retirement, and every single year has been in the green. I’m not too worried about comparing my numbers to anyone else’s—I’m just focused on keeping that green streak alive. If I can do that, I’d say I’m ahead of the game. 😉

Well said. I don't track my spending precisely, so I don't report withdrawal rate or total spending amounts as in another threads, to avoid contradicting myself in different postings. But 2024 was a big (record) spending year for us, we roughly spent 25% in each of the categories: tax (including Roth conversions), travel, gifting to children, and others (living expenses). In fact, we could live well with just the last category (living expenses, at this level, the tax is probably close to zero).
 
I found it very easy to conclude that you're wrong. I don't see people bragging about a low withdrawl rate. Rather, they were posting an answer to the question the OP asked.

My parents had a negative withdrawal rate for their first 39 years of retirement thanks to a generous COLA'd pension combined with simply spending less as they aged, and they lived very long lives. Dad died in his mid-90s, mom in her early 100s.

But everything changed when my dad needed 24/7 skilled nursing care to remain at home beginning at age 94. Less than 2 years after he died, mom needed 24/7 care starting at age 95. She had excellent caregivers in her own home for 6 1/2 years before she died at home. But that care didn't come cheaply, both in terms of money and in terms of how it affected my own life, because a lot of work remained for me as long as they were living in their own home (just 10 minutes from my home). The bulk of the money they had accumulated over the decades paid for that quality care as well as their other ongoing expenses (food, insurance, property tax, home repairs, etc.). Their withdrawal rate went from negative to a double-digit percentage which increased every year as their assets were drained. In my mom's last 2 years of life, Covid became a factor and putting her in a nursing home became unthinkable. Fortunately their assets didn't go down all the way to zero, and they got much better care than they would have received in the best nursing home.

Some people have a very good reason for keeping a significant reserve in their investable assets as they age. My dad told me over 30 years ago that they decided to self-insure for long-term care because of their pension and assets accumulated at that point. I'm sure they never expected the bulk of their savings would pay for their long-term care, but their savings were there when the worst-case scenario happened.
Your parents story is (I suppose) one of the reasons I don't worry about having "over saved" or whatever we want to call it. Both my parents ended their days in a nursing home and although they got what I thought was good care, I'm sure it would have been more comfortable to stay in their own home with nursing staff 24/7. That was not even a glimmer of a possibility. They had savings, but only enough to get them through their final days in the nursing home.

So, I hope I never need intensive care at home, but it would be nice to know that it's available (affordable.). YMMV
 
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