What was your WR YTD

[Andre1969]

For those of you who calculate your WR to two decimal places, how exactly do you do that?
Example: let's say my only withdrawal for the year is $50,000 on July 1.

So for the denominator, do you use portfolio value on:
1) 1/1/23?
2) 7/1/23, just before the withdrawal?
3) 12/31/23?

Or do you use Creative Accounting and choose the date with largest portfolio value so that your WR seems lower?

I would calculate the value on 1/1/23, the value on 12/31/23, and then take the average. However, if I only did a one-time withdrawal, I'd probably at least make a note of what the percent was, on that date.

 

[GravitySucks]

Wow! Another net worth type topic we will be debating until we die or become addled.
?

You think I’m going to stop arguing just because I’ve become addle minded?

 

[Taco]

When Bergen came up with the 4% Safe Withdrawal Rate (SWR), that did not include social security or pensions. It was withdrawals from ones portfolio / nest egg.

When I start playing this game next year, here are the rules I'll play by:

1. SS and pension will get deposited into my checking account and spent from there. Those income streams will not be deposited into my portfolio / nest egg.

2. Anything extra I need (want) to spend will get withdrawn from my nest egg. These withdrawals will be the basis for calculating my WR.

 

[Milkman]

We have been retired since 9/01/2014. Our average wd rate has been 2.25%. The highest was 3.4% when we upgraded our motorhome 3 years ago. Our rate has gone down since I took social security at 70. This year was 2.07%.

 

[TheWizard]

When Bergen came up with the 4% Safe Withdrawal Rate (SWR), that did not include social security or pensions. It was withdrawals from ones portfolio / nest egg.

When I start playing this game next year, here are the rules I'll play by:

1. SS and pension will get deposited into my checking account and spent from there. Those income streams will not be deposited into my portfolio / nest egg.

2. Anything extra I need (want) to spend will get withdrawn from my nest egg. These withdrawals will be the basis for calculating my WR.

That's similar to what I do, but my pension + SS exceed my expenses most months. So I tend to limit my checking account to $10,000 and move the excess to my taxable investment account and eventually into stock index funds...

 

[VanWinkle]

This was the first year i really took withdrawals since SS started in 2019. We built a new house in Tennessee with furniture, irrigation, and landscaping/sod. This required a 3% withdrawal from my portfolio to cover extra expenses. I need to draw more out, but it's hard to shift from saving to spending.

I'm going to try harder this year to blow some dough.

VW

 

[Dtail]

To some extent, this thread shows how many members are just very conservative spenders.
Where is RobbieB when we need him?

 

[Flieger]

WR Calculation....

I think either way works. I'm not in WR phase yet so haven't chosen, but...

If you do: Annual Spend (- SS/Pension, etc)/YS Portfolio Value,
Or you do: Annual Spend (- SS/Pension, etc)/YE Portfolio Value inclusive gains,

If you have gains beyond Annual Spend, the first way gives you a higher WR for current year, then, assuming Annual Spend the same for following year, your WR will be lower the 2nd year due to the gains.

Vice Versa if you chose the 2nd way.

Potato - Potaato

Flieger

 

[sengsational]

This is the definition I would use also.

Our expenses were 1.5% of our portfolio value at the start of the year.

Yep, you and DS find the "spend rate" value significant. Spend rate might or might not equal "withdrawal rate" and so align with the portfolio depletion analytical models, which use withdrawal rate.

 

[Born2Fish]

Total withdrawals less reinvestments could work. I think we have a semantics issue. When I have extra $ from my withdrawals, I reinvest them. Spending is what reduces the portfolio in terms of calculating the WR (not losses or gains). If you don't spend it, it doesn't count towards your WR, even if you withdrew it from an IRA, 401(k) or brokerage account (it's still an investible asset).

This all assumes you don't have income from SS, Pension, etc.

Using your approach I have ~0% WR for 2023.

 

[Born2Fish]

To some extent, this thread shows how many members are just very conservative spenders.
Where is RobbieB when we need him?

I was in the "Lean" camp this year.

 

[flyingaway]

About 3.57% against the start of the year balance. Expenses include: total spending, gifts to children, and Roth conversion taxes.

 

[Koolau]

I calculate my WD as how much I actually took from my 401(k) (or from any other retirement accounts this past year.) Based on that, my WDR in 2023 is approximately 2.5% of stash. But total spending was a lot more (includes my SS and pension.)



It gets confusing, however, when I realize that my NW has increased during that time. I haven't calculated it yet, but I think it's up well over 10% for '23. YMMV

 

[MarieIG]

I calculate my WD as how much I actually took from my 401(k) (or from any other retirement accounts this past year.) Based on that, my WDR in 2023 is approximately 2.5% of stash. But total spending was a lot more (includes my SS and pension.)



It gets confusing, however, when I realize that my NW has increased during that time. I haven't calculated it yet, but I think it's up well over 10% for '23. YMMV

For my withdrawal rate, I don't include the amount which I withdrew from my traditional IRA and converted to my Roth - but I do include the amount of money that was withdrawn from my taxable account and sailed off to the IRS to pay taxes on those conversions.

Our spending is augmented by DH's pension and annuity income (which are 100% joint and survivor) - no SS yet.

 

[RE2Boys]

Withdrawal rate?? I have no idea! I remember tracking it carely during my first 8-9 years of retirement in order to have a good picture of of our finances and to control the spending rate.

But after making it through the great recession, seeing my sons through college, and 24 years of retirement from my main career, it is an exercise that no longer has any value. The value of the portfolio, keeps increasing (thank you for a ten-year bull market and recent Fed interest rates). I have a steady pension, I'm good.

 

[SecondCor521]

0.75%, according to my calculations and arcane rules that make sense to me.

 

[HI Bill]

I did 1 and 3.

WR 2.3% if calculated end of 2023. 3.1% if calculated at the beginning of the year.

12/31 of previous year ('22). It's the prior year-end balance.

 

[calmloki]

I know we spent some money last year, but somehow our NW is up 17.97%. That keeps us ahead of inflation, so don't think I'll stew over withdrawal rate too much right now. Now if our NW started dropping I'd be freaking out, given that I collect no pensions or retirement payments other than enough SS to keep our cat fed.

 

[Golden sunsets]

Our WR for 2023 was 1.5% Calculated as (total spending less (SS, pensions + disability)) divided by total investments as of 12/31/2022. This was our highest spending year since we retired. Big lumpies last year including a wedding + a 529 contribution for GC # 1 + a major home improvement project. Going forward 2024 should be lower but we will have another 529 contribution for GC #2 and a major home maintenance project. We're done with the weddings though.

 

[ejman]

Wow, as always I'm amazed at the creativity of the members of this forum -121 varying responses on how to calculate withdrawal rate from ones portfolio reminds me of the old joke about the accountant answering the question of 2+2 =? "what do you want it be?" For the record, my withdrawal rate % is my expenses (including taxes paid) minus income from social security and pensions and that was 1.82% of my portfolio balance on 12/31/22. And that's the truth according to God and the appropriate Holy Books

 

[audreyh1]

People are just trying to determine their nest egg burn rate.

 

[TheWizard]

People are just trying to determine their annual nest egg drawdown rate.

Or, in the case of some of us, our annual nest egg add-to rate...

 

[CincyDave]

2.5% of investments (beginning 2023 value)

 

[goingtotravel]

2.4% of the 2022 ending balance of LT investments. Pulled to shore up cash/short term reserves. Money spent above pensions in 2023 was pulled from LT investments a few years ago (and we spent more than we replenished with as it was building up and we had some blow that dough projects).

 

[FREE866]

In reading all these extremely low WR's it's very obvious, barring a 1930s style economic and financial markets meltdown, nobody here is going to run out of money