Why take a much smaller SWR than you can??

[NW-Bound]

The thing is, when you retire you don't know if you are going to have a run of good years or bad years. So most people pad a bit.

Then if you end up with a string of good years, your safe income from your retirement assets starts to exceeds your spending, and keeps growing. But when you retired you had to plan for the opposite to happen...

+1000

One plans for the worst case, not the best case.

 

[hudibras]

I read it as being aware that very often things don't turn out anywhere near the way one predicted so they wisely leave a big fat cushion in case we get an event like October 1929 again.

If I had a nickel every time someone here said "Past performance is not indicative of future results" and then in the next breath said, "We're due for another crash like in 1929," I could increase my withdrawal rate even further...

Like I said, I doubt I'll change the mind of anyone here who's already retired; what's done is done. I just hope people understand there are tradeoffs (like working for more years than necessary) to trying to completely avoid the worst-case scenario, especially when any rational, real-life, worst-case scenario is not "freezing to death on a street corner trying to sell pencils" like in 1932 but rather "I was retired for 25 years but the market took a downturn and now I work a minimum-wage job at age 70 to supplement my social security. But at least I got to spend time with my children when they were growing up instead of punching a clock..."

 

[OldShooter]

+1000

One plans for the worst case, not the best case.

Here is a "pop quiz" I use in my adult ed investing class:

You’re 75 years old, healthy, and reviewing your financial situation. Which would you prefer?

A. You find that you’re running out of money.

B. You find that you’ve saved more money than you really need.
​

The point being, of course, that the consequences of a mistake on the low side are far, far, more negative than the consequences of an overshoot. We overshot.

 

[OldShooter]

... Like I said, I doubt I'll change the mind of anyone here ..."

And, obviously, no one here is going to change your mind either.

 

[hudibras]

And, obviously, no one here is going to change your mind either.

Definitely a true statement...

 

[JDARNELL]

I read it as:
"I didn't plan out my retirement spending well and ended up working for 8 years longer than I needed to.*shrug*"

.

Yep I was 3yrs 6 months longer that my first getting off point. But at 44 I gutted it out lol.

 

[hudibras]

Yep I was 3yrs 6 months longer that my first getting off point. But at 44 I gutted it out lol.

Believe me, I know. The annual "Honey, look at this spreadsheet. If I work one more year, we can..." struggle is real.

 

[audreyh1]

Yep I was 3yrs 6 months longer that my first getting off point. But at 44 I gutted it out lol.

I don't feel too bad about retiring at 39 even though I suppose I possibly could have retired a couple of years earlier.......

But how did I know that our net worth would beat inflation over the past 19 years? I didn't. And we lived through some pretty horrific market volatility. Gosh - 9-10 years after retiring our net worth had dropped all the way to where we started - and quite a bit lower when inflation adjusted. Who knows - it could have kept dropping for several more years, and still took several years to catch back up to inflation.

So - since retirement is offering us a larger income than planned (knock on wood), we are trying to take good advantage of it.

 

[travelover]

Definitely a true statement...

I doubt you'll be around very long, but I'm gonna put you on my ignore list, just in case.

 

[hudibras]

I doubt you'll be around very long, but I'm gonna put you on my ignore list, just in case.

Long-time lurker, first-time poster, but it's been nice talking with you!

 

[audreyh1]

Long-time lurker, first-time poster, but it's been nice talking with you!

Maybe now that you have de-cloaked you should introduce yourself on the Hi I Am... forum
Hi, I am... - Early Retirement & Financial Independence Community

 

[Fedup]

I wonder why people think everybody should retire if they have enough money. Honestly, I don’t mind working till 60, except for the commute, work was never a problem to me. When I worked, I spent time planning for vacation. When I retire, I spend time planning for vacation. What’s the difference? Except I bring no new dough.

 

[HI Bill]

I wonder why people think everybody should retire if they have enough money. Honestly, I don’t mind working till 60, except for the commute, work was never a problem to me. When I worked, I spent time planning for vacation. When I retire, I spend time planning for vacation. What’s the difference? Except I bring no new dough.

This IS the Early Retirement forum, so most here want to retire early. I don't think everybody SHOULD retire early. But really, if you don't have something you want to do that's more important to you than work (generally), I believe you should find something!

I have one friend who's an exception. She's at/near FRA, and still working in biochemistry. It's taken her most of her career, but she successfully created an 'antidote' to box jellyfish venom. Now, she's travelling around the world collecting other box jellyfish species, and meeting with different militaries and health departments. Her work is making a real difference in the world. Can't say that about most people's jobs.

My mom was another exception. She taught first grade, and really lived for her kids. She loved the beginning of the year, and hated the end, when they moved on to Grade 2. But after she was forced to retire, she didn't really have a life outside of work, so there wasn't so much for her to retire 'to'.

 

[Fedup]

I’m not the type who has to retire to something either, I don’t believe in that nonsense. But I’m not the type who I absolutely has to have meaning at work either. I have a balanced life between work and play. I don’t get stressed about work when working. I play plenty both before I retire and after I retire. In fact, what I earn at work allows me to spend some money to play. The only thing retirement has helped me is that I have more time to exercise and sleep. But I don’t hate work ever. I can’t believe people live through life like that. I enjoy my life even with work. It’s pretty simple.

 

[RobbieB]

I agree.

I didn't retire to anything but retirement. I enjoy doing nothing. I also enjoy doing something. Sometimes something, sometimes nothing.

I don't know my WR and I don't care. I'm still stacking dough while spending as much as I can.

Life is good -

 

[RobLJ]

I chuckled a bit at hudibras's post (as well as the reference to Sam Butler), since it does point out the disconnect between many of our (including my) spending habits and FireCalc.


DW doesn't want to leave much to the dear sons, but on the other hand, getting her to spend even after I convinced her to retire early is a bit of a challenge, although we did just come back from a week in Vancouver (highly recommended).



I took out 3% at the beginning of the year, although I'm still working very part-time online (and happily), but we've only spent about 2%, but I do plan on loosening the purse one way or another when I get close to full SS age in 5.5 years. I think by then the spend it or bequest it will come a little closer to reality for DW (who is 4 years younger). My plan is to spend 4-6% in a few years until I'm 66, then go back to 3.5-4% after I start taking SS, but we'll see if I'm persuasive enough to convince her to spend that dough.

The thing is, when you retire you don't know if you are going to have a run of good years or bad years. So most people pad a bit.

Then if you end up with a string of good years, your safe income from your retirement assets starts to exceeds your spending, and keeps growing. But when you retired you had to plan for the opposite to happen.

Me, I'm trying to put more money to good use while I'm living.... ramping up gradually.

 

[Scuba]

I agree with the ramping up gradually approach. For us, having “excess” financial resources gives us options. If things don’t go well, we can still maintain our home and lifestyle. If things go better than planned, we can ramp up spending. We don’t need to spend more to enjoy our lives, but could do more luxurious travel, buy a small boat or second home, buy a new car, etc. if we felt these things would add to our enjoyment of life. If not, we could gift more to our relatives and charities. Lots of options! But we feel since we’re still in our 50’s and haven’t been ER’d even two years yet, it’s premature to start gifting or spending more than we did while we were working yet.

 

[RobLJ]

I chuckled a bit at hudibras's post (as well as the reference to Sam Butler),

Hudibras could be a reference to the Fairie Queene, but I'm a bit dubious about that.

"He that made love unto the eldest dame
Was hight Hudibras, an hardy man;
Yet not so great of deeds as great of name
Which he by many rash adventures wan,
Since errant arms to sew he first began."

I knew taking the Renaissance Seminar from Prof. Steadman would turn out to pay off, at some point (35 years later). I might even reread Book II of the Fairie Queene, now that I have time on my hands.

 

[Dtail]

I agree.

I didn't retire to anything but retirement. I enjoy doing nothing. I also enjoy doing something. Sometimes something, sometimes nothing.

I don't know my WR and I don't care. I'm still stacking dough while spending as much as I can.

Life is good -

+1 on retiring to retirement. Not everyone needs a whole retirement non financial game plan. Some days we just do nothing and it reminds us how wonderful retirement is.

 

[inkitnow]

Measured Consumption

I echo much of what others have said- years of spending below my means and a desire to buy less; experience more. I have plenty- and enjoy a stimulating life that makes going on “vacation” a step down from staying home. Besides, I have a cat.
But a big reason I don’t spend more is my passion for animal welfare and my desire to leave a large amount of money to causes I care about. This gives my life meaning and is one way I “live my values”.

 

[scrabbler1]

Every time I see a post on this thread like:
"I have a 2% withdrawal rate but I'm happy and don't feel the need to increase it. *shrug*",

I read it as:
"I didn't plan out my retirement spending well and ended up working for 8 years longer than I needed to.*shrug*"

There's obviously nothing you can do now if you're already retired and have too large of a nest egg, but the whole point of a larger SWR is to allow you to retire earlier than you otherwise could.

I retired 10 years ago at age 45, and that was at least 5 years earlier than I thought it would happen. Several things came together in the few years leading up to my ER, some of them unexpectedly, which enabled me to get out when I did. And yes, my WR has been around 2%, some years in the mid-2s, some years slightly below 2%.

I don't lead an extravagant lifestyle, I simply wanted to put an end to the long, awful commute I had, even as little as the 2 days a week I had for the last 17 months of my career. But I suppose in your view I worked 8 years too long and should have gotten out at age 37?

 

[watchman3135]

I am early retiring mid 2019 due to my Hospital being acquired by a larger organization who is now downsizing IT and plan on drawing 3% on my fixed portion however will be doing a SEPP on my IRA equity portion since I will be 53. I will be forced to do calculations based on SEPP rates which are around 4% as far as I can tell. I have reached out to my tax person for a better explanation however I will only use the 3% and will reinvest the other 1% back in the low tax VTSAX. Our only debt is a near paid mortgage and with my wife working and supplying health coverage, I need very little per month and could live on less than $40k a year. I think the withdrawal rate depends heavily on where you live, are you empty nesters and have you gone through all the toys faze. I'f we bought another luxury car, watch, or anything else, at this point, we'd be spending money just to spend so I basically got it all out of my system in my 40's. Spending on foolish things one doesn't need in your 50's actually became sicking to me when I looked back.

 

[gauss]

If I eventually find that my assets have increased so much that we'll never be at risk of running out, while spending more than 4-5%, I'll consider upping the spending.

Technically speaking, I think the chances of exhausting a 1M portfolio vs 100M portfolio are exactly the same if you wd 4-5% each year.

Qualitatively however, I think I understand the thought that you were expressing.

 

[Rdub]

My WR rate is around 2%, which is still a ton of dough to spend. Retired less than 2 years ago at 47 with 2 young kids. My take is that I want to sleep well at night. If the market tanks by 50%, I'm at a 4% withdrawal rate and still sleeping well. I did recently pull a chunk out of my investment portfolio and added another condo in Hawaii to my rental portfolio. I gave a low ball (relative) cash offer and after a quick negotiation we close at the end of the month. Since the cash I am using was mostly in CD/treasury ladders (as well as a little tax loss harvesting) my returns on the condo will be better than the returns I was getting on that invested cash. I guess my point is that if you have a low withdrawal rate, it gives you options to jump on other investment deals and still sleep well.

 

[Dtail]

My WR rate is around 2%, which is still a ton of dough to spend. Retired less than 2 years ago at 47 with 2 young kids. My take is that I want to sleep well at night. If the market tanks by 50%, I'm at a 4% withdrawal rate and still sleeping well. I did recently pull a chunk out of my investment portfolio and added another condo in Hawaii to my rental portfolio. I gave a low ball (relative) cash offer and after a quick negotiation we close at the end of the month. Since the cash I am using was mostly in CD/treasury ladders (as well as a little tax loss harvesting) my returns on the condo will be better than the returns I was getting on that invested cash. I guess my point is that if you have a low withdrawal rate, it gives you options to jump on other investment deals and still sleep well.

You would probably have a lower than 4% WR if the market drops 50% unless you are 100% equities.
So you can probably sleep even better.