Withdrawal rates for 2017, and planned for 2018

[NW-Bound]

Never went as high as 6% with only 5 years under my belt, but would think an occasional excursion like that shouldn't hurt at all. It's only 2% above that golden rule of 4% WR for crying out loud.

But 6% year in/year out, now that's something else. And even then, it does not matter if you are, ahem, your remaining time is limited.

 

[W2R]

Hey, if you include my house purchase I went up to 8.4% a couple of years ago! And survived. I think the key is to not do that as a regular habit...

 

[NW-Bound]

REWahoo fearlessly went as high as 9.8% in his 2nd year of retirement. Anybody can beat that? Here's a man who is not afraid of the fearsome "sequence of returns".

 

[W2R]

The only 2nd home that can be better than the current one for me would be a home on the eastern side of Bainbridge Island, preferably on Rockaway Beach Rd, with a waterfront and a view of the Seattle skyline.

There's no way I can afford one, unless my stash grows again like it did in 2017. That's highly unlikely.

Vacation maybe?

 

[NW-Bound]

I went to Seattle quite often over the years. Even with the RV, I have made two trips there. But it is not the same thing as having a waterfront home, where I could row a canoe out to check on the crab trap, and my wife could watch me from the deck to see if I scored any crab for dinner and get the boiling pot ready.

I gave up on that dream some years ago. Just now, I just checked and the price of homes there went up about the same as the stock market. It's out of sight.

 

[FreeBear]

Our calendar year withdrawal rates shown as a percentage of our initial portfolio value the day we retired in 2005:

Year 1: 4.8%
Year 2: 9.8%
Year 3: 7.9%
Year 4: 6.1% (SS begins for me)
Year 5: 5.4% (SS begins for DW)
Year 6: 4.2%
Year 7: 3.9%
Year 8: 3.5%
Year 9: 3.7%
Year 10: 4.5%
Year 11: 4.2%
Year 12 (2017): 4.7%
Year 13 (2018): RMD requires 4.3%, and will probably withdraw a bit more

Sounds familiar, I feel better now. Looks like you pulled SS early and your RMD is similar to your burn rate anyway. I think we'll be in a similar situation, so I don't worry too much about RMD planning. If the market grants us more $$$, it won't be a bad problem!

Our WR's, based on nest egg at start of FIRE early in 2015, with yearly inflation adjustment :

2016: 4.0% (2nd year of ER-still nervous, still recovering from w*rk)

2017: 4.9% (implants, 2 months worth of vacation-acclimating to ER!)

2018: 4.3% target (same vacation as 2017, but without dental drama)

FB

 

[DrRoy]

This was our first year of RE (at 58). We knew we were in good shape, and spent rather freely, more than in a typical year when working. I have a pension worth .9% of the initial portfolio, and we spend an additional 1.6%. After market growth, and pulling out the next year's worth of spending cash, the estimated WR for 2018 would only be 1.4%. Guess we need to find something else to splurge on.

 

[Badger]

Our WR is what ever the RMD is at the time - about $15k at the moment. Next year it will be about $32k when we are both taking RMD. All goes into a MM with Vanguard as we live on SS and a couple of small pensions. We have yet to use any of our savings since we are happy with the life style we have. House, cars, etc. are paid, health insurance is taken care of by Medicare and Tricare, and no debt. We take an occasional trip but prefer hiking and exploring the countryside as opposed to expensive hotels, expensive restaurants, and other expensive entertainment although I am planning a week or two in Iceland this year. My wife has always wanted to go and my new knee should be up to the trip by then.

Cheers!

 

[davismills]

DW is receiving SS and I'm waiting until 70. My military pension has done us well and we have zero debt.

This year we withdrew .004 of our IRAs. Our first ever withdrawal.

We called it psychological therapy to cure our extreme reluctance to spend the money. I guess we still have miles to go to cure this affliction.

 

[pb4uski]

Hey, if you include my house purchase I went up to 8.4% a couple of years ago! And survived. I think the key is to not do that as a regular habit...

+1 if I include withdrawals to purchase our winter condo in 2016 we would be at 11.7%... but another view is that the winter condo isn't a withdrawal but just adding another asset class (real estate) and the long run returns are lower cost than if we rented to snowbird and possible appreciation.

 

[markelp]

What do you all use for the denominator in your withdrawal rate calculations?

Does your "Portfolio" include all invested assets (Brokerage+Retirement Accounts) or just accounts that you actually withdrew from during the year? With ER, a significant portion of our portfolio are in tax advantaged accounts that are inaccessible due to age requirements.

I've calculated our withdraw rate based on transfers from the brokerage account to banking accounts as the numerator, but included all 1/1/17 balances from investment account (brokerage+IRAs+403b) in the denominator.

For fun I tried using Net Worth, but that result just looked goofy since a large part of our NW is in rental property and primary residence.

 

[REWahoo]

What do you all use for the denominator in your withdrawal rate calculations?

Does your "Portfolio" include all invested assets...

Yes, all invested assets.

 

[audreyh1]

What do you all use for the denominator in your withdrawal rate calculations?

Does your "Portfolio" include all invested assets (Brokerage+Retirement Accounts) or just accounts that you actually withdrew from during the year? With ER, a significant portion of our portfolio are in tax advantaged accounts that are inaccessible due to age requirements.

I've calculated our withdraw rate based on transfers from the brokerage account to banking accounts as the numerator, but included all 1/1/17 balances from investment account (brokerage+IRAs+403b) in the denominator.

For fun I tried using Net Worth, but that result just looked goofy since a large part of our NW is in rental property and primary residence.

We only withdraw from our investments labeled “retirement assets” that are invested for the long-term and we withdraw a fixed percentage each year based in Dec 31 value. We draw on Jan 2 from the retirement accounts based on Dec 31 value prior year.

A lot of folks here simply compare their year spending to their portfolio or total investable assets. This is a useful safety check even though it’s not the traditional method. I’m sure for many folks as long as they don’t exceed some X%, they feel like they are fine. And I agree - most calculated rates are extremely modest.

 

[flintnational]

3.2% 2017 actual
3.0% 2018 estimate

The denominator is current year investable assets. In 8 or 9 more years SS and pensions will cover our current budget (inflation adjusted).

Happy New Year! Go Dawgs!

 

[pb4uski]

What do you all use for the denominator in your withdrawal rate calculations?...

I use "retirement" assets... which includes cash, taxable account investments, tax-deferred tIRAs, tax-free Roth IRAs and HSAs and the CSV of a whole life insurance policy I own that is functionally a bond.

I exclude our local bank accounts that we pay or bills from but those balances are typically negligible... $15k or less and I also exclude homes, cars, boats, etc.

 

[Tallman4123]

The rubber has officially hit the road for us today.

While I RE'd in mid-2016, DW just retired two weeks ago. I've been tracking our expenses for a number of years in anticipation of this day but there's always been a small component of fuzzy math, wishful thinking and excuse-making (i.e. "how often could you need a dental implant?", or "well, we won't always fly first class" or "I'll drive so much less when RE'd that those four new tires will last me 10 years!"). Suddenly it's all very, very REAL.

Being a newbie to this RE circumstance, my intentions are to apply - in a very rigorous fashion - everything I've learned through this forum and the research it has pointed me to. If I do, what could go wrong, right? At the very least I'll apply everything that is convenient to my circumstance and ignore the rest (more of that excuse-making and fuzzy math).

The budget I've developed has us withdrawing 5% of our initial portfolio balance as of 12/31/17. My plan is to use the Guyton Klinger spending rules to determining future withdrawal amounts. The 5% will continue for nine and a half years when I'll hit 70 and my DW hits 62 (that happens in 2027 for both of us). At that point - assuming SS is still at current projected levels - our WD will be reduced to 2.6% of our current portfolio balance.

The whole plan feels slightly aggressive to me, but the one thing I hang my hat on is that 36% of our annual budget is for discretionary spending. I believe we could reduce our WD to 4% of current portfolio and still be comfortable (by our admittedly inflated standards).

So off we go!! Happy New Year to all of you!!

 

[NW-Bound]

...Being a newbie to this RE circumstance, my intentions are to apply - in a very rigorous fashion...

No rigor here. My expenses have been quite lumpy, though nowhere near the same level as that of REWahoo.

As long as one does not insist on "blowing that dough" when the market turns south, he can survive. Out with XO Cognac and caviar. In with rum and canned tuna.

 

[ejman]

2017 expenses were 2.53% of our starting liquid assets upon ER on 12/31/2002 or 1.17% of liquid asset balance on 12/31/2016. This aging business seems to take away the desire for expending more - will have to work on that.

 

[bbbamI]

Both retired in 2009. At the time dh was 54 and yours truly 51. DH receives a small non cola'd pension. The WR is based on the portfolio balance at the beginning of each year.

2009 Projected WR.....0 (dh worked part of that year, we had to take no reserves)
2010 Projected WR....3%......Actual 2.71%
2011 Projected WR....3%......Actual 3.27% (health issues)
2012 Projected WR....3%......Actual 2.87%
2013 Projected WR....3.5%...Actual 4.94% (new car)
2014 Projected WR....3.5%...Actual 2.68%
2015 Projected WR....3.5%...Actual 3.57%
2016 Projected WR....3%......Actual 2.01% (dh started SS in June)
2017 Projected WR....3%......Actual 1.5%
2018 Projected WR....3%

I like to stay under 3% each year, but will not panic if we spend more. Each year brings new 'surprises'....gotta roll with it.

Need to add...I include all expenses...from Federal taxes to marshmallows.

 

[Chuckanut]

My withdrawal rate was 2.5%.

2017 was a lackluster travel year for me after a very active 2016 and I want to get back on the horse and do more traveling withing North America. So, I anticiapte an increase for 2018 to about 4%. It would be more but I finally paid of my auto loan in December and found a cheaper Medicare supplement plan. That will add about $7k of dough to spend this year.

 

[Tallman4123]

No rigor here.

Trust me when I say...I truly aspire to that attitude in MANY facets of life. I fight my uptight DNA every day!

 

[Chuckanut]

It’s way more than we spend but I withdraw it anyway.

+1 for the extra.

I put it into some relatively short term CDs (1-3 years) or a short term bond fund. I figure if we get another Bear market like 73-74, it will provide a useful buffer.

 

[Golden sunsets]

Our past, current and future planned withdrawal rates are:

2016 .94% - first year of our decumulation phase and big wedding expense
2017 1.28% - 2017 was what I called "the year of the inside of the house Home Improvement" and legacy gift to one child for house downpayment. Also the first year for RMD for DH so taxes were greater.
2018 1.44% - This year is what I am calling "the year of the outside of the house Home Improvement"
2019 1.70% - We plan to replace our SUV at the end of Q1 2019. It will be 8 years old later this year. This is also the year that our second RMD kicks in and I claim SS under my own record so Fed and State taxes increase a lot.
2020 .61% - So far not a lot planned for lumpy expenses for 2020.
2021 .42% - So far no lumpy expenses planned. So room to grow both 2020 and 2021 additional expenses.

Note: We are blessed with two pensions and two social security checks, so WR's are very low.
We divide our withdrawal by year end balance from previous year. If we used end of current year instead of beginning the withdrawals would be lower.

 

[Chuckanut]

REWahoo fearlessly went as high as 9.8% in his 2nd year of retirement. Anybody can beat that? Here's a man who is not afraid of the fearsome "sequence of returns".

Heck, that mean tough guy, doesn't even fear the asteroid!

 

[Moemg]

In 2018 I plan to return to my usual 4% but anything can happen .