Author Topic: Safe Withdrawal Rate Question  (Read 1424 times)

factor22

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Safe Withdrawal Rate Question
« on: December 13, 2015, 09:27:16 AM »
Hi, Can someone please point me in the right direction to help with this question. When I consider my base to calculate the Safe Withdrawal Rate, do I exclude my primary residence value?  Thanks.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4313
  • Location: CT
Re: Safe Withdrawal Rate Question
« Reply #1 on: December 13, 2015, 09:43:58 AM »
Yes, your property value is not a liquid asset. SWR are based on portfolio. Unless you have plans on selling your primary residence.

factor22

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: Safe Withdrawal Rate Question
« Reply #2 on: December 13, 2015, 10:11:09 AM »
Thanks matchewed

Don Jean

  • 5 O'Clock Shadow
  • *
  • Posts: 32
Re: Safe Withdrawal Rate Question
« Reply #3 on: December 13, 2015, 10:23:14 AM »
Is the answer the same for an investment property?

matchewed

  • Magnum Stache
  • ******
  • Posts: 4313
  • Location: CT
Re: Safe Withdrawal Rate Question
« Reply #4 on: December 13, 2015, 10:35:26 AM »
You would factor the income from the investment property unless you were making a play for appreciation in which you would factor the sale of the property.

MDM

  • Walrus Stache
  • *******
  • Posts: 9246
Re: Safe Withdrawal Rate Question
« Reply #5 on: December 13, 2015, 10:37:17 AM »
Is the answer the same for an investment property?
Maybe.

See https://www.bogleheads.org/wiki/Safe_withdrawal_rates for more background.

You'll have to decide if the investment property behaves similarly enough to the stock and bond portfolios that were used to determine historical SWRs.  It could be the same, better, or worse.