Author Topic: Question on Safe Withdrawal Rates (or Firecal, cFIREsim)  (Read 1764 times)


  • 5 O'Clock Shadow
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Question on Safe Withdrawal Rates (or Firecal, cFIREsim)
« on: July 09, 2017, 10:11:42 PM »
Hello Everyone

Just my first post on forum (i.e., please be gentle if the question below has already been answered - believe me, I've searched hard before posting!).

I have a question on the issue of safe withdrawal rates.  To make it simpler, let me ask it on the basis of how Firecal or cFIREsim makes calculations.   All research in the area of safe withdrawal rates, as well as those calculators, include the idea of "spending" or "spending rate", which is the anticipated/desired annual spending post-retirement.  Depending what study or what calculator, it's usually said that such value should be 2.5%, or 3%, or 4% (or whatever percentage may be).

My specific question is: when I consider the amount for "spending", is that amount pre- or post-tax.  In other words, if I set my spending as, say, $40,000, is that amount actual spending, post tax?  Or, is the actual spending $40,000 less tax on $40,000?   In other words, where is the effect of tax considered in the safe withdrawal rate calculation?

Thank you in advance!


  • Bristles
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Re: Question on Safe Withdrawal Rates (or Firecal, cFIREsim)
« Reply #1 on: July 09, 2017, 11:42:09 PM »
SWR does not consider tax, so it is pre-tax.

i.e. if you take $40k out then you need to pay tax on that $40k at whatever rate applies to you.