Author Topic: to RE mustachians - how frequently do you make your withdrawls?  (Read 4396 times)

nereo

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To those of you who are living off your investments, I've been wondering how often you withdraw money?
Yes, I understand it's a largely personal choice, but I'm curious whether people have found it easier for them to take out a lump sum annually, or quarterly, bi-weekly, etc.
Anyone simply take out money "as-needed" and back-calculate how much was withdrawn after the fact?

I ask because my entire working life I've been paid either bi-weekly or monthly.  In a sense I've become conditioned to seeing that sort of frequency of spikes in my bank account.  But now that I'm at least dreaming of FI/RE, I'm wondering if that's how often I'd like to 'pay myself'.

brewer12345

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #1 on: July 03, 2014, 09:17:11 AM »
I am only in year 1, but I started out with a wad of cash, CDs, etc.  I periodically transfer a slug of cash in 10 to 20k increments into my checking account that is used for bill pay and just use it until I need to transfer more money.  I intentionally started cash heavy (alternative to bonds) and will replenish the cash stash from portfolio income (interest and dividends) and the cash proceeds from rebalancing transactions.

DoubleDown

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #2 on: July 03, 2014, 12:20:49 PM »
I'm also in the first year of retirement. Before I left, I started directing my savings straight into the bank account instead of other investments. I saved up about 6 months of living expenses in cash. Since then, I've done one sale of ESPP stocks (last month) that will carry us another 5-6 months. I have another asset lined up to sell for the next period we need some money in our bank account to pay bills later this year.

So, I don't (yet) have any precise withdrawal schedule, I'm just liquidating assets according to tax treatment/risk/personal preference. For example, I sold the ESPP stocks because they were the highest risk (one company's stock), and they appreciated a huge amount since I purchased them years ago, so selling them now while I have $0 earned income will allow me to avoid paying any capital gains taxes.

Next year, I'll likely sell a rental home and the equity there will carry us for about 4 years, then some mutual funds/etc., then I'll be old enough to start taking pension and 401k withdrawals, then SS...

It was indeed weird to see the automatic deposits finally cease going into my bank account from my paychecks, a little unnerving even though it was completely anticipated!

Catbert

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #3 on: July 03, 2014, 01:15:32 PM »
Hey, if monthly deposits are what you are use to and feel comfortable just keep doing it!  Whatever makes it simple.  If you know that you need xxx a month including variable expenses then have xxx deposited each month.   

nereo

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #4 on: July 03, 2014, 03:18:44 PM »
Hey, if monthly deposits are what you are use to and feel comfortable just keep doing it!  Whatever makes it simple.  If you know that you need xxx a month including variable expenses then have xxx deposited each month.
I realize it's a personal choice, but that's exactly what I'm soliciting here - what have others chosen to do.  It's all part of trying to learn from other people's experiences, right?

Dodge

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #5 on: July 03, 2014, 03:35:02 PM »
IMO it makes the most sense to withdraw only as you need it.  For most people bills are paid on a monthly basis, so monthly withdrawals would be the most efficient.  If you take out all 30k you'll need for the year on Jan 1, and use it evenly throughout the year, you're paying the opportunity cost for the time your money isn't invested.

deborah

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #6 on: July 03, 2014, 04:20:36 PM »
I have two sets of investments. Investment A gives me more-or-less regular income. Investment B needs to be withdrawn. Investment A is enough to cover normal stuff, but not everything I do - about 3/4 of my annual living expenses. I keep a forward estimate of when this will run out, and top it up from investment B when I think I will actually run out in a couple of months.

I guess that this would be similar for a number of people - investment A could be a rental, side hassle, annuity... investment B could be Vanguard dividends, or other parts of the stash that don't produce a more-or-less regular income.

Rural

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #7 on: July 03, 2014, 08:17:56 PM »


I guess that this would be similar for a number of people - investment A could be a rental, side hassle, annuity...


I definitely have a side hassle, though it didn't start out that way... :-)

Middlesbrough

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #8 on: July 03, 2014, 09:17:48 PM »
It depends on where you get your money and such. When in comes to stocks and cash, I figure it's best to have three years of expenses on hand so if the market is to take a large decline, you have a longer buffer period to regain value before you sell. To take monthly, weekly, or small intervals are reverse cost averaging their benefits and losing out on value. This is all theory, but would be my thoughts on the matter.

nereo

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #9 on: July 04, 2014, 06:41:28 AM »
It depends on where you get your money and such. When in comes to stocks and cash, I figure it's best to have three years of expenses on hand so if the market is to take a large decline, you have a longer buffer period to regain value before you sell.
ok - but that's not really answering my question.  I'm seeking responses about how individual mustachians handle their withdraws.
Quote
To take monthly, weekly, or small intervals are reverse cost averaging their benefits and losing out on value. This is all theory, but would be my thoughts on the matter.
interesting idea.  iv'e heard so much about DCA but not given 'reverse DCA' much thought.  Selling stocks daily is probably a bit silly, but I know Vanguard (and presumably others) allow you to withdraw a set amount every week into your bank account. 

Middlesbrough

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Re: to RE mustachians - how frequently do you make your withdrawls?
« Reply #10 on: July 13, 2014, 07:46:31 PM »
It depends on where you get your money and such. When in comes to stocks and cash, I figure it's best to have three years of expenses on hand so if the market is to take a large decline, you have a longer buffer period to regain value before you sell.
ok - but that's not really answering my question.  I'm seeking responses about how individual mustachians handle their withdraws.
Quote
To take monthly, weekly, or small intervals are reverse cost averaging their benefits and losing out on value. This is all theory, but would be my thoughts on the matter.
interesting idea.  iv'e heard so much about DCA but not given 'reverse DCA' much thought.  Selling stocks daily is probably a bit silly, but I know Vanguard (and presumably others) allow you to withdraw a set amount every week into your bank account.
With the first part I was trying to eliminate those who get money from property investments. You are expecting cash payments on a monthly basis that would alter other withdrawal methods.

When it comes to withdrawing from stock and 401k accounts, yearly lump sums would seem best. When the market is good, withdraw your minimum distributions or to get your extended liquidity needs all in one big chunk. When markets suck, don't withdraw from equities and live on the extra cash and it you have to take minimum distributions withdraw only from bond funds and the like until the market corrects.