Poll

For those close to RE through long-time RE'd, what's your household SWR (planned for those almost there)?

Actual 0%
5 (1.5%)
Actual <2%
10 (3%)
Actual 3%
23 (7%)
Actual 4%
33 (10%)
Actual <6%
6 (1.8%)
Actual 6%+
2 (0.6%)
Planned 0%
1 (0.3%)
Planned <2%
7 (2.1%)
Planned 2-3%
82 (24.9%)
Planned ~4%
122 (37.1%)
Planned <6%
29 (8.8%)
Planned 6%+
9 (2.7%)

Total Members Voted: 311

Author Topic: What's your actual/planned SWR?  (Read 28734 times)

McDuffy

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What's your actual/planned SWR?
« on: May 27, 2015, 10:38:20 AM »
The "how big is your stash" kind of ignored spend rate and other earnings (non-retired spouses, part-time work, etc.) so, how about: "How much passive income as a percent of net worth, on average, does your household actually rely on?"

How big have high outlier years been? How stable is the average?
How many stable years?

If you live in your own house, exclude the equity value (unless you also want to include some cost of renting the house from yourself, which the passive income of the equity then pays for).

I'm hoping this reveals some real-life examples beyond the studies and simulation tools.

The "how low is your spending" poll is another decent one, assuming it doesn't turn into a frugality arms-race.

matchewed

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Re: What's your actual/planned SWR?
« Reply #1 on: May 27, 2015, 10:41:06 AM »
Flexible...

Exflyboy

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Re: What's your actual/planned SWR?
« Reply #2 on: May 27, 2015, 11:28:05 AM »


If I collect my pension and stay in the rental business next year the WR will be 0.3%... But I doubt I will draw my pension and we will probably do some expensive travelling.. So that would put us up to the 3% range.

So 0.3 to 3% is my flexible answer.

MandyM

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Re: What's your actual/planned SWR?
« Reply #3 on: May 27, 2015, 11:44:17 AM »
I plan to quit FT work when I have a ~5.5% WR, but my early years include at least a little paid work as a factor of safety.

secondcor521

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Re: What's your actual/planned SWR?
« Reply #4 on: May 27, 2015, 12:37:30 PM »
My spreadsheet says 3.42% today, but that is with Friday's closing prices.  I use trailing 6 month moving average expenses; that plus the stock market variations means it bounces around a little.  Have a little bit left to get my Roth pipeline where it needs to be; should be there in the next few months.

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Re: What's your actual/planned SWR?
« Reply #5 on: May 27, 2015, 01:48:59 PM »
I have a complicated setup. But barebones will be around 2-3%. Unnecessary will grow that to 3 or 4 or so. If we keep making money because we want to, those will obviously go down.

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Re: What's your actual/planned SWR?
« Reply #6 on: May 31, 2015, 07:24:04 AM »
This SWR question is always hard for me to answer.  That's because I follow a dividend income investing approach, which means that I don't actually "safely withdraw" any of the portfolio's principal/book value.

As of the end of May (May 29), the dividend yield on my portfolio's invested book value stands at 6.7%.  But since at the moment there's also a lot of cash sitting in the investment accounts waiting to be reinvested, the dividend yield on my total (stocks + cash) portfolio is a diluted 5.4%.

Maybe that helps.

soccerluvof4

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Re: What's your actual/planned SWR?
« Reply #7 on: May 31, 2015, 07:28:19 AM »
Depends on the times but i am planning 3-4%. Still not withdrawing yet as I am receiving money through my biz liquidation.

Spork

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Re: What's your actual/planned SWR?
« Reply #8 on: May 31, 2015, 07:38:34 AM »
I answered "4%" ... but actual number is currently about 3.1%.  As there wasn't a 3-4.... I fudged upwards.

happy

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Re: What's your actual/planned SWR?
« Reply #9 on: May 31, 2015, 07:43:26 AM »
4%, but I'll be retiring around 60 years of age, so I will not have more than 40 years to cover, and probably not more than 30. Sometimes I wonder if I could go on 5% but them old folks homes can be pricey and I'm conservative.

FrancisinPa

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Re: What's your actual/planned SWR?
« Reply #10 on: May 31, 2015, 08:20:48 AM »
I voted for planned less than 2%. But it will probably be less than that due to 26k pension at 65 and SS at 70. In reality withdrawal rate could easily be 0% at 70. So my answer is variable.

dude

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Re: What's your actual/planned SWR?
« Reply #11 on: June 01, 2015, 11:09:15 AM »
The plan is @1.9% when I retire, then bumped up to 4-5% about 7 years later when my wife retires.  But that could change.

Bob W

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Re: What's your actual/planned SWR?
« Reply #12 on: June 04, 2015, 11:13:28 AM »
I'm planning on 8+% with a combination of real estate and index dual momentum investing.  Won't need it hopefully.   I'm old so SS and only 30 years max to live helps.  We could easily live off our combined anticipated SSI at some point.

The younger you are the lower the number should be IMHO.  If I make it to 85 I'll be dancing with a 15% draw down. 

Bateaux

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Re: What's your actual/planned SWR?
« Reply #13 on: June 04, 2015, 11:42:51 PM »
I'm starting out at 3%.  If the stash grows may increase to 4%  I have to rid myself of a bunch of money absorbing crap first.

steveo

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Re: What's your actual/planned SWR?
« Reply #14 on: June 05, 2015, 02:07:11 AM »
I'm starting out at 3%.  If the stash grows may increase to 4%  I have to rid myself of a bunch of money absorbing crap first.

I said 4% however my intention is to get to about that level and then take 3% initially. Assuming this works out and the markets don't kill me I will consider going to 5% with the proviso that I can adjust whenever I want plus I will probably save some of that 5%.

2Birds1Stone

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Re: What's your actual/planned SWR?
« Reply #15 on: June 05, 2015, 06:04:23 AM »
If I had to live off my current stache' - 17% required to support current expense level
If I cut expenses to barebones - 12%
I will quit FT work when I get to 6-8% range
Fully FIRE when I hit the 3-4% range

Easy Does It FI

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Re: What's your actual/planned SWR?
« Reply #16 on: June 09, 2015, 09:25:19 PM »
Definitely like the idea of downshifting. I was at the 4% mark by myself until I got married. The cost of all the one-time expenses has made my budget harder to track over the last 6 months.

My wife actually makes more than me, but started investing later, so she's pulling us closer to 5-6% (nothing another year or two of FT work and saving can't cure, hopefully). We're renting now, so we're hoping to save up enough for a house (in the next 12-18 months) and projecting the residual expenses and investments to come to 4%.

We'll both continue at least a side hustle to drop that SWR by at least 1%.

Erica/NWEdible

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Re: What's your actual/planned SWR?
« Reply #17 on: June 09, 2015, 09:41:18 PM »
Current 4% dead on. Targeting 3 - 3.5 % long term. I don't have a huge amount of faith in the boom-bust cycle of modern markets so a buffer and general flexibility seems prudent to me.

sol

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Re: What's your actual/planned SWR?
« Reply #18 on: June 09, 2015, 10:06:32 PM »
5% for 17 years, then closer to 2% of whatever's left.

RoadLessTravelled

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Re: What's your actual/planned SWR?
« Reply #19 on: June 10, 2015, 08:08:44 AM »
No such thing as a SWR exists however much people want to think it does.

Try finding 10 people who can tell you they have followed a SWR plan for 20 years. 

brooklynguy

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Re: What's your actual/planned SWR?
« Reply #20 on: June 10, 2015, 09:05:15 AM »
No such thing as a SWR exists however much people want to think it does.

Hrm, you sound suspiciously similar to another poster who routinely made this same false argument and who seems to have mysteriously disappeared from the forum around the same time you registered...

As has been repeatedly pointed out in various threads across the forum, the concept of a "safe withdrawal rate", as ordinarily defined in the financial planning literature and as used in this forum, is backward (not forward) looking, and, by definition, irrefutably exists -- there can be no argument that, say, 4% constituted a "safe withdrawal rate" for a 30-year retirement period for a certain asset allocation and a certain threshold setting for the percentage of historical cases in which the portfolio was not depleted to zero.  The same can be said of a 10% withdrawal rate, if you set your bar for "safe" low enough.

Quote
Try finding 10 people who can tell you they have followed a SWR plan for 20 years.

And, as has also been pointed out time and time again, exactly nobody actually algorithmically follows a precise SWR spending plan in retirement, and no one ever suggests that anyone should.  The purpose of the SWR concept is to serve as a guideline for a more comprehensive (and hopefully a flexible and adaptive) retirement plan.  When the OP asked for people's actual or planned SWRs, I believe that was shorthand for indirectly asking "what size portfolio did you retire on or plan to retire on, expressed as a multiple of your projected annual expenditures?", and not "what inflation-adjusted withdrawal rate do you plan to robotically adhere to without deviation for the entirety of your retirement period?"

Cougar

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Re: What's your actual/planned SWR?
« Reply #21 on: June 10, 2015, 09:11:17 AM »


If I collect my pension and stay in the rental business next year the WR will be 0.3%... But I doubt I will draw my pension and we will probably do some expensive travelling.. So that would put us up to the 3% range.

So 0.3 to 3% is my flexible answer.

you made me read this twice when I saw the 0.3% WR.

you must have at least 2 good rentals. that's my plan. 2 rentals and a paid off house. I figure I really wouldn't even need to withdraw unless I wanted to spend a month in Europe during their peak season.

Exflyboy

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Re: What's your actual/planned SWR?
« Reply #22 on: June 10, 2015, 11:31:43 PM »


If I collect my pension and stay in the rental business next year the WR will be 0.3%... But I doubt I will draw my pension and we will probably do some expensive travelling.. So that would put us up to the 3% range.

So 0.3 to 3% is my flexible answer.

you made me read this twice when I saw the 0.3% WR.

you must have at least 2 good rentals. that's my plan. 2 rentals and a paid off house. I figure I really wouldn't even need to withdraw unless I wanted to spend a month in Europe during their peak season.

Actually my rentals are OK, but not great.. big one in a 1996 trailer that is deteriorating.. its OK but not sure I want to maintain it forever. The small cabin makes $400 a month and is pretty ancient.. both of these places are on the same property as our house.

Our projected spend is $35k (based on last years spend plus an allowance for funding our own HC).. So the rent makes $15k, and next years pension is also $15k.. so we only have to fund $5k.. That's where the 0.3% WR came from.

If we draw my Wife's pension in 8 years time our WR would be negative if we are still renting.. but somehow I think the novelty of being a landlord will have worn off by then..:).. Besides we want to be free to travel and not mess with rentals.

Penny Lane

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Re: What's your actual/planned SWR?
« Reply #23 on: June 11, 2015, 06:38:08 AM »
I've been retired from my "big" job for almost 3 years, but I am able to do some consulting for not much time a week as is DH so the stash just grows at this point.  We may take some travel money later this year.  We can do as we please--very nice but still amazing to me--but when we quit the consulting 4% will be plenty.

deborah

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Re: What's your actual/planned SWR?
« Reply #24 on: June 11, 2015, 09:25:08 AM »
When you have a small yearly budget (amount you expect to spend), outliers can be dramatic. In my case I expect to double it in outlying years. However, most years I don't get anywhere near my budget, so on the other side I possibly use only 70% of my budget.

It doesn't really matter, as the stash grows each year.

crazycatlady

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Re: What's your actual/planned SWR?
« Reply #25 on: July 12, 2015, 08:04:49 PM »
I am 10 months into RE and so far we are at 1%, which means our spending is about the same as it was while we were working.  We are very cautious and wanted to keep our spending quite low for the first year or two.  When DH hits 50, in about 1.5 years we may increase our spending to 2%.

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Re: What's your actual/planned SWR?
« Reply #26 on: July 12, 2015, 08:30:08 PM »
Seeing how low some of these numbers are makes me realize how truly conservative many people are about this.  I say that as someone who is innately conservative.  Is it skepticism about whether the stash will hold out, or skepticism about the concept of FIRE and not wanting to do it until you feel "sure" it will work? 

I find the calculations tough because my wife currently works, claims to love working, and always sees herself working.  Given that our annual expenses have just about dropped below her post-tax salary, in theory, that makes me FI.  And with significant retirement savings, social security, etc., I estimate we have a greater than 50% chance of succeeding if I quit tomorrow.

BUT . . . I'm not going to do that.  Because I've got the best job I'm going to have making the kind of money I do, and I know I'll feel like a complete idiot if I ran out of money or had to work part-time jobs later because I didn't want to put in another 5 years.  It bums me out that I'm so risk adverse, but it looks like many others here are the same way. 

It is amusing that we are aiming for something considered so radical--early retirement--but really doing it in the most conservative way possible!

StockBeard

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Re: What's your actual/planned SWR?
« Reply #27 on: July 13, 2015, 04:47:30 PM »
It is amusing that we are aiming for something considered so radical--early retirement--but really doing it in the most conservative way possible!
Interesting thought. Early retirement involves doing lots of things conservatively indeed, but you're right that ironically, it's still a novel idea

mak

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Re: What's your actual/planned SWR?
« Reply #28 on: July 19, 2015, 11:50:02 AM »
Actual 0.7% pretax because I'm very frugal.  Age 57 and I think I need to grow portfolio for future needs, emergencies,  and unforeseen disasters.   About half rental RE no debt,  and half equities/munis.

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Re: What's your actual/planned SWR?
« Reply #29 on: July 19, 2015, 12:37:15 PM »
This impossible to answer for me until I know how long my wife will continue to work and where our stache will be at that point - we are still happily in "accumulation mode", albeit not accumulating  as quickly since I left the workforce.

I have a pretty good idea where our NW will be if my wife works another 5 years - needless to say, we are going to have to figure out how to spend more or some orca preservation society is going to get a huge chunk of change upon our departure from this life...come to think of it, I like that idea. :)

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Re: What's your actual/planned SWR?
« Reply #30 on: July 21, 2015, 07:21:51 PM »
This impossible to answer for me until I know how long my wife will continue to work and where our stache will be at that point - we are still happily in "accumulation mode", albeit not accumulating  as quickly since I left the workforce.

I have a pretty good idea where our NW will be if my wife works another 5 years - needless to say, we are going to have to figure out how to spend more or some orca preservation society is going to get a huge chunk of change upon our departure from this life...come to think of it, I like that idea. :)

That works for me too Jon.. Maybe we'll both be swallowed up the Earthquake and/or Tsunami?..:)

dude

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Re: What's your actual/planned SWR?
« Reply #31 on: July 22, 2015, 07:52:30 AM »
Had to revisit this thread after finding out my raise was larger than I thought.  Bottom line is that with the raise, my annuity payment went up a fair amount.  It will cover, believe it or not, about 95% of my current expenses for the first 7 or so years of my retirement.  Meaning that my withdrawal rate, assuming I had to withdraw to make up the shortfall (as opposed to just picking up some part-time work), would be a miniscule 0.53%.*  Some would say that I'm therefore oversaving now, but my wife does not have a pension, so she'll be 100% reliant on her 401k (at least until SS kicks in).  I want to be able to cover her shortfall (and more), so I'll continue to plow money in.  In addition, with all the hostility toward public employees and their pensions/benefits, I want to make sure I can cover us if the fuckhead politicians decide to pull the rug out from under me.

* I'm still having trouble wrapping my head around this!

deborah

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Re: What's your actual/planned SWR?
« Reply #32 on: July 22, 2015, 03:18:38 PM »
Had to revisit this thread after finding out my raise was larger than I thought.  Bottom line is that with the raise, my annuity payment went up a fair amount.  It will cover, believe it or not, about 95% of my current expenses for the first 7 or so years of my retirement.  Meaning that my withdrawal rate, assuming I had to withdraw to make up the shortfall (as opposed to just picking up some part-time work), would be a miniscule 0.53%.*  Some would say that I'm therefore oversaving now, but my wife does not have a pension, so she'll be 100% reliant on her 401k (at least until SS kicks in).  I want to be able to cover her shortfall (and more), so I'll continue to plow money in.  In addition, with all the hostility toward public employees and their pensions/benefits, I want to make sure I can cover us if the fuckhead politicians decide to pull the rug out from under me.

* I'm still having trouble wrapping my head around this!
Yes, it is amazing when you find that sort of thing out - congratulations.

dude

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Re: What's your actual/planned SWR?
« Reply #33 on: July 23, 2015, 06:49:56 AM »
Had to revisit this thread after finding out my raise was larger than I thought.  Bottom line is that with the raise, my annuity payment went up a fair amount.  It will cover, believe it or not, about 95% of my current expenses for the first 7 or so years of my retirement.  Meaning that my withdrawal rate, assuming I had to withdraw to make up the shortfall (as opposed to just picking up some part-time work), would be a miniscule 0.53%.*  Some would say that I'm therefore oversaving now, but my wife does not have a pension, so she'll be 100% reliant on her 401k (at least until SS kicks in).  I want to be able to cover her shortfall (and more), so I'll continue to plow money in.  In addition, with all the hostility toward public employees and their pensions/benefits, I want to make sure I can cover us if the fuckhead politicians decide to pull the rug out from under me.

* I'm still having trouble wrapping my head around this!
Yes, it is amazing when you find that sort of thing out - congratulations.

:-)  Thanks!

nawhite

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Re: What's your actual/planned SWR?
« Reply #34 on: July 21, 2016, 05:45:42 PM »
Saw the link to this poll from another post and had to resurrect this zombie thread because holy cow are people working too long!

I said <6% and we'll probably pull the plug right around 6% because getting from 6% to 4% is an extra like 5 years of work. F*** that. I can take those 5 years and go learn how to parasail. Or volunteer/"work" at a national park. Or work on a personal side online business that seemed interesting with effectively infinite runway. Or hike the Appalachian Trail, the Pacific Crest Trail and the Continental Divide trail. Or be a stay at home dad with my (future) kids. Or work as a kayak instructor whenever I get the chance. Or go visit Thailand. Or go spend more time with my parents if they aren't doing well. Or bike to Patagonia. And if I do all those things and I can't possibly figure out a way to have my money last me by cutting back or finding another job anywhere then I'll have to live off of social security and my kids. boo hoo, I'll have to figure out how to live on more than the average SS payment (thank you high income in these accumulation years).

arebelspy

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Re: What's your actual/planned SWR?
« Reply #35 on: July 21, 2016, 06:18:38 PM »
Yeah, when someone pointed out that if you remove the 5 worst starting years, instead of a 4% SWR, you'd have a 6.5% SWR, it made me realize we worked too long.

 I don't think last year was one of the worst 5 years ever to retire (even if it will be worse than average going forward, due to high valuations and low interest rates, it won't be the worst ever, IMO), so I think a WR of 5-6% could be completely fine.
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Re: What's your actual/planned SWR?
« Reply #36 on: July 21, 2016, 06:49:08 PM »
Good thread.  My FIRE was originally intended to be temporary or semi.  I'm at actual 6.1% and doing just fine.  I'll work 20 hours a week at Taco Bell if things get tight (just for a few years) but 4% seems SUPER conservative to me.

onlykelsey

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Re: What's your actual/planned SWR?
« Reply #37 on: July 21, 2016, 07:03:09 PM »
Yeah, when someone pointed out that if you remove the 5 worst starting years, instead of a 4% SWR, you'd have a 6.5% SWR, it made me realize we worked too long.

 I don't think last year was one of the worst 5 years ever to retire (even if it will be worse than average going forward, due to high valuations and low interest rates, it won't be the worst ever, IMO), so I think a WR of 5-6% could be completely fine.

The difference between 4 and 6.5% is so huge.  If I sold my condo (and subtracted out realtors and moving fees), I'd have 26,000 a year at 6.5% if I quit tomorrow.  Waiting to next December brings me to 44,000 a year (on my own, solo) assets at 6.5%.   

ETA: For the sake of completeness, on the 4% rule I have 16K now, and 26K next year.
« Last Edit: July 21, 2016, 07:23:17 PM by onlykelsey »

Spork

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Re: What's your actual/planned SWR?
« Reply #38 on: July 21, 2016, 07:15:04 PM »
Yeah, when someone pointed out that if you remove the 5 worst starting years, instead of a 4% SWR, you'd have a 6.5% SWR, it made me realize we worked too long.

 I don't think last year was one of the worst 5 years ever to retire (even if it will be worse than average going forward, due to high valuations and low interest rates, it won't be the worst ever, IMO), so I think a WR of 5-6% could be completely fine.

Okay... I'm not a Negative Nancy.  I'm actually fine with 4%.  I am only the Devil's Advocate here.  But wouldn't it be true that by the same logic, you could add 5 REALLY TERRIBLE YEARS and it would require 1.5%?

arebelspy

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Re: What's your actual/planned SWR?
« Reply #39 on: July 21, 2016, 07:25:05 PM »
Yeah, when someone pointed out that if you remove the 5 worst starting years, instead of a 4% SWR, you'd have a 6.5% SWR, it made me realize we worked too long.

 I don't think last year was one of the worst 5 years ever to retire (even if it will be worse than average going forward, due to high valuations and low interest rates, it won't be the worst ever, IMO), so I think a WR of 5-6% could be completely fine.

Okay... I'm not a Negative Nancy.  I'm actually fine with 4%.  I am only the Devil's Advocate here.  But wouldn't it be true that by the same logic, you could add 5 REALLY TERRIBLE YEARS and it would require 1.5%?

I guess, but that doesn't make any sense.  Those 5 negative years you're "adding" never actually happened.

The 5 negative I'm removing DID happen, but in accepting the premise I said which you quoted, you're basically saying "I don't think this is one of the worst 5 times ever, so I don't need a 4% SWR, which covers those periods, but a 6.5% would be fine, since it's not one of those 5 years."

In adding random negative years, you're positing "this WILL be worse than ever."  I'm saying someone who realizes that this year may have lower than average projections going forward, but probably not a "5 worst ever" can have substantially higher than 4% (and again, that's not even counting safety margins, like making money or reducing spending or all the other ones).
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Lagom

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Re: What's your actual/planned SWR?
« Reply #40 on: July 21, 2016, 07:35:41 PM »
I've lost too much time being an idiot to worry about any 2% nonsense. As long as I can get the wife on board, I think 5% should do just fine for us. We'll both have pensions too (barring economic disaster), so that 5% is probably still too conservative. Maybe I'll shoot for 6%...

Spork

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Re: What's your actual/planned SWR?
« Reply #41 on: July 21, 2016, 07:37:14 PM »
Yeah, when someone pointed out that if you remove the 5 worst starting years, instead of a 4% SWR, you'd have a 6.5% SWR, it made me realize we worked too long.

 I don't think last year was one of the worst 5 years ever to retire (even if it will be worse than average going forward, due to high valuations and low interest rates, it won't be the worst ever, IMO), so I think a WR of 5-6% could be completely fine.

Okay... I'm not a Negative Nancy.  I'm actually fine with 4%.  I am only the Devil's Advocate here.  But wouldn't it be true that by the same logic, you could add 5 REALLY TERRIBLE YEARS and it would require 1.5%?

I guess, but that doesn't make any sense.  Those 5 negative years you're "adding" never actually happened.

The 5 negative I'm removing DID happen, but in accepting the premise I said which you quoted, you're basically saying "I don't think this is one of the worst 5 times ever, so I don't need a 4% SWR, which covers those periods, but a 6.5% would be fine, since it's not one of those 5 years."

In adding random negative years, you're positing "this WILL be worse than ever."  I'm saying someone who realizes that this year may have lower than average projections going forward, but probably not a "5 worst ever" can have substantially higher than 4% (and again, that's not even counting safety margins, like making money or reducing spending or all the other ones).

My point is: removing actual valid data is (to me) a worse sin than being conservative and padding the data to support it.  (I went overboard on the "being conservative" as a lame attempt to prove a point.)  Bad stuff happens.  It's not the norm.  But don't ignore it.

arebelspy

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Re: What's your actual/planned SWR?
« Reply #42 on: July 21, 2016, 07:45:04 PM »
To me, it depends on why you're removing it, and if you can make a solid case for doing so.

But I'm guessing we'll have to agree to disagree on this one.  :)
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Classical_Liberal

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Re: What's your actual/planned SWR?
« Reply #43 on: July 21, 2016, 07:58:24 PM »
Obviously someone planning for a 40-50+ year retirement is taking a risk at a 6+% WR.  I would agree though, it's important to analyze outliers in data.  I've played with firecalc/cfiresim in those scenarios and a relatively small infusion of cash in bad start years solves the problem.  Everyone's situation is different, but I think the odds of someone retiring in their 30s or 40s and never, ever  earning another dime, even by accident, seems pretty unlikely as well.  With the low budgets most people on here have, it doesn't take much income to bring a 6% WR to a 4% WR for a small part of a 50 year retirement if we happen to call it quits at the wrong time.  I'd prefer a 20 percent chance of working a flexible part time schedule for a few of the next 50 years, when the alternative is 95% chance that I've worked 5 years FT too much. 

Still, the conservative in me votes for 5% :)

slowsynapse

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Re: What's your actual/planned SWR?
« Reply #44 on: July 21, 2016, 08:07:58 PM »
I am planning on 3.5% in early years just to get a comfort level.  My wife still wants to work part time, so we will really get to test our spending with a safety net.  This also gives a chance for me to decide if I want to work part time while only shortly out of work.  I also have room in the budget to get rid of some "luxury" spending which will be part of my cushion.  I think cushion in the budget is a great protector.  I used to want to work for 5 to 10 more years, but job changes have made that not realistic.  I would rather cut back on spending than kill myself at a job.

itchyfeet

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Re: What's your actual/planned SWR?
« Reply #45 on: July 21, 2016, 11:12:53 PM »
I have a difference of opinion on some posts here.

To the people that say "I live on dividends, therefore my withdrawal rate is zero", I think you should be just performing the simple calculation of Annual Spending/ Net Worth.

The SWR research includes dividends in the portfolio returns.

Just because you live off dividends (or rental income for that matter) does not make your expenditure zero. You are still taking funds from the total returns of your investments.

Metric Mouse

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Re: What's your actual/planned SWR?
« Reply #46 on: July 21, 2016, 11:22:29 PM »
Depends on the year and the markets. Last year was a big one with improving the house. This year will be a bit more frugal. First few years out of retirement I spent like a drunken sailor the night before the rapture. So hard to say; I don't know many retirees who deny themselves based on some arbitrary number in their portfolio.

For the poll, I'm up above 6%, I guess. No sense in working longer than you have to.

arebelspy

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Re: What's your actual/planned SWR?
« Reply #47 on: July 21, 2016, 11:47:45 PM »
I have a difference of opinion on some posts here.

To the people that say "I live on dividends, therefore my withdrawal rate is zero", I think you should be just performing the simple calculation of Annual Spending/ Net Worth.

The SWR research includes dividends in the portfolio returns.

Just because you live off dividends (or rental income for that matter) does not make your expenditure zero. You are still taking funds from the total returns of your investments.

Absolutely.

If your dividends pay 2.1%, and you live on that, you have a 2.1% SWR.  Should be ultra-safe, but definitely not zero.

Zero is, I suppose, if you have income to cover your spending (say, a pension?) and you literally don't touch your portfolio.

But that at point the portfolio could be $1 or $1MM, and it wouldn't matter, assuming the income source is stable in perpetuity.

But yes, people living on dividends aren't at a SWR of zero.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

mathjak107

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Re: What's your actual/planned SWR?
« Reply #48 on: July 22, 2016, 03:05:53 AM »
 this month is our first complete year retired .  we clocked in this  first year of retirement  at about 3.50%  delaying social security . once social security kicks in if we delay to 70 we drop to 2% .   that makes us a whole lot less dependent on markets ,rates and sequencing  .

« Last Edit: July 22, 2016, 03:07:45 AM by mathjak107 »

fattest_foot

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Re: What's your actual/planned SWR?
« Reply #49 on: July 22, 2016, 08:45:42 AM »
I want to pull the plug on work with a 5% SWR ($40k withdrawals on $800k savings).

I feel safe doing it though, because we only really need to make it 20 years before a combination of FERS retirement and Social Security cut that $40k in half (worst case scenario; best case, it may cover 60-80% of expenses). The worst case is built on receiving no raises, the Social Security trust fund gets depleted, and a host of other rounding down of numbers I calculated to assure myself it'd be okay.

On top of that, my wife and I will still be in our early to mid 40's, so we can always take up some extra work to bridge that 20 year gap.

 

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