Author Topic: 6.67% withdrawal rate???  (Read 3276 times)

Slow2FIRE

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6.67% withdrawal rate???
« on: September 23, 2016, 09:18:57 PM »
I was playing with CFIREsim and FIRECalc.  It seems that due to our dual pensions and highish social security, we are getting a 100% success rate using a 6.67% withdrawal rate (annual spending about 2.5x our actual minimum expenses and pensions, which kick in 12 years after retirement, cover more than our minimum expenses).

I had been considering that something like this might be the case instead of using a 4% withdrawal rate, when we hit our pensions our withdrawal rate goes so low, that I suspected we could have a high initial draw rate.  Target retirement ages: 50 (which isn't too far off).  I was originally thinking age 52 is when we would hit our target, but now 50 is very realistic.  Additionally, with such high annual spending it will be easy to back off if the plan is not going as expected.

Gotta love that pension!

arebelspy

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Re: 6.67% withdrawal rate???
« Reply #1 on: September 23, 2016, 09:46:17 PM »
Yup, SWR is built on covering all spending.  If your pension covers a large part of your spending, you can certainly withdraw higher.  :)

Heck, it took me about five seconds to come up with a scenario where you could have a WR of OVER 100%!  ;)

Definitely part of the "you've won the game" scenarios, so now you can enjoy yourself.  Congrats!
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DailyGrindFree

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Re: 6.67% withdrawal rate???
« Reply #2 on: September 23, 2016, 09:48:43 PM »
Congrats.
I will start collecting my pension @60. But planning on leaving way before that (51 possibly). It will be tough to leave knowing that every additional year of work will increase the pension amount. We will see what I do when the time comes.   

Bicycle_B

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Re: 6.67% withdrawal rate???
« Reply #3 on: September 24, 2016, 12:05:35 AM »
Congrats, Slow2Fire!  Rock on with your bad self.  Enjoy it.

You too, DailyGrindFree.

Much Fishing to Do

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Re: 6.67% withdrawal rate???
« Reply #4 on: September 24, 2016, 05:55:28 AM »
If either/both pensions are private, you may want to stress test this by cutting the pensions 25% to account for reduced payouts that may come from forced internal cuts or pension failure requiring pension insurance to kick in.  I think anyone still many years away form SS should do the same with it, as I think its extreme to consider SS not being there at all as many do, but very realistic to think the benefits will be cut (whether by cutting the amount or raising age of full retirement).

But yes, I really don't see that as a high withdraw rate for anyone who has a significant amount of their mandatory expenses covered by something so solid and automatically adjusting to inflation.

 

Wow, a phone plan for fifteen bucks!