POLL: Withdrawal Rates For Real Retirees

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Withdrawal Rate For Real Retirees

Less than 1%
46
28%
Above 1%, Below 1.5%
8
5%
Above 1.5%, Below 2%
10
6%
Above 2%, Below 2.5%
20
12%
Above 2.5%, Below 3%
19
12%
Above 3%, Below 3.5%
21
13%
Above 3.5%, Below 4%
23
14%
Above 4%, Below 5%
13
8%
Above 5%, Below 6%
3
2%
Above 6%
2
1%
 
Total votes : 165

Re: POLL: Withdrawal Rates For Real Retirees

Postby Yipee-Ki-O » Mon Mar 18, 2013 2:05 pm

tadamsmar wrote:I see some happy heirs in the future :happy

Exactly! My guess is for most Bogleheads the real question is how big a pile of money they leave behind; not the possibility of them running out of money while still kicking.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby lckamp » Mon Mar 18, 2013 2:50 pm

I've been retired for 23 years and have been generally following Taylor's approach. My portfolio has grown over this period and I'm currently using a 55% Equity( of which 45% is foreign) and 45% fixed Income.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby learning_head » Mon Mar 18, 2013 5:34 pm

Yipee-Ki-O wrote:It's worked for eight years now as my portfolio is larger now than when I retired.


Grasshopper wrote:Retired in 2006 age 54, [...] and still have more than I started with.


Sheepdog wrote:I have more than when I started. :D


lckamp wrote:I've been retired for 23 years [...] My portfolio has grown over this period


EternalOptimist wrote:Am withdrawing essentially what I've needed, investments are higher than when I retired.


This is in real, inflation-adjusted, terms, right... ? (CPI-U?) I think this is great!
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Grasshopper » Mon Mar 18, 2013 6:49 pm

learning_head wrote:
Yipee-Ki-O wrote:It's worked for eight years now as my portfolio is larger now than when I retired.


Grasshopper wrote:Retired in 2006 age 54, [...] and still have more than I started with.


Sheepdog wrote:I have more than when I started. :D


lckamp wrote:I've been retired for 23 years [...] My portfolio has grown over this period


EternalOptimist wrote:Am withdrawing essentially what I've needed, investments are higher than when I retired.


This is in real, inflation-adjusted, terms, right... ? (CPI-U?) I think this is great!


Where is the inflation? I ran a Quicken report of 2012 expenses compared to 2008-2011 average expense. On $40000 of expenses, not including taxes, but includes medical, fuel and all the core expenses. ka-ching $709.50 more spent in 2012. You can do the math, I spent that much on beer last year.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Dale_G » Mon Mar 18, 2013 7:16 pm

Forced withdrawals from the portfolio (RMDs and a fixed annuity) amount to a little more than 2%. Of this about 1/3rd goes to federal taxes and 2/3rds gets invested in the taxable account.

I suppose I "over-saved", but it was not clear at the time. And in retrospect, there was nothing that I wanted that I did not buy.

My guess is that many of those "maxing out their 401ks and IRAs" will find themselves in a similar situation later on.

It is not the worst scenario.

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Re: POLL: Withdrawal Rates For Real Retirees

Postby MnD » Mon Mar 18, 2013 9:07 pm

Yipee-Ki-O wrote:
tadamsmar wrote:I see some happy heirs in the future :happy

Exactly! My guess is for most Bogleheads the real question is how big a pile of money they leave behind; not the possibility of them running out of money while still kicking.


If after almost 35 years of saving I indicated that we withdraw"less than 1% per year" to support spending while in retirement, running out of money while still kicking would not be a possibility for me. Because my wife would kill me. :mrgreen:
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Re: POLL: Withdrawal Rates For Real Retirees

Postby mickeyd » Tue Mar 19, 2013 3:47 pm

For those of us who have chosen to not insure with LTCi and self fund this risk, we need to keep this in mind because we will always have a risk that the LTCi gang does not. It is great for me to not be receiving annual letters from my LTC carrier advising me of another 30% rate increase,but I needn't get "too big for my britches" (I have always liked that old saying) and forget that we need to have a bigger stash (be it earmarked or not) than those guys.

A bigger stash doesn't necessarily mean a bigger monthly income for us.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby EternalOptimist » Tue Mar 19, 2013 4:08 pm

I bet most peoples' withdrawal rate varies from year-to-year, it almost has to unless one is hell-bent on withdrawing a certain amount always, logically there are just too many variables at play.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Sheepdog » Tue Mar 19, 2013 5:12 pm

EternalOptimist wrote:I bet most peoples' withdrawal rate varies from year-to-year, it almost has to unless one is hell-bent on withdrawing a certain amount always, logically there are just too many variables at play.

I can't imagine all of us do not vary our withdrawals especially for big purchases like autos, house remodeling, world cruise or whatever. My goal is to average 4.5% a year, but in actuality the withdrawals over 14 years have been from 3.14% to 6.57% but the average is almost exactly 4.5%.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby SpaceCommander » Tue Mar 19, 2013 6:43 pm

I too was rather disconcerted with the large number that are withdrawing less than 1%. I guess lifelong habits are hard to break (like living well below your means). I'm still in the accumulation phase, but my knee-jerk reaction to seeing that number was hoping that I don't fall into that crowd when I get to the distribution phase. It makes me think of Scott Burns' book "Spend 'til The End" where he discusses "consumption smoothing". Of course, it's better to die rich, than die poor. But still: I'd like my family to be able to enjoy the abundance we're blessed with while I'm still with them!

For those of you familiar with the Scriptures, my mind goes to Ecclesiastes 2, "sometimes a person who has toiled with wisdom and knowledge and skill must leave everything to be enjoyed by someone who did not toil for it. This also is vanity and a great evil... There is nothing better for a person than that he should eat and drink and find enjoyment in his toil... to the sinner is given the business of gathering and collecting, only to give to one who pleases God."

So my goal is to drawdown in retirement and share my wealth with my loved ones and favorite charities while I'm still around. :beer
But who knows? I've got that same frugal habit, and might find myself in that same <1% group when the time comes.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby SteveNet » Tue Mar 19, 2013 7:44 pm

Living Frugally I have come to find is not so much a hardship after a few years starting out but becomes a way of life.
8+ years retired I still cannot break the habit and I have come to actually enjoy it.
I take comfort in not what the accounts can buy, but that they are simply there in case a need arises.
I lived simply, I enjoyed the pleasure of a simple frugal life and still do.
Not that my accounts are big by comparison to others by any means, but to me and my wife they give a feeling of well being and safety just being there.

It's nice knowing I 'can' buy a new car :shock: or a boat, or take trips 'If' we want to, and that may well happen in the future.
If the monies are left for the kids after I/we are gone then it doesn't matter as we live how we want to.

Less than 1% er and Happy. :sharebeer
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Re: POLL: Withdrawal Rates For Real Retirees

Postby jasonv » Tue Mar 19, 2013 10:58 pm

SpaceCommander wrote:I too was rather disconcerted with the large number that are withdrawing less than 1%. I guess lifelong habits are hard to break (like living well below your means). I'm still in the accumulation phase, but my knee-jerk reaction to seeing that number was hoping that I don't fall into that crowd when I get to the distribution phase. It makes me think of Scott Burns' book "Spend 'til The End" where he discusses "consumption smoothing". Of course, it's better to die rich, than die poor. But still: I'd like my family to be able to enjoy the abundance we're blessed with while I'm still with them![/i]


This could be the subject of a followup poll, but I have to wonder whether the significant proportion of < 1% responses is the result of spending in retirement being lower than expected, investment returns higher than expected, or a very significant tilt towards bequests (or some combination). Rick Ferri recently suggested a SWR of up to 5%, meaning that some retired Bogleheads might have saved five times more than than they needed to.
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Re: Withdrawal Rates For Real Retirees

Postby CaliJim » Tue Mar 19, 2013 11:51 pm

sscritic wrote:Where are the negative percentages for those of us who add to our retirement accounts from what is left over from our pensions and social security? If a positive percentage is a withdrawal, a negative percentage would be an addition.


Braggart! Said with love and admiration for your thrift and wealth. 8-)

-------------------------

OK. So.. I wasn't sure how to answer for my case... because it isn't one number.

1) retired early. 2 kids in college. withdrawal rate now is >4.5%
2) then once that is done, the plan is for the withdrawal rate to go to ~2 to 2.5% for a while
3) then at 70, once SS kicks, it will drop down to ~<1.5%, mas o menos.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby CABob » Tue Mar 19, 2013 11:59 pm

Another variable that might have a great effect on drawdown is pensions. Many DB plans have an option to take a monthly amount or a lump sum that can be rolled over into an IRA. This decision obviously has a large effect on the size of ones tax deferred accounts after retirement and also on the need for withdrawals from such accounts.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby dbr » Wed Mar 20, 2013 10:35 am

CABob wrote:Another variable that might have a great effect on drawdown is pensions. Many DB plans have an option to take a monthly amount or a lump sum that can be rolled over into an IRA. This decision obviously has a large effect on the size of ones tax deferred accounts after retirement and also on the need for withdrawals from such accounts.


Yes, and the reverse is removing assets for an annuity at one or more steps.

Another significant lump sum move is to sell a home to gain investments and exchange home ownership expenses for rental/long term care expenses.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Sidney » Wed Mar 20, 2013 10:47 am

dbr wrote:
CABob wrote:Another variable that might have a great effect on drawdown is pensions. Many DB plans have an option to take a monthly amount or a lump sum that can be rolled over into an IRA. This decision obviously has a large effect on the size of ones tax deferred accounts after retirement and also on the need for withdrawals from such accounts.


Yes, and the reverse is removing assets for an annuity at one or more steps.

Another significant lump sum move is to sell a home to gain investments and exchange home ownership expenses for rental/long term care expenses.

Another needle mover for us will be taxes. When RMDs kick in in about 9 years, our tax bill will jump considerably.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Blues » Wed Mar 20, 2013 11:01 am

Sidney wrote:Another needle mover for us will be taxes. When RMDs kick in in about 9 years, our tax bill will jump considerably.


I'm hoping to have my wife's tIRA fully converted to Roth by then to help minimize the tax bite.

Since I'll only have to pay federal tax on TSP proceeds, conversion is not an issue.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby CABob » Wed Mar 20, 2013 11:17 am

Sidney wrote: Another needle mover for us will be taxes. When RMDs kick in in about 9 years, our tax bill will jump considerably.

Tell me about it! :shock:
After DW and I turned 65, had no earned income, etc. but, before RMD there were a couple of years I paid no income tax. I was shocked the first time it happened thinking that I had made a mistake in doing taxes. And as you indicated that changed after I started taking RMD.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby lckamp » Wed Mar 20, 2013 11:49 am

In reply to learning head:

Yes, the growth in my portfolio is in real terms.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby btenny » Wed Mar 20, 2013 11:51 am

I'm curious how all those taking less than 1% are paying the taxes on RMDs from their IRAs and still not spending more than 1%. Some things just don't seem to add up. Can some of you please explain?

And a second question for this same group is who is going to inherit your left over money? Kids or charity? Or are you going to start giving some of your funds away when you get real old? Just curious.

Thanks
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Sidney » Wed Mar 20, 2013 11:53 am

btenny wrote:I'm curious how all those taking less than 1% are paying the taxes on RMDs from their IRAs and still not spending more than 1%. Some things just don't seem to add up. Can some of you please explain?

And a second question for this same group is who is going to inherit your left over money? Kids or charity? Or are you going to start giving some of your funds away when you get real old? Just curious.

Thanks
Bill

You don't have to take RMD until 70.5.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby btenny » Wed Mar 20, 2013 12:03 pm

Yes I know some of the less than 1% crowd are under 70 but many others are not so I want to know how they are handling the taxes. Plus the second question still stands about future spending plans. In my case my kids are struggling since the big downturn so I have helped them out some. So I am wondering if others are thinking they are going to help out there kids more. I know I am sort of guilty at how well off we are versus how much our kids are sweating it. But I also know I sweated it a lot when I was young and that made me more Boglehead like so maybe this is OK.

Just some thoughts
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Dale_G » Wed Mar 20, 2013 1:04 pm

btenny wrote:Yes I know some of the less than 1% crowd are under 70 but many others are not so I want to know how they are handling the taxes.

Bill

I don't have taxes withheld from SS or a small pension. I have taxes withheld at a 25% rate from annuity payments - and I have 85% of my yearly RMD withheld. As long as almost all of the RMD goes to to taxes, I take the distribution in December.

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Re: POLL: Withdrawal Rates For Real Retirees

Postby Dan999 » Wed Mar 20, 2013 3:04 pm

If, when you first retire and are living off of Social Security and taxable savings, the tax rate will be very low.

So, why not convert enough of the IRA to a Roth IRA to get up to say 15% tax rate, and pay the tax from existing savings.

Is there any reason not to do the conversion? Seems pretty clear if shoul done. Am I missing something?
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Re: POLL: Withdrawal Rates For Real Retirees

Postby SteveNet » Wed Mar 20, 2013 3:18 pm

Dan999 wrote:If, when you first retire and are living off of Social Security and taxable savings, the tax rate will be very low.

So, why not convert enough of the IRA to a Roth IRA to get up to say 15% tax rate, and pay the tax from existing savings.

Is there any reason not to do the conversion? Seems pretty clear if shoul done. Am I missing something?


That is sort of what I'm contemplating doing when I hit 62, IF I wait till age 66 for SS.
My Pension gets cut in half at age 62 putting me in a very low bracket tax wise, so for 4 years I will be able to convert IRA to Roth and pay those taxes in the 15% category from my taxable acct.
I will also have to make up the lack of 50% of my pension during that time from my taxable acct. A little balancing act.
So far Cap gains will be 0% staying in the 15% bracket from the sale of the taxable acct.

All depends on what the markets do, how things look, in the next 3 yrs. age 59 now.
That's my plan on the back burner as of now.

Edit, that would put my withdrawal % @ 2.40% to make up for the Pension part, and a bit more to do the conversion for those 4 yrs.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby CABob » Wed Mar 20, 2013 3:41 pm

Dan999 wrote:If, when you first retire and are living off of Social Security and taxable savings, the tax rate will be very low.

So, why not convert enough of the IRA to a Roth IRA to get up to say 15% tax rate, and pay the tax from existing savings.

Is there any reason not to do the conversion? Seems pretty clear if shoul done. Am I missing something?

With the usual caveat of "it depends", I think this would be a very good idea. I did not do this when in this position and it is perhaps one of my mistakes.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby mickeyd » Wed Mar 20, 2013 4:20 pm

btenny wrote:I know I am sort of guilty at how well off we are versus how much our kids are sweating it. But I also know I sweated it a lot when I was young and that made me more Boglehead like so maybe this is OK.

Just some thoughts
Bill



Well stated Bill. Same boat here. Our adult kids have struggled/are struggling BUT they will make it because they have figured out how to make it all work for their situation. This in good Bogleheadish education IMHO. Our kids will probably inherit a nice chunk of change, but it will be like found money to them.
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Re: POLL: Withdrawal Rates For Real Retirees

Postby btenny » Wed Mar 20, 2013 4:24 pm

I did the Roth conversion you describe while taking some early pensions and no SS for two years for my wifes IRA. It worked great but was extra paperwork. I did the conversion up to the top of the 15% bracket. It is even better to do the Roth conversion thing for a few years after early retirement and before taking any SS or any pensions when you are completely living on your savings. Then you can convert a lot more of your IRA $$ up to the limit of the 15% bracket.

Bill
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Re: POLL: Withdrawal Rates For Real Retirees

Postby 2beachcombers » Sat Mar 23, 2013 11:08 am

retired 13 yrs ago. Portfolio has grown 3X with 50%deferred space converted to Roths.
Withdrawals negative, pensions and SS cover 110% expenses for next 40 yrs.

RMDs start in 3 yrs, Withdrawals(fido retire planner) will will be less than 1% for the first 12 yrs, 2% for the next 10, etc

moved to no state tax state for seniors--GA
moved out of high tax state---------------VT
90% equities for 40 yrs, now 70%
pay cash --run cars to 200K miles
no mortgage, no debt
er avg 30bp
pay no interest on anything
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Re: POLL: Withdrawal Rates For Real Retirees

Postby Info_Hound » Sun Mar 24, 2013 11:34 am

I lived on my projected post retirement income for a year before actually retiring. This helped me see if retirement was possible and project my financial needs over time.

Lots of expenses in the first year of retirement, moving and buying & selling of homes in different states caused a larger withdrawl rate from my IRA the first year (2%) , however this was planned. After a year, I still have not touched my principle $ and have more $ than when I retired and began IRA withdrawls.

I have multiple pensions from companies I have worked for over the years, Social Security (that will increase in amount over time when I claim my SS benefits), a lifetime death benefit annunity and did a small monthly withdrawl from my IRA. 60% of my current income is COLA'd. No debt and own my own home so expenses are very low. :mrgreen:
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