Safe Withdrawal Rate

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

What SWR do you plan to use in retirement?

Poll ended at Thu Apr 17, 2014 4:48 pm

Less than 2.5%
24
14%
2.5%
25
14%
3.3%
55
31%
4.0%
59
33%
5.0%
9
5%
More than 5%
5
3%
 
Total votes: 177

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TheTimeLord
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Safe Withdrawal Rate

Post by TheTimeLord »

What SWR do you plan to use in retirement? Selected the closest value.
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Sidney
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Re: Safe Withdrawal Rate

Post by Sidney »

No SWR. We use the Taylor Larimore method.
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Cut-Throat
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Re: Safe Withdrawal Rate

Post by Cut-Throat »

I am using the VPW method. Variable Percentage Withdrawal. It cannot fail and it depletes my portfolio when I tell it to. And I get to start my withdrawals at 4.3%. SWR rates are very ineffective. They can fail and usually leave a Large amount on the table.

See this thread http://www.bogleheads.org/forum/viewtop ... 0&t=120430
Last edited by Cut-Throat on Mon Feb 17, 2014 4:44 pm, edited 1 time in total.
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Taylor Larimore
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Re: Safe Withdrawal Rate

Post by Taylor Larimore »

Sidney wrote:No SWR. We use the Taylor Larimore method.
StarbuxInvestor:

This is the "Taylor Larimore method":
One of the great mysteries to me are the Great Debates over Safe Withdrawal Rates (SWR).

I put "Safe Withdrawal Rate" into Google and it came up with nearly 200,000 hits. One wonders how people managed to retire without knowing their "SWR."

Mathematicians love numbers. Fortunately for them, the stock and bond markets spew-out millions of numbers every day which are carefully preserved and available for them to analyze. Unfortunately, past performance numbers do not predict future performance.

I retired in June of 1982 at the age of 57. We had about a $1 million dollar portfolio to last us the rest of our lives. I didn't know about safe withdrawal rates (the Trinity Study wasn't published until 1998). We had no computers, Internet, Monte Carlo, or sophisticated calculators. We only knew that we had to be careful to make our money last ($1M at 4% = $40,000/year before tax).

So what happened? We simply withdrew what we needed and kept an eye on our portfolio balance. Most years our balance went up and we spent the money on vacations, luxuries and charity. When our balance went down we tightened our belt and economized.

This is what most people do and it works.

"There seems to be some perverse human characteristic that likes to make easy things difficult."--Warren Buffet
Best wishes.
Taylor
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CyberBob
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Re: Safe Withdrawal Rate

Post by CyberBob »

Sidney wrote:No SWR. We use the Taylor Larimore method.
Simplest - and best - withdrawal method ever!
Pair it with the simplest - and possibly best - asset allocation method ever, a Vanguard Target Retirement fund, and you've really got something!

By the way Taylor, what was your allocation like when you retired? Anything specific that you rebalanced to, or was it more along the lines of as long as I've got some stocks and some bonds, I can't be too far wrong?

And in reply to the poll question, I'll answer none of the above, as I think that hewing to a rigid withdrawal rate is just that, too rigid. Your income during your working life likely fluctuated, and you adapted. Retirement should be similar. Stay flexible. I find it hard to envision retirees taking out a rigid inflation adjusted percentage after years like 2008 without giving it any thought.

Bob
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midareff
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Re: Safe Withdrawal Rate

Post by midareff »

I tick marked 2.5% but the last four years have been really, really good and I started at a much higher rate that portfolio growth seems to have overwhelmed. As a standard monthly staple it is 2.5% now but I will lump sum additional amounts out this year for travel and charity.
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Re: Safe Withdrawal Rate

Post by hicabob »

I plan to use the "Taylor method" too but the nice thing about SWR's is that from knowing what has worked previously, one can get a reasonably good answer to if they have "enough" or not.
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Cut-Throat
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Re: Safe Withdrawal Rate

Post by Cut-Throat »

CyberBob wrote:
Sidney wrote:No SWR. We use the Taylor Larimore method.
Simplest - and best - withdrawal method ever!
Pair it with the simplest - and possibly best - asset allocation method ever, a Vanguard Target Retirement fund, and you've really got something!
For all those reading this thread, understand that the 'Taylor Larimore method' was employed in June of 1982, which was the start of the greatest bull market in history. For this method to work as well as Mr. Larimore, you would have to believe that 2014 was the start of another Greatest Bull Market in history.

Since, I am a little more pessimistic, I will employ VPW, but continue to hope that we enjoy the good fortune of Taylor! :happy
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Re: Safe Withdrawal Rate

Post by cfs »

Leaders, good morning/afternoon/evening

Good conversation. To participate I had to pick an option, so, I marked less than 2.5% but it will depend on market conditions. The bottom line is that instead of using SWR my plan is to use TLM.

De-fine SWR: Safe Withdrawal Rate

De-fine TLM: Taylor Larimore's Method

Thanks for reading.
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jfn111
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Re: Safe Withdrawal Rate

Post by jfn111 »

When we retired we planned for a 2.5% withdrawal rate. What we found out is we don't need that much, so far, and are withdrawing less.
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cfs
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Re: Safe Withdrawal Rate

Post by cfs »

jfn111 wrote:When we retired we planned for a 2.5% withdrawal rate. What we found out is we don't need that much, so far, and are withdrawing less.
You are using TLM
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gkaplan
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Re: Safe Withdrawal Rate

Post by gkaplan »

Sidney wrote:No SWR. We use the Taylor Larimore method.
Me too.
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wrysys
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Re: Safe Withdrawal Rate

Post by wrysys »

Nice discussion and appreciate Mr. Larimore's input as usual. So the web says 1M in 1982 is equal to 2.47M today, and the average home in 1982 cost around 70K. The massive home price appreciation in the past 30 years will probably not occur in the next 30. Although I am glad we don't need to call brokers and it's easy to track one's net worth now. Mr. Larimore, did you have certain rules of thumb to keep you on target and keep expenses down? How much did variance did you have? Just curious because you are a role model!
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runner26
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Re: Safe Withdrawal Rate

Post by runner26 »

For me, I set the max withdrawal for the year at 3.5% of the year-end balance, but I don't feel compelled to withdraw it all. What I don't use goes back into the pot for the next years 3.5 % calculation. Kind of a variation of Tylor's with a cap.
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Re: Safe Withdrawal Rate

Post by Boglenaut »

No "Other" option?

We plan to accumulate as fast as we can and then decide. I doubt very much we'll just withdraw a set inflation-adjusted amount each year. We don't budget now and doubt we'll do it in retirement. We'll take what we need and want and no more. The kids will get the rest someday.
Last edited by Boglenaut on Sun Feb 16, 2014 8:12 pm, edited 1 time in total.
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Re: Safe Withdrawal Rate

Post by nisiprius »

Before retirement, how do you regulate your spending?

a) Do you read a bunch of inconsistent research studies about a "safe spending rate," based on Monte Carlo simulations of a lot of peoples' historically fluctuating salary histories?

Or

b) do you follow a version of the Taylor Larimore method?

Why wouldn't it be the same after retirement?
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FrugalInvestor
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Re: Safe Withdrawal Rate

Post by FrugalInvestor »

3.3% would be the closest number for us, although that's a 'rule of thumb' in that we take what we need (ala Taylor) but try to make that the maximum withdrawal amount. We also do not automatically apply annual inflation and tighten our belts a bit when the market dictates.

I like the feeling that I have some control and am not completely at the mercy of time and the market.
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Taylor Larimore
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Necessary and Unnecessary portfolio balances.

Post by Taylor Larimore »

wrysys wrote: Mr. Larimore, did you have certain rules of thumb to keep you on target and keep expenses down? How much variance did you have? Just curious because you are a role model!
wrysys:

Our rule of thumb was to never fall below a minimum portfolio balance that we thought "necessary." This minimum portfolio balance (after considering social security and other income) is invested mostly in bond funds and cash with little variance.

The remaining "unnecessary" balance is invested mostly in stock funds which has significant variance -- but I don't care.

Not sure about that "role model" description--but thanks.

Best wishes.
Taylor
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Re: Safe Withdrawal Rate

Post by Wildebeest »

I would love to have seen more options in the poll such dividing out, who lives the SWR rate ( retirees) and who is planning for retirement and decides on the " number" using the SWR.

I like the Taylor's method a lot and would have loved to see that as an option as well.

I think that Bobcat2 made excellent case that SWR is not the correct measure and one would need social security plus an annuity like product to be safe and I would be curious to see how popular that option would be.
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LarryG
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Re: Safe Withdrawal Rate

Post by LarryG »

I retired Dec. 31, 1998. My withdrawal rate has varied between 4.2% and 6.1% The higher numbers are a result of RMDs. My portfolio value Dec. 31, 2013 was 5.1% higher than the day I retired.
I have not tried to adhere to any set amount, but in recent years the RMDs have caused me to take more than we spend.

LarryG
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Re: Safe Withdrawal Rate

Post by BHCadet »

I voted for the 3.3% withdrawal rate.
But, in reality, I will have several withdrawal rates.
At the beginning, for the years before age 65 and pension distribution, the withdrawal rate will be higher.
When pension starts at 65, the withdrawal rate will go down to 2.5%.
When SS starts at 70, the withdrawal rate will be even lower.
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Cut-Throat
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Re: Safe Withdrawal Rate

Post by Cut-Throat »

nisiprius wrote:Before retirement, how do you regulate your spending?

a) Do you read a bunch of inconsistent research studies about a "safe spending rate," based on Monte Carlo simulations of a lot of peoples' historically fluctuating salary histories?

Or

b) do you follow a version of the Taylor Larimore method?

Why wouldn't it be the same after retirement?
Actually, I used a bunch of research studies for a "Safe Savings Rate" to project my date of retirement. I then spent what was left over. So my "safe spending rate" was the amount I had left over after I paid my Savings amount. Kind of the reverse of what I'm doing today. I always believe in a 'Plan'...Plans Work and take the Emotion out of it.
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Re: Safe Withdrawal Rate

Post by Garco »

I should call my approach the ""safe withdrawal rate"", because it is the basic approach that I'll apply to my tax deferred funds, which at this time are about 70% of my investment holdings. Because I will retire later than the age used in most SWR models, and because a substantial part of my estate is not subject to RMD's, I will basically follow the "RMD curve" for roughly the first 10 years of my retirement. This means that in my age 70.5 year, I will take out 3.65% of ca. 70% of my estate. In addition, I will have SS. I plan to draw some income from my taxable accounts, but mainly for special purchases such as a new car or for emergencies. I note that most SWR models assume a starting age of 65, not 70, and so I could in principle start withdrawing at a somewhat higher percentage rate than if I were retiring at age 65 or 66.
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Re: Safe Withdrawal Rate

Post by rustymutt »

One withdraw plan not listed is one that can change depending on the market that year. I'm not setting my withdraw rate until it's time to withdraw.
You seem to think that people will take out the same amount each year. I'd like to think I'm open to different withdraw rates depending on how the market is doing in any year. Flexibility. How about adding that option to your list?
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Re: Safe Withdrawal Rate

Post by TheTimeLord »

This is interesting. I would have thought the purpose of setting a SWR was to determine how much one needed to save for retirement.
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Re: Safe Withdrawal Rate

Post by dbr »

StarbuxInvestor wrote:This is interesting. I would have thought the purpose of setting a SWR was to determine how much one needed to save for retirement.
It is, sort of. If you want to set up a savings plan, you have to have a model for how you are going to save and invest in accumulation and how you are going to withdraw from assets during retirement. That is what is run out in all those retirement planning models, and the question of how you can spend without running out of money looms large in the outcome. Discussion comes in from at least three points.

1. People can't help themselves from tinkering with the model to see if there is a smarter way to squeeze out more income with less chance of failure. That generates all the discussion about spending models. Of course that whole discussion is irrelevant unless annuitization and also the effect of existing non-investment income streams is included in the problem. Given that the timing of those things may be quite lumpy, the simple "4%" withdrawal model is too simple to function as an actual plan.

2. One of the facts of life in investing is that specific luck dominates averages. The fate of a retirement withdrawal scheme depends more than anything else on what year a person retires and how investments behave from that point forward. A person simply cannot ignore paying attention to what is going on. Casual attention to what is actually happening is more important than precise attention to averages.

3. Even more importantly, life itself is not a plan. Stuff happens; every experience is an individual experience. A person has to adjust according to how things go.

A person's financial lifetime is an experience of successive approximations. Trying to engineer this from the start is an impossible undertaking.
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Re: Safe Withdrawal Rate

Post by Peculiar_Investor »

nisiprius wrote:Before retirement, how do you regulate your spending?

a) Do you read a bunch of inconsistent research studies about a "safe spending rate," based on Monte Carlo simulations of a lot of peoples' historically fluctuating salary histories?

Or

b) do you follow a version of the Taylor Larimore method?

Why wouldn't it be the same after retirement?
Brilliant post, as usual. :beer
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Re: Safe Withdrawal Rate

Post by Garco »

dbr wrote:
StarbuxInvestor wrote:This is interesting. I would have thought the purpose of setting a SWR was to determine how much one needed to save for retirement.
[extended but very useful text omitted for sake of brevity here]

A person's financial lifetime is an experience of successive approximations. Trying to engineer this from the start is an impossible undertaking.
Yes, yes, yes! And it's those successive approximations that make life life.
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Re: Safe Withdrawal Rate

Post by TheTimeLord »

Garco wrote:
dbr wrote:
StarbuxInvestor wrote:This is interesting. I would have thought the purpose of setting a SWR was to determine how much one needed to save for retirement.
[extended but very useful text omitted for sake of brevity here]

A person's financial lifetime is an experience of successive approximations. Trying to engineer this from the start is an impossible undertaking.
Yes, yes, yes! And it's those successive approximations that make life life.
Still not understanding why someone would expect to need 30 or 40 times expected expenses for a 30 year retirement.
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Re: Safe Withdrawal Rate

Post by Professor Emeritus »

This is all so " déjà vu all over again" (credit to Yogi Berra )


FOLKS

1) SWR like Asset allocation is a mathematical model, it is not a "real thing"
2) Models are teleological they are created "intentionally" for a purpose.
3) "Reification" is the error of treating an abstraction as if it is a "real" thing.

E.G. it is ridiculous to uses sentences like "my desired asset allocation is XYZ"
That treats asset allocation as if it is "real". It's not, it is part of a model.

(you can properly and correctly state you x stocks and Y bonds but that is not the same thing).
(I'll stop before I go off on the issue of risk)

You never bother with a model until you first ask "what are you trying to accomplish"
Then you analyze how well models fit what you are trying to accomplish.

I've worked with models in fields as different as crowd movement and military procurement. the first rule is

DO NOT CONFUSE THE MODEL WITH THE GOAL
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Re: Safe Withdrawal Rate

Post by feh »

Planning on retirement in 3 years...I chose 2.5%, because that is closest to our estimated expenses divided by portfolio value as of today (2.8%).

I believe our withdrawals will vary however, depending on portfolio performance.
Last edited by feh on Mon Feb 17, 2014 10:06 am, edited 2 times in total.
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Re: Safe Withdrawal Rate

Post by FrugalInvestor »

Professor Emeritus wrote:
DO NOT CONFUSE THE MODEL WITH THE GOAL
Some models make appropriate goals....

Image
Last edited by FrugalInvestor on Mon Feb 17, 2014 9:56 am, edited 2 times in total.
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Re: Safe Withdrawal Rate

Post by Dave55 »

Taylor, what was the % range of your withdrawals? ( I am 56 and trying to learn all I can here)
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Re: Safe Withdrawal Rate

Post by Sheepdog »

Started retirement withdrawal planning with, "we will watch our accounts and spend according to growth or decline of our savings value", ala Taylor L. The year of my retirement, 1998, the Trinity Study was published, so that gave me a number to try to stay near, but I would still watch our accounts and withdrawal strategy. (How did i know that that study would fit me, after all?) I decided to set a goal which was, I would stay within an average withdrawal rate close to 4%, but not be tied to that exact number. I picked 4.5% average per year and not adjust for inflation. Not adjusting our withdrawal rate for inflation was the key for us. As it worked out, our personal inflation rate has been less than the CPI anyway. I can spend more if I have more, but I must spend less if the market is down. That still works. In over 15 years, half way to our 30 years plan, we have more than when retirement started. I won't run out. That is very comforting.
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Re: Safe Withdrawal Rate

Post by dbr »

A factor that needs consideration is that anecdotes of success need to take account of when the retirement started. It is not a criticism of Taylor's experience, but I think I recall his retirement began around 1976, a point in time when a very high withdrawal rate would have been successful and a "Taylor method" retirement would not have been as stressed as retirements started at other times. Unfortunately those who would have retired in the really bad year of 1966 are mostly no longer around to be heard from. Those retirees would also not likely have had the opportunities to invest they way people are doing now. It would be interesting to hear tales from that cohort, however.

Taylor also did a wise thing in annuitizing some assets at an appropriate age. I don't know what his pension and SS situation might have been, but that is important as well.
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Re: Safe Withdrawal Rate

Post by Cut-Throat »

dbr wrote: Unfortunately those who would have retired in the really bad year of 1966 are mostly no longer around to be heard from. Those retirees would also not likely have had the opportunities to invest they way people are doing now. It would be interesting to hear tales from that cohort, however.
They all had pensions back then.... Most did not even invest in the markets.
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Re: Safe Withdrawal Rate

Post by Peter Foley »

Starbucksinvestor

I too found the SWR to be most helpful in planning. We've been retired for about a year and a half and montior things along the line of what Taylor suggested. With an extraordinary year in the market last year our total assets have increased while our savings and checking accounts decreased. I planned retirement based on 4%, but we are spending in the neighborhood of 2.5%.
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Re: Safe Withdrawal Rate

Post by FrugalInvestor »

Cut-Throat wrote:
dbr wrote: Unfortunately those who would have retired in the really bad year of 1966 are mostly no longer around to be heard from. Those retirees would also not likely have had the opportunities to invest they way people are doing now. It would be interesting to hear tales from that cohort, however.
They all had pensions back then.... Most did not even invest in the markets.
On the average most only lived a few years beyond retirement age in 1966....

http://demog.berkeley.edu/~andrew/1918/figure2.html
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Re: Safe Withdrawal Rate

Post by HomerJ »

StarbuxInvestor wrote:Still not understanding why someone would expect to need 30 or 40 times expected expenses for a 30 year retirement.
Recency basis... interest rates have been low for a few years now, so people expect them to remain low for the next 30 years.

There have been some papers by "experts" who make starting assumptions/predictions that make it seem that 2.5% or 3% SWR is the only way to get a 100% success. I don't believe their starting assumptions/predictions are accurate... For one, they see interest rates taking 15-20 years to get back to even the 4% range.

Anyway 4% SWR worked in the past during the worst times... People seem to think 4% was for "normal" times, and now that times look bad going forward, we should drop to 3%... But "normal" times in the past, you could withdraw 5% or 6%... 4% already accounts for "bad" times... 4% worked during the Great Depression... 4% worked during the 60s and 70s when stocks went nowhere, bonds were in a rising interest rate environment, and we had high inflation at the end of that period...

And still 4% worked.

I think 4% (or 25x expenses) is an excellent and conservative goal.
Last edited by HomerJ on Mon Feb 17, 2014 11:41 am, edited 2 times in total.
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Re: Safe Withdrawal Rate

Post by HomerJ »

feh wrote:Planning on retirement in 3 years...I chose 2.5%, because that is closest to our estimated expenses divided by portfolio value as of today (2.8%).

I believe our withdrawals will vary however, depending on portfolio performance.
What keeps you from retiring today with a 3% (or 3.2%) SWR? Just curious.
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Re: Safe Withdrawal Rate

Post by goodenyou »

IMO, the linchpin to a Safe Withdrawal Rate is to have the lowest fixed or recurring costs possible when entering retirement. A paid off house and no consumer debt is important, if not imperative. If your ability to spend discretionarily is governed by investment return, and you have had the mindset to live at or below your means most of your life, you should not have difficulty having your money outlive you. You will always throttle back when necessary, because you have the ability to do so. If most of your expenses are covered by guaranteed income, the only challenge is extraordinary or discretionary expenses. For some, the idea of a maximal SWR, is often a mathematical and theoretical academic exercise, since most who use their brainpower to calculate this number have spent most of their lives in the land of Bogleian Frugality. IMO, a lot of savers who have spent most of their lives accumulating, don't become voracious consumers. Sorry if I have stated the obvious or have reiterated the TLM.
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Re: Safe Withdrawal Rate

Post by peppers »

FrugalInvestor wrote:
Professor Emeritus wrote:
DO NOT CONFUSE THE MODEL WITH THE GOAL
Some models make appropriate goals....

Image

Those models tend to project high maintenance costs.
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Re: Safe Withdrawal Rate

Post by cherijoh »

LarryG wrote:I retired Dec. 31, 1998. My withdrawal rate has varied between 4.2% and 6.1% The higher numbers are a result of RMDs. My portfolio value Dec. 31, 2013 was 5.1% higher than the day I retired.
I have not tried to adhere to any set amount, but in recent years the RMDs have caused me to take more than we spend.

LarryG
Larry, if you are simply withdrawing it from a tax-advantaged account but not spending it, then I don't think it counts as a withdrawal in the context of SWR. You would consider your taxable and tax-deferred portfolios together in this instance.
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Re: Safe Withdrawal Rate

Post by dbr »

cherijoh wrote:
LarryG wrote:I retired Dec. 31, 1998. My withdrawal rate has varied between 4.2% and 6.1% The higher numbers are a result of RMDs. My portfolio value Dec. 31, 2013 was 5.1% higher than the day I retired.
I have not tried to adhere to any set amount, but in recent years the RMDs have caused me to take more than we spend.

LarryG
Larry, if you are simply withdrawing it from a tax-advantaged account but not spending it, then I don't think it counts as a withdrawal in the context of SWR. You would consider your taxable and tax-deferred portfolios together in this instance.
Exactly right. An RMD is just effectively a transfer from tax deferred to taxable accounts. If you actually deposit the RMD in your checking account and then go out and buy a yacht, then it is a withdrawal. Note yachts that fit in the bathtub still count.
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Re: Safe Withdrawal Rate

Post by cherijoh »

goodenyou wrote:IMO, the linchpin to a Safe Withdrawal Rate is to have the lowest fixed or recurring costs possible when entering retirement. A paid off house and no consumer debt is important, if not imperative. If your ability to spend discretionarily is governed by investment return, and you have had the mindset to live at or below your means most of your life, you should not have difficulty having your money outlive you. You will always throttle back when necessary, because you have the ability to do so. If most of your expenses are covered by guaranteed income, the only challenge is extraordinary or discretionary expenses. For some, the idea of a maximal SWR, is often a mathematical and theoretical academic exercise, since most who use their brainpower to calculate this number have spent most of their lives in the land of Bogleian Frugality. IMO, a lot of savers who have spent most of their lives accumulating, don't become voracious consumers. Sorry if I have stated the obvious or have reiterated the TLM.
+1 You are probably preaching to the choir here, but in the general population this philosophy might come as a big surprise. I know plenty of people very close to retirement who are buying homes and taking out 30 year mortgages.
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FrugalInvestor
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Re: Safe Withdrawal Rate

Post by FrugalInvestor »

cherijoh wrote:
goodenyou wrote:IMO, the linchpin to a Safe Withdrawal Rate is to have the lowest fixed or recurring costs possible when entering retirement. A paid off house and no consumer debt is important, if not imperative. If your ability to spend discretionarily is governed by investment return, and you have had the mindset to live at or below your means most of your life, you should not have difficulty having your money outlive you. You will always throttle back when necessary, because you have the ability to do so. If most of your expenses are covered by guaranteed income, the only challenge is extraordinary or discretionary expenses. For some, the idea of a maximal SWR, is often a mathematical and theoretical academic exercise, since most who use their brainpower to calculate this number have spent most of their lives in the land of Bogleian Frugality. IMO, a lot of savers who have spent most of their lives accumulating, don't become voracious consumers. Sorry if I have stated the obvious or have reiterated the TLM.
+1 You are probably preaching to the choir here, but in the general population this philosophy might come as a big surprise. I know plenty of people very close to retirement who are buying homes and taking out 30 year mortgages.
I think you're right on point goodenyou. My wife and I had a discussion along the same lines recently. We have for some time now seasonally rented homes in a 55+ community where it is commonplace for second homes to be purchased and often mortgaged. Many of the people doing this are still employed or have sources of income (SS + pension) to cover this expense. Being relatively young and early retired we do not. My statement to her was that we have no fixed income so my goal is to minimize our fixed expenses. I don't think she had looked at it that way before and so it really seemed to hit home with her. She now seems much more understanding of my desire to rent rather than purchase a second home and take on the associated ongoing expenses that cannot be easily eliminated.
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Re: Safe Withdrawal Rate

Post by richard »

FrugalInvestor wrote:
Cut-Throat wrote:
dbr wrote: Unfortunately those who would have retired in the really bad year of 1966 are mostly no longer around to be heard from. Those retirees would also not likely have had the opportunities to invest they way people are doing now. It would be interesting to hear tales from that cohort, however.
They all had pensions back then.... Most did not even invest in the markets.
On the average most only lived a few years beyond retirement age in 1966....

http://demog.berkeley.edu/~andrew/1918/figure2.html
That appears to be a table of life expectancy at birth. It would be more relevant to see a table of life expectancy from age 65. Those who reach 65 life more than a few years beyond 65.
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Re: Safe Withdrawal Rate

Post by Cut-Throat »

richard wrote:That appears to be a table of life expectancy at birth. It would be more relevant to see a table of life expectancy from age 65. Those who reach 65 life more than a few years beyond 65.
Agree, most of the gains in life expectancy were in the areas of infant mortality. Anecdotally, all of my relatives born in the late 1800s lived well into their late 80s and mid 90s. And all of males had Pensions!
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Leif
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Re: Safe Withdrawal Rate

Post by Leif »

5%, but 5% based on the market value each year. Not a 5% at the start with an inflation calculation boost each year.

Plus that is max. If I don't use it that is fine, it rolls over. Or, it is can saved for a larger expense, such as a new car.
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Re: Safe Withdrawal Rate

Post by Clearly_Irrational »

HomerJ wrote:Anyway 4% SWR worked in the past during the worst times...
If by "worked" you mean a 5% failure rate, then yes. Personally, I want a system that would have "worked" 100% of the time under known historical scenarios, which leaves you closer to 3.4% or so given the same methodology.
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