Periodic Withdrawals

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Topic Author
CaseinPoint
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Joined: Tue Apr 28, 2009 3:51 pm

Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 5:46 pm

Hi all, I realize this is a basic question, but I wasn’t able to easily find a thread on this. If it’s been covered already and I missed it, I’d appreciate the link to the thread, and please accept my apologies.

Here’s my question about withdrawing money (original investment, dividends, ST/LT gains) from VG investments for living expenses (say in retirement).

Do you determine your SWR and:

1. Withdraw it in its entirety, as a lump sum ANNUALLY? MONTHLY? QUARTERLY?
2. Do you withdraw it at no specific periods, just depending on market performance or other factors?
3. A combination of these?

Thanks!

jebmke
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Re: Periodic Withdrawals

Post by jebmke » Mon Jan 13, 2020 5:51 pm

There are countless threads on this. And many variations.

I pull convert enough of my portfolio to cash every month in the amount needed to pay the bills in the next month. Expenses are variable month to month so having a constant cash flow would not help me.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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jfn111
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Re: Periodic Withdrawals

Post by jfn111 » Mon Jan 13, 2020 5:54 pm

Everyone does it differently but I took out a chunk of money in January, about 1.6% of the portfolio. If I need more later in the year I'll make another withdrawal. Last year I didn't need a second withdrawal but I may buy a new car this year.

Topic Author
CaseinPoint
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Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 5:54 pm

Thanks very much.

I've been doing the same so far.
jebmke wrote:
Mon Jan 13, 2020 5:51 pm
There are countless threads on this. And many variations.

I pull convert enough of my portfolio to cash every month in the amount needed to pay the bills in the next month. Expenses are variable month to month so having a constant cash flow would not help me.

dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Periodic Withdrawals

Post by dbr » Mon Jan 13, 2020 5:55 pm

I withdraw what I need to spend more or less when I need it. That tends to be variable from month to month. Our monthly spending ranges from half of average to twice average and varies a lot from year to year as well. I don't withdraw a calculated SWR because SWR is not a plan for spending but an estimate of a reasonable safe average rate of spending, keeping in mind how investments are doing and value of the portfolio. I can't imagine shackling how we live our lives to some artificial SWR theory. SWR is probably a useful planning estimate before one is retired and remains a longer range planning estimate in retirement.

Topic Author
CaseinPoint
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Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 5:56 pm

Thanks, that makes sense. You're lucky to be able to live in 1.6%. Way to go! :happy
jfn111 wrote:
Mon Jan 13, 2020 5:54 pm
Everyone does it differently but I took out a chunk of money in January, about 1.6% of the portfolio. If I need more later in the year I'll make another withdrawal. Last year I didn't need a second withdrawal but I may buy a new car this year.

Topic Author
CaseinPoint
Posts: 26
Joined: Tue Apr 28, 2009 3:51 pm

Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 5:58 pm

Thanks. I agree about the SWR as being an artificial estimate in comparison with the reality of retirement, especially in a stock market environment like we had last year.
dbr wrote:
Mon Jan 13, 2020 5:55 pm
I withdraw what I need to spend more or less when I need it. That tends to be variable from month to month. Our monthly spending ranges from half of average to twice average and varies a lot from year to year as well. I don't withdraw a calculated SWR because SWR is not a plan for spending but an estimate of a reasonable safe average rate of spending, keeping in mind how investments are doing and value of the portfolio. I can't imagine shackling how we live our lives to some artificial SWR theory. SWR is probably a useful planning estimate before one is retired and remains a longer range planning estimate in retirement.

Broken Man 1999
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Re: Periodic Withdrawals

Post by Broken Man 1999 » Mon Jan 13, 2020 6:37 pm

jebmke wrote:
Mon Jan 13, 2020 5:51 pm
There are countless threads on this. And many variations.

I pull convert enough of my portfolio to cash every month in the amount needed to pay the bills in the next month. Expenses are variable month to month so having a constant cash flow would not help me.
This is what I do, also.

Near the end of the month, I have a good idea what the bills will be for the following month. So I sell some asset (currently selling equities) and transfer enough $$$ to my credit union to pay bills to the middle of the following month. The remainder of my bills are paid during the second half of the month by my SS benefit.

My expenses are very lumpy, so no reason to set up to receive a consistant amount to my credit union.

At first I transferred a year's worth of expenses in December for the following year. Then I decided I would stay fully invested until I needed to pay my biils. I don't like cash just hanging around, as my other investments will see how lazy it is, earning some paltry sum while they are working hard for me. Cash's sloth might rub off on my good performers. :)

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Case59
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Re: Periodic Withdrawals

Post by Case59 » Mon Jan 13, 2020 6:40 pm

We mostly try to stay within dividends/interest, then at the end of year add cash as necessary to keep our cash at roughly a year's worth of expenses. Not an emergency fund exactly, more just mental bucketing/peace of mind.
"Most quotations on the internet are incorrect."-Mark Twain

rixer
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Re: Periodic Withdrawals

Post by rixer » Mon Jan 13, 2020 7:41 pm

I take my annual withdrawal once a year, place it a high interest savings and have a portion sent to my checking monthly.

Topic Author
CaseinPoint
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Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 10:55 pm

Exactly. In this great market, it may not make sense to have too much cash "just sit around" as would happen with an annual withdrawal. Of course, who knows when the market might take a turn for the worse, in which case an annual withdrawal could turn out to be a good thing.
Broken Man 1999 wrote:
Mon Jan 13, 2020 6:37 pm
At first I transferred a year's worth of expenses in December for the following year. Then I decided I would stay fully invested until I needed to pay my biils. I don't like cash just hanging around, as my other investments will see how lazy it is, earning some paltry sum while they are working hard for me. Cash's sloth might rub off on my good performers. :)

Topic Author
CaseinPoint
Posts: 26
Joined: Tue Apr 28, 2009 3:51 pm

Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 11:01 pm

Yep. we also have some cash allocated for exactly that "peace of mind" bucket. It's important, especially during choppiness.

Interesting strategy to also use it as a supplement that gets replenished annually. Makes sense.
Case59 wrote:
Mon Jan 13, 2020 6:40 pm
We mostly try to stay within dividends/interest, then at the end of year add cash as necessary to keep our cash at roughly a year's worth of expenses. Not an emergency fund exactly, more just mental bucketing/peace of mind.

Topic Author
CaseinPoint
Posts: 26
Joined: Tue Apr 28, 2009 3:51 pm

Re: Periodic Withdrawals

Post by CaseinPoint » Mon Jan 13, 2020 11:03 pm

Tried and true. Thanks.
rixer wrote:
Mon Jan 13, 2020 7:41 pm
I take my annual withdrawal once a year, place it a high interest savings and have a portion sent to my checking monthly.

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