Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

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Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

marcopolo wrote: Tue Jul 05, 2022 5:27 pm
Marseille07 wrote: Tue Jul 05, 2022 5:09 pm
marcopolo wrote: Tue Jul 05, 2022 5:06 pm You seem to keep implying that spending from a cash stock pile is not a withdrawal from your portfolio. Where does all this cash come from, some magic fountain?
Cash is part of my AA, I thought I made this clear multiple times.
Then what does your WR have to do with replenishing your cash portion? Once you have spent the money, you have affected your WR. How you choose to balance your AA within in your portfolio does not affect your WR.

You have repeatedly made statements that imply you believe only selling equities counts towards your WR. So, maybe that is the misunderstanding I am having.

Perhaps you could clear that up. Do you consider cash as part of your portfolio? Does spending the cash count as a withdrawal from your portfolio that contributes to your WR?

Let say you have $900k in equities and $100k in cash.

1) What is your AA?

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.

So, you now have $850K in equities and $60k in cash

2) What is your AA now?

3) What was your WR?


Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.

So, now you have $830k in equities and $80k in cash

4) What is your AA?

5) What was your WR?
I think one fundamental misunderstanding is this: "You spend $50k on living expenses from equities."

No, you *never* spend $50K of living expenses from equities unless you have credit card bills payable by equities. That's what the cash is for.

Besides, I don't know why you come after me when personal finance is personal. I know what I'm doing, but you don't have to understand what I do.
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9-5 Suited
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by 9-5 Suited »

Marseille07 wrote: Tue Jul 05, 2022 4:12 pm That said, I'd rather hit my 3% WR every month than have something like 5% that I almost never hit, but I might - not because I spend a lot, but because of big purchases such as a car.
This is an issue where one's accounting preferences play an interesting role. If you are focused on cash flows, then buying a car (in cash, outright) can make your WR% spike way up and then go way down in subsequent years. But if you use a depreciation schedule and hit your income/expense statement every year with a charge equal to (Car Price - Residual Value) / Useful Life then that smooths the event.

I like doing it the second way because it leads to less mental trickery. For example, one could take out an undesirable loan to buy the car just to spread out the payments and have a smoother WR%. However, cash flow is really what matters when evaluating SORR, so the cash flow approach is totally defensible, too.

But perhaps more to the point - this kind of thing is why I don't worry about ANY rigid spending rule. I trust myself to have a disciplined spending plan over a long period of time that accounts for such purchases in an average overall budget.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

Marseille07 wrote: Tue Jul 05, 2022 5:31 pm
marcopolo wrote: Tue Jul 05, 2022 5:27 pm
Marseille07 wrote: Tue Jul 05, 2022 5:09 pm
marcopolo wrote: Tue Jul 05, 2022 5:06 pm You seem to keep implying that spending from a cash stock pile is not a withdrawal from your portfolio. Where does all this cash come from, some magic fountain?
Cash is part of my AA, I thought I made this clear multiple times.
Then what does your WR have to do with replenishing your cash portion? Once you have spent the money, you have affected your WR. How you choose to balance your AA within in your portfolio does not affect your WR.

You have repeatedly made statements that imply you believe only selling equities counts towards your WR. So, maybe that is the misunderstanding I am having.

Perhaps you could clear that up. Do you consider cash as part of your portfolio? Does spending the cash count as a withdrawal from your portfolio that contributes to your WR?

Let say you have $900k in equities and $100k in cash.

1) What is your AA?

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.

So, you now have $850K in equities and $60k in cash

2) What is your AA now?

3) What was your WR?


Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.

So, now you have $830k in equities and $80k in cash

4) What is your AA?

5) What was your WR?
I think one fundamental misunderstanding is this: "You spend $50k on living expenses from equities."

No, you *never* spend $50K of living expenses from equities. That's what the cash is for.

Besides, I don't know why you come after me when personal finance is personal. I know what I'm doing, but you don't have to understand what I do.
Unless you have a magical source for the cash, you will be spending from equities whether you want to believe it or not. What do you suppose happens when you replenish the cash from equities?

Fair enough, but then what's the point of you telling us all what you do, if not to stimulate discussion?
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canadianbacon
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by canadianbacon »

Zeno wrote: Tue Jul 05, 2022 9:58 am I'm somewhat surprised that the returns from OP's survey so far are largely "ad hoc" and moderately disparaging of withdrawal approaches (e.g., "voodoo math," "just subtraction," etc.). If that's the case, I'm not sure what all of the angst is in nearly all of the other threads regarding financial planning for retirement.
You're probably seeing the difference between boomers (maybe the richest generation of retirees ever and that will ever be) and younger generations for whom much less is certain.

Anyway, it's VPW here. My base expenses are well below my withdrawal amount, so it's really just a question of how much splurging I get to do. The difference between VPW and "ad hoc" is putting a number on that amount instead of winging it.
Last edited by canadianbacon on Tue Jul 05, 2022 5:43 pm, edited 1 time in total.
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Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

marcopolo wrote: Tue Jul 05, 2022 5:37 pm Unless you have a magical source for the cash, you will be spending from equities whether you want to believe it or not. What do you suppose happens when you replenish the cash from equities?

Fair enough, but then what's the point of you telling us all what you do, if not to stimulate discussion?
OK so let's revisit your questions.

Let say you have $900k in equities and $100k in cash.
1) What is your AA? 90/10

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.
So, you now have $850K in equities and $60k in cash
2) What is your AA now? 93/7
3) What was your WR? My WR is always 3%. In this case, I'd slash 25.5K of equities assuming the balance stays.

Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.
So, now you have $830k in equities and $80k in cash
4) What is your AA? 91/9
5) What was your WR? 3%. In this case, I'd slash 24.9K of equities assuming the balance stays.
Last edited by Marseille07 on Tue Jul 05, 2022 5:54 pm, edited 1 time in total.
Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

9-5 Suited wrote: Tue Jul 05, 2022 5:34 pm This is an issue where one's accounting preferences play an interesting role. If you are focused on cash flows, then buying a car (in cash, outright) can make your WR% spike way up and then go way down in subsequent years. But if you use a depreciation schedule and hit your income/expense statement every year with a charge equal to (Car Price - Residual Value) / Useful Life then that smooths the event.

I like doing it the second way because it leads to less mental trickery. For example, one could take out an undesirable loan to buy the car just to spread out the payments and have a smoother WR%. However, cash flow is really what matters when evaluating SORR, so the cash flow approach is totally defensible, too.

But perhaps more to the point - this kind of thing is why I don't worry about ANY rigid spending rule. I trust myself to have a disciplined spending plan over a long period of time that accounts for such purchases in an average overall budget.
I feel the notion of WR is quite different.

To me, I *set* WR% and withdraw accordingly, treating it as the ceiling. I don't measure what my WR% was after the fact, unless I really run into some trouble where I have to go over my pre-set WR%.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

canadianbacon wrote: Tue Jul 05, 2022 5:37 pm
Zeno wrote: Tue Jul 05, 2022 9:58 am I'm somewhat surprised that the returns from OP's survey so far are largely "ad hoc" and moderately disparaging of withdrawal approaches (e.g., "voodoo math," "just subtraction," etc.). If that's the case, I'm not sure what all of the angst is in nearly all of the other threads regarding financial planning for retirement.
You're probably seeing the difference between boomers (maybe the richest generation of retirees ever and that will ever be) and younger generations for whom much less is certain.
I think it is more a split between those that are already retired (especially those at least a few years in whobjave benefitted from really good market performance) vs. those that are still in the planning phases.

When we were in the planning phases, I poured over various withdrawal strategies. I even have a hard copy of McClung's book. Created all sorts of spreadsheets. This was mostly to give us some comfort that we were ready to pull the plug.

We retired in early 2018 at age 51. We set up rough guard rails on the ceiling of spending, but essentially used the ad hoc approach. What we quickly discovered is that we were not spending anywhere near our guard rails. The portfolio kept getting bigger as well. So, the ad hoc approach is working fine, so no need to do anything more structured.

I do still have very rough guard rails in the back of my head. If markets have really bad, prolonged down turns (certainly possible), there is a good chance those guard rails will be hit, and we may need to pay closer attention to a more structured spending plan. I suspect the same is true for many people that have said they follow an ad hoc approach.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by HeavyChevy »

AerialWombat wrote: Tue Jul 05, 2022 4:06 pm
Marseille07 wrote: Tue Jul 05, 2022 3:26 pm
AerialWombat wrote: Tue Jul 05, 2022 12:57 pm "Ad hoc" seems to be the popular answer, and I'm probably in that bucket, too. I base my retirement plan modeling on a 5% withdrawal rate ceiling, but my model also shows that I never actually hit that ceiling.

Over the next few months, I'm determining what my actual portfolio will look like in the decumulation phase. It will have some cash, some more cash, lots of cash-equivalent, and lots of fixed income that's easily converted to cash. I'll probably do some type of duration-matching. Based on my projections, I'll never actually need to draw from the equity side of my 30/70 portfolio, and plan to live on just rental income, dividends, interest, and fixed income drawdown until Social Security.
Why do you think you won't hit the 5% ceiling? Imo one could easily hit that if they want to, such as traveling to Europe flying first class. This is why I don't like to set the ceiling that high assuming you won't hit it.
I'm not one of the people that generally wants to. Almost 40% of my current spending is already discretionary, mostly travel and adventure experiences, boating, other hobbies. I've allowed myself significant lifestyle creep over the last two years in particular, and I've effectively run out of new things I want to start spending money on. In fact, by the end of the year I'll have reduced my monthly spending by about 15%, by eliminating my marina slip and a couple other things.

Basically, I just don't live the kind of lifestyle that the typical American does. I spend too much money to appease the leanFIRE or Mr. Money Mustache crowd, and spend too little money to appease many vocal Bogleheads, and I'm OK with that.
Marina slip is absolute first priority!

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marcopolo
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

Marseille07 wrote: Tue Jul 05, 2022 5:41 pm
marcopolo wrote: Tue Jul 05, 2022 5:37 pm Unless you have a magical source for the cash, you will be spending from equities whether you want to believe it or not. What do you suppose happens when you replenish the cash from equities?

Fair enough, but then what's the point of you telling us all what you do, if not to stimulate discussion?
OK so let's revisit your questions.

Let say you have $900k in equities and $100k in cash.
1) What is your AA? 90/10

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.
So, you now have $850K in equities and $60k in cash
2) What is your AA now? 93/7
3) What was your WR? My WR is always 3%. In this case, I'd draw 25.5K/year

Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.
So, now you have $830k in equities and $80k in cash
4) What is your AA? 91/9
5) What was your WR? 3%. In this case, I'd draw 24.9K/year
OK. Thank you for the clarification. This explains all the confusion I was having with your stated approach.

It seems you consider the cash a part of your portfolio when computing your AA. But, do not consider it part of your portfolio when computing WR.

I think most people consider their portfolio as a whole.
In either scenario, they had $1M to start with and spent $90k that year. Their WR was 9%. If viewed this way, hiw you move money around between asset classes does not change your WR.

Anyway, as long as it works for you, go for it.

Although, as I said before, it does make conversations confusing when you make up definitions of your own that is quite different than is normally understood.

Good luck to you.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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retiredjg
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by retiredjg »

Marseille07 wrote: Tue Jul 05, 2022 5:31 pm I think one fundamental misunderstanding is this: "You spend $50k on living expenses from equities."

No, you *never* spend $50K of living expenses from equities unless you have credit card bills payable by equities. That's what the cash is for.

Besides, I don't know why you come after me when personal finance is personal. I know what I'm doing, but you don't have to understand what I do.
I don't think anyone is "coming after" you. The problem is that it appears (it is never really clear) that you consider cash as part of your AA but you don't consider using cash part of your withdrawal rate.

I won't tell you that is wrong. As you said, personal finance is personal.

But since you use a different definition of "withdrawal rate" than everybody else, it is impossible to have an intelligent conversation about withdrawal rates or withdrawal methods.

You are talking about apples and everybody else is talking about oranges. It just creates chaos, the threads get derailed, nothing is learned by anybody and new people can't even figure out what the conversations mean.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

marcopolo wrote: Tue Jul 05, 2022 5:57 pm
Marseille07 wrote: Tue Jul 05, 2022 5:41 pm
marcopolo wrote: Tue Jul 05, 2022 5:37 pm Unless you have a magical source for the cash, you will be spending from equities whether you want to believe it or not. What do you suppose happens when you replenish the cash from equities?

Fair enough, but then what's the point of you telling us all what you do, if not to stimulate discussion?
OK so let's revisit your questions.

Let say you have $900k in equities and $100k in cash.
1) What is your AA? 90/10

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.
So, you now have $850K in equities and $60k in cash
2) What is your AA now? 93/7
3) What was your WR? My WR is always 3%. In this case, I'd draw 25.5K/year

Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.
So, now you have $830k in equities and $80k in cash
4) What is your AA? 91/9
5) What was your WR? 3%. In this case, I'd draw 24.9K/year
OK. Thank you for the clarification. This explains all the confusion I was having with your stated approach.

It seems you consider the cash a part of your portfolio when computing your AA. But, do not consider it part of your portfolio when computing WR.

I think most people consider their portfolio as a whole.
In either scenario, they had $1M to start with and spent $90k that year. Their WR was 9%. If viewed this way, hiw you move money around between asset classes does not change your WR.

Anyway, as long as it works for you, go for it.

Although, as I said before, it does make conversations confusing when you make up definitions of your own that is quite different than is normally understood.

Good luck to you.
:oops: We're actually talking about the same thing.

1M portfolio running 900K/100K and spending 90K is obviously 9%, both in your math and mine.

In my method, I sell 81K worth of equities (9% of 900K), the proceeds go onto my cash pile (819K/181K). Now draw down 90K from the fixed income side...we have 819K/91K, or 90/10.

I'm surprised many posters got confused by this simple math.
Last edited by Marseille07 on Tue Jul 05, 2022 6:35 pm, edited 5 times in total.
Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

retiredjg wrote: Tue Jul 05, 2022 5:59 pm
Marseille07 wrote: Tue Jul 05, 2022 5:31 pm I think one fundamental misunderstanding is this: "You spend $50k on living expenses from equities."

No, you *never* spend $50K of living expenses from equities unless you have credit card bills payable by equities. That's what the cash is for.

Besides, I don't know why you come after me when personal finance is personal. I know what I'm doing, but you don't have to understand what I do.
I don't think anyone is "coming after" you. The problem is that it appears (it is never really clear) that you consider cash as part of your AA but you don't consider using cash part of your withdrawal rate.

I won't tell you that is wrong. As you said, personal finance is personal.

But since you use a different definition of "withdrawal rate" than everybody else, it is impossible to have an intelligent conversation about withdrawal rates or withdrawal methods.

You are talking about apples and everybody else is talking about oranges. It just creates chaos, the threads get derailed, nothing is learned by anybody and new people can't even figure out what the conversations mean.
Nope. See my response to marcopolo above. Same thing.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by AerialWombat »

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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by lws »

Pension, annuity, SS, and RMDs do the job.
No need to raid the stash.
marcopolo
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

Marseille07 wrote: Tue Jul 05, 2022 6:03 pm
marcopolo wrote: Tue Jul 05, 2022 5:57 pm
Marseille07 wrote: Tue Jul 05, 2022 5:41 pm
marcopolo wrote: Tue Jul 05, 2022 5:37 pm Unless you have a magical source for the cash, you will be spending from equities whether you want to believe it or not. What do you suppose happens when you replenish the cash from equities?

Fair enough, but then what's the point of you telling us all what you do, if not to stimulate discussion?
OK so let's revisit your questions.

Let say you have $900k in equities and $100k in cash.
1) What is your AA? 90/10

You spend $50k on living expenses from equities.
You spend $40k on a new car from the cash, and do not replenish it from equities.
So, you now have $850K in equities and $60k in cash
2) What is your AA now? 93/7
3) What was your WR? My WR is always 3%. In this case, I'd draw 25.5K/year

Let's say instead you did replenish half the money spent fir the car, selling $20k of equities to partially refill cash.
So, now you have $830k in equities and $80k in cash
4) What is your AA? 91/9
5) What was your WR? 3%. In this case, I'd draw 24.9K/year
OK. Thank you for the clarification. This explains all the confusion I was having with your stated approach.

It seems you consider the cash a part of your portfolio when computing your AA. But, do not consider it part of your portfolio when computing WR.

I think most people consider their portfolio as a whole.
In either scenario, they had $1M to start with and spent $90k that year. Their WR was 9%. If viewed this way, hiw you move money around between asset classes does not change your WR.

Anyway, as long as it works for you, go for it.

Although, as I said before, it does make conversations confusing when you make up definitions of your own that is quite different than is normally understood.

Good luck to you.
:oops: We're actually talking about the same thing.

1M portfolio running 900K/100K and spending 90K is obviously 9%, both in your math and mine.

In my method, I sell 81K worth of equities (9% of 900K), the proceeds go onto my cash pile (819K/181K). Now draw down 90K from the fixed income side...we have 819K/91K, or 90/10.

I'm surprised many posters got confused by this simple math.
This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

retiredjg wrote: Tue Jul 05, 2022 5:59 pm
Marseille07 wrote: Tue Jul 05, 2022 5:31 pm I think one fundamental misunderstanding is this: "You spend $50k on living expenses from equities."

No, you *never* spend $50K of living expenses from equities unless you have credit card bills payable by equities. That's what the cash is for.

Besides, I don't know why you come after me when personal finance is personal. I know what I'm doing, but you don't have to understand what I do.
I don't think anyone is "coming after" you. The problem is that it appears (it is never really clear) that you consider cash as part of your AA but you don't consider using cash part of your withdrawal rate.

I won't tell you that is wrong. As you said, personal finance is personal.

But since you use a different definition of "withdrawal rate" than everybody else, it is impossible to have an intelligent conversation about withdrawal rates or withdrawal methods.

You are talking about apples and everybody else is talking about oranges. It just creates chaos, the threads get derailed, nothing is learned by anybody and new people can't even figure out what the conversations mean.
Thanks. For a while there I was questioning if I was maybe the only being confused here.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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celia
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by celia »

CloseEnough wrote: Tue Jul 05, 2022 11:44 am I suspect the reason for the ad hoc approach by so many is because the wealth they've accumulated is so large as to create a substantial buffer so the angst is not needed. Except in cases of truly extreme wealth relative to expenses, I'm sure most are still reevaluating and considering overall financial picture to determine that the ad hoc approach, without the angst, is still ok. So the angst reflected in financial planning for retirement is to get there, and once there if you have enough you just wing it. Those with less buffer may use more analytical methods for withdrawal.
No, you don't have to have that much wealth. (We don't.) You just have to have LOWER EXPENSES than you had when working. As we were getting ready to retire, our mortgage was paid off, the last kid was finishing college, and we had "enough" in retirement accounts. Since those expenses were over half of our overall expenses, I felt that we were ready.

Although our pension income and SS more than meet our needs, we are neither adding to or withdrawing from our portfolio. We gift our excess income to our kids or charities. I spent the first 10 years of retirement converting as much of our tax-deferred accounts as we could. After age 70.5, we started QCDs so now we never have to worry about RMDs (and the taxes they incur). I am trying to simplify things and position our portfolio in fewer assets so it can run on automatic and continue to grow, when the markets recover.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by fposte »

Mike Scott wrote: Tue Jul 05, 2022 12:19 pm Over planning and optimizing seems to be very common for accumulation stages of life. And then, when you "get there" a continuation of a similar and ingrained lifestyle and budget will likely keep you on track without too much analysis.
I'm finding that true for me. I budgeted and spreadsheeted like crazy when working and I still track expenses, and I live in a LCOL area. I don't need to know exactly what percentage of my assets I've spent to know I'm staying within safe spending.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Zeno »

celia wrote: Tue Jul 05, 2022 7:13 pm
CloseEnough wrote: Tue Jul 05, 2022 11:44 am I suspect the reason for the ad hoc approach by so many is because the wealth they've accumulated is so large as to create a substantial buffer so the angst is not needed. Except in cases of truly extreme wealth relative to expenses, I'm sure most are still reevaluating and considering overall financial picture to determine that the ad hoc approach, without the angst, is still ok. So the angst reflected in financial planning for retirement is to get there, and once there if you have enough you just wing it. Those with less buffer may use more analytical methods for withdrawal.
No, you don't have to have that much wealth. (We don't.) You just have to have LOWER EXPENSES than you had when working. As we were getting ready to retire, our mortgage was paid off, the last kid was finishing college, and we had "enough" in retirement accounts. Since those expenses were over half of our overall expenses, I felt that we were ready.

Although our pension income and SS more than meet our needs, we are neither adding to or withdrawing from our portfolio. We gift our excess income to our kids or charities. I spent the first 10 years of retirement converting as much of our tax-deferred accounts as we could. After age 70.5, we started QCDs so now we never have to worry about RMDs (and the taxes they incur). I am trying to simplify things and position our portfolio in fewer assets so it can run on automatic and continue to grow, when the markets recover.
Interesting
Last edited by Zeno on Mon Jul 11, 2022 8:22 pm, edited 1 time in total.
Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
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9-5 Suited
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by 9-5 Suited »

Marseille07 wrote: Tue Jul 05, 2022 5:43 pm
9-5 Suited wrote: Tue Jul 05, 2022 5:34 pm This is an issue where one's accounting preferences play an interesting role. If you are focused on cash flows, then buying a car (in cash, outright) can make your WR% spike way up and then go way down in subsequent years. But if you use a depreciation schedule and hit your income/expense statement every year with a charge equal to (Car Price - Residual Value) / Useful Life then that smooths the event.

I like doing it the second way because it leads to less mental trickery. For example, one could take out an undesirable loan to buy the car just to spread out the payments and have a smoother WR%. However, cash flow is really what matters when evaluating SORR, so the cash flow approach is totally defensible, too.

But perhaps more to the point - this kind of thing is why I don't worry about ANY rigid spending rule. I trust myself to have a disciplined spending plan over a long period of time that accounts for such purchases in an average overall budget.
I feel the notion of WR is quite different.

To me, I *set* WR% and withdraw accordingly, treating it as the ceiling. I don't measure what my WR% was after the fact, unless I really run into some trouble where I have to go over my pre-set WR%.
Probably not as different as it seems. I just think about smoothing the planning by saying I think I’ll spend about $x per year on average and don’t worry too much about the fact that the cash flows may not perfectly match that. For example a home repair may come as one $15k bill but I’m including a few thousand in annualized home repairs in my planned spending budget. It will work out much the same way.

If my budget is $90k per year and the next 5 years cash flowsare $95, $85, $100, $80, $90 then I still consider myself pretty well tracking regardless of the single year WR %s.
nguy44
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by nguy44 »

We withdraw ad-hoc from our cash as need. When I retired 4 years ago I estimated our required spending beyond what my pension would cover and set aside enough cash to last until the earliest I would consider taking SS at the time. It was conservative as I did not factor in DW's small salary (did not want to be dependent on it so that she could choose to retire when she desired) or her SS plans. Our actual cash spending has been much less than we thought it would be, and our cash replenishment (from interest, non-reinvested dividends, DW's job and subsequent SS, and unexpected things like an inheritance and stimulus) has been much greater than I estimated, so our net cash is down less than 10%, and we have not had to touch our investments.Our SWR, which I thought would be around 2.4% is running closer to 1%.
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9-5 Suited
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by 9-5 Suited »

nguy44 wrote: Tue Jul 05, 2022 11:17 pm We withdraw ad-hoc from our cash as need. When I retired 4 years ago I estimated our required spending beyond what my pension would cover and set aside enough cash to last until the earliest I would consider taking SS at the time. It was conservative as I did not factor in DW's small salary (did not want to be dependent on it so that she could choose to retire when she desired) or her SS plans. Our actual cash spending has been much less than we thought it would be, and our cash replenishment (from interest, non-reinvested dividends, DW's job and subsequent SS, and unexpected things like an inheritance and stimulus) has been much greater than I estimated, so our net cash is down less than 10%, and we have not had to touch our investments.Our SWR, which I thought would be around 2.4% is running closer to 1%.
Sounds like the ol’ game has been won! Nice job. Hopefully a few fun experiences are in order to push that withdrawal rate up to 1.5% :wink:
heyyou
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by heyyou »

Retired 17 years ago, since mid-55 age with no-COLA pension, and started delayed SS at age 70. I use the RMD portfolio spending method which applies your age-based RMD % to each annual portfolio value plus spending annual dividends and interest. I like how a variable spending method is beneficial for portfolio longevity, and I can see next year's spending fluctuate with this year's stock market levels, so any reduction there, is not a surprise in early January.

Thank you to poster Celia for encouraging annual Roth conversions during my early years of retirement. Those portfolio adjustments have paid very well in the long run.
Chip
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Chip »

marcopolo wrote: Tue Jul 05, 2022 7:10 pm
retiredjg wrote: Tue Jul 05, 2022 5:59 pm You are talking about apples and everybody else is talking about oranges. It just creates chaos, the threads get derailed, nothing is learned by anybody and new people can't even figure out what the conversations mean.
Thanks. For a while there I was questioning if I was maybe the only being confused here.
Absolutely not the only one. Confusing enough to me that I've chosen not to enter into those conversations anymore.

For the OP, ad hoc withdrawals during 21 years of retirement. We track spending closely, though there is no longer any need to because portfolio growth has reduced our WR to ~2%.
eldinerocheapo
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by eldinerocheapo »

TIRA wd $16k annually
Wife pt work $20k
VG muni fund wd $4.5k non taxable
Maturing cd's used as settlement funds $15k non taxable.
Ally savings acct. any excess needed zero out monthly budget, usually $12k per year non taxable
Roth conversions around $70k to take income up to maximize 12% taxable bracket space.

All this will change when we both take SS next year, as this should provide about $40k annually, and the above amounts will be tapered to layer in an additional $15k per year or so.
"Dream, Dare, Do."
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retiredjg
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by retiredjg »

Marseille07 wrote: Tue Jul 05, 2022 10:25 pm
marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
If you want your comments to be understood and taken seriously, you need to at least try to speak the same language that others are speaking. If you don't, your comments simply create confusion.

I don't think that creating confusion is the result you actually want.

Here is a clear example.

By commonly accepted definition, if you spend 50k out of $1 million, that is a 5% withdrawal rate from the portfolio of $1 million. For reasons of your own, you want to call this a withdrawal rate of 3% because the "Marseille07 withdrawal rate" is calculated as a withdrawal from the equity side only, not from the portfolio.

You are limiting yourself to a "Marseille07 withdrawal rate" of 3% so you can only take $27,000 from equities that year and put it back into the cash bucket. You are calling this a 3% withdrawal rate, but it is really a "Marseille07 withdrawal rate of 3% from equities"... which is something entirely different.

As I said earlier, nobody is trying to say this is the wrong way to handle your money. But when speaking with the group, if you call this a 3% withdrawal rate, you are talking about apples and the rest of us are talking about oranges. No real communication occurs. Threads get derailed. And everybody gets frustrated.

As I said above, I don't think that is what you really want.
livesoft
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by livesoft »

It seems that Marseille07 uses an ad hoc withdrawal method and we are now back on topic.
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Ckprocker
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Ckprocker »

I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
Wanderingwheelz
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Wanderingwheelz »

retiredjg wrote: Wed Jul 06, 2022 7:00 am
Marseille07 wrote: Tue Jul 05, 2022 10:25 pm
marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
If you want your comments to be understood and taken seriously, you need to at least try to speak the same language that others are speaking. If you don't, your comments simply create confusion.

I don't think that creating confusion is the result you actually want.

Here is a clear example.

By commonly accepted definition, if you spend 50k out of $1 million, that is a 5% withdrawal rate from the portfolio of $1 million. For reasons of your own, you want to call this a withdrawal rate of 3% because the "Marseille07 withdrawal rate" is calculated as a withdrawal from the equity side only, not from the portfolio.

You are limiting yourself to a "Marseille07 withdrawal rate" of 3% so you can only take $27,000 from equities that year and put it back into the cash bucket. You are calling this a 3% withdrawal rate, but it is really a "Marseille07 withdrawal rate of 3% from equities"... which is something entirely different.

As I said earlier, nobody is trying to say this is the wrong way to handle your money. But when speaking with the group, if you call this a 3% withdrawal rate, you are talking about apples and the rest of us are talking about oranges. No real communication occurs. Threads get derailed. And everybody gets frustrated.

As I said above, I don't think that is what you really want.
This is some mix of painful & entertaining to watch. I’m now sure how much of each, though. I’ll stay tuned.
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dbr
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by dbr »

Ckprocker wrote: Wed Jul 06, 2022 7:32 am I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
Of course a person keeps track of what is going on. Ad Hoc does not mean completely out of control.

I know what the trajectory of my portfolio value is and I know what my withdrawal rates are every year and I know what my total spending is every year.
Chip
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Chip »

dbr wrote: Wed Jul 06, 2022 7:47 am
Ckprocker wrote: Wed Jul 06, 2022 7:32 am I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
Of course a person keeps track of what is going on. Ad Hoc does not mean completely out of control.

I know what the trajectory of my portfolio value is and I know what my withdrawal rates are every year and I know what my total spending is every year.
Same here.
dbr
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by dbr »

Marseille07 wrote: Tue Jul 05, 2022 5:03 pm
dbr wrote: Tue Jul 05, 2022 4:55 pm So one month I spent $44,000. Annualized that is a rate of $525,000/year. I did that by withdrawing $44,000 from somewhere and moving on. That was probably an extreme. Looking back it appears that money might have come from selling some shares of stock. It looks like that transaction might have put the asset allocation back in balance a little too. The portfolio withdrawal % of initial portfolio was 3.7% that year.
Imo the key is to control the pace of selling equities. If I have a 44K purchase, I'd pay cash; no foul no harm. But I don't immediately sell 44K worth of stocks to replenish that. This is where the WR% thing comes into play for the next several months.
No. The key is the trend in withdrawal rate over the years and the trend in portfolio value over the years. The withdrawal rate for that year was 3.7% which is perfectly in line with a reasonable withdrawal rate. As it happens the stocks had been on an uptick over a few years and selling some stocks did not drop the allocation to stocks out of target.
Wanderingwheelz
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Wanderingwheelz »

Ckprocker wrote: Wed Jul 06, 2022 7:32 am I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
I mentioned further up thread that there are many folks who achieve FI early without having a budget or any concrete plan. It just happened. For me, by the time I got serious about planning a retirement I had already achieved FI. My first real job was as a financial planner, thus I always saved what I knew was plenty. I never once stopped to figure out whether or not what I was doing was good enough, by say running a retirement calculator. I just knew.

I don’t think many people who hyper-planned (or even strictly planned) their way to FI are going to be the same people who Ad Hoc their retirement withdrawals.

In fact, it might be a good exercise to have anyone chime in who was a careful planner during accumulation, but is winging it in retirement. Carefully planning for retirement doesn’t jibe with having way overfunded it.
Being wrong compounds forever.
TN_Boy
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by TN_Boy »

Marseille07 wrote: Tue Jul 05, 2022 10:25 pm
marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
No .... if you withdraw 5% from your portfolio ... then you withdraw 5% from your portfolio. Why would you not agree with this (universal) definition?

If you want to argue something like only withdrawals from the equity side affect portfolio survival, people might disagree with that notion, but at least you wouldn't be ignoring the math that $50k is 5% of 1M. And such an argument would have bearing on the thread topic, especially if you could define the algorithm a bit more cleanly.
smitcat
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by smitcat »

Marseille07 wrote: Tue Jul 05, 2022 10:25 pm
marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
"This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year."
It really depends a whole bunch on how often you spend that 5%, you may do it once every 10 years or maybe....
1st year - new car primary driver
3rd year - $50K home roof and stuff expense
5th year - new car for second person
7th year - one time family vacation
Normchad
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Normchad »

I’m a big fan of VPW. So my intention is to use that.

I do suspect though that in most years, my actual spending needs will be a bit lower than what VPW says.

So I’m saying VPW, but ad hoc might be a better description.
Wanderingwheelz
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Wanderingwheelz »

TN_Boy wrote: Wed Jul 06, 2022 8:06 am
Marseille07 wrote: Tue Jul 05, 2022 10:25 pm
marcopolo wrote: Tue Jul 05, 2022 7:09 pm This is why it is so confusing to have a conversation with you.
Just a few posts ago you dismissed my question by saying the premise is wrong because you would never spend the 50k out of your equities because that is what cash is for.

Now you are saying you would sell $81k in equities to fund 90% of your spending. Do you you really believe that the fact that when you sell the equities you fill the cash bucket before then spending from the cash bucket, that somehow means you are not spending from equities?!?
OK so let's try it one last time (pretty sure I've described this scenario before too but I suppose you don't remember).

900K/100K and let's say I suddenly need to buy a 50K car.

I pay 50K out of my cash holding (remaining: 900K/50K), then I draw 27K over the course of 1 year to replenish cash. I continue drawing another 23K next year to finally restore my AA.

This takes a long time, but it's unavoidable when you spend away 5% of your portfolio all at once and your withdrawal rate is only 3%/year.
No .... if you withdraw 5% from your portfolio ... then you withdraw 5% from your portfolio. Why would you not agree with this (universal) definition?

If you want to argue something like only withdrawals from the equity side affect portfolio survival, people might disagree with that notion, but at least you wouldn't be ignoring the math that $50k is 5% of 1M. And such an argument would have bearing on the thread topic, especially if you could define the algorithm a bit more cleanly.
If you look carefully, 5% wasn’t withdrawn it was “spent away”.

Let’s not be unfair here.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by iamblessed »

Normchad wrote: Wed Jul 06, 2022 8:26 am I’m a big fan of VPW. So my intention is to use that.

I do suspect though that in most years, my actual spending needs will be a bit lower than what VPW says.

So I’m saying VPW, but ad hoc might be a better description.
I am strongly thinging of a 5% VPW. One of the fund companies had examples of a 90/10 working out well over the years. Folks had about what they started with 20 years later. Not bad.
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retiredjg
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by retiredjg »

Ckprocker wrote: Wed Jul 06, 2022 7:32 am I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
I don't think ad hoc methods would work if a person is over-spending. The only way I would know how to judge over-spending is going way over 4%ish for years.

So I'd have to say there must be some kind of upper limit guardrail if using an ad hoc method.
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by sixtyforty »

I run a couple retirement calculators to identify what our upper limit is, then adjust accordingly.
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Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

retiredjg wrote: Wed Jul 06, 2022 7:00 am If you want your comments to be understood and taken seriously, you need to at least try to speak the same language that others are speaking. If you don't, your comments simply create confusion.

I don't think that creating confusion is the result you actually want.

Here is a clear example.

By commonly accepted definition, if you spend 50k out of $1 million, that is a 5% withdrawal rate from the portfolio of $1 million. For reasons of your own, you want to call this a withdrawal rate of 3% because the "Marseille07 withdrawal rate" is calculated as a withdrawal from the equity side only, not from the portfolio.

You are limiting yourself to a "Marseille07 withdrawal rate" of 3% so you can only take $27,000 from equities that year and put it back into the cash bucket. You are calling this a 3% withdrawal rate, but it is really a "Marseille07 withdrawal rate of 3% from equities"... which is something entirely different.

As I said earlier, nobody is trying to say this is the wrong way to handle your money. But when speaking with the group, if you call this a 3% withdrawal rate, you are talking about apples and the rest of us are talking about oranges. No real communication occurs. Threads get derailed. And everybody gets frustrated.

As I said above, I don't think that is what you really want.
I say 3% WR because it is. As I explained, this gets smoothed out over time.

Paying 50K out of a million might be regarded as 5% WR on the day you buy a car. But I don't measure my WR based off of a one-day event. It's meaningless.
Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

retiredjg wrote: Wed Jul 06, 2022 10:17 amOk. :happy
I mean...I am talking about a withdrawal method in retirement, not what 50K / 1M is.

And I'm sure you don't measure your WR daily either, so...I don't know why you go up and down insisting that's 5% on that particular day as if it is a big deal. It's not.
Marseille07
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Marseille07 »

livesoft wrote: Wed Jul 06, 2022 7:10 am It seems that Marseille07 uses an ad hoc withdrawal method and we are now back on topic.
First of all, spending 3% constant-percentage is not ad-hoc.

Second, I've been talking about a retirement withdrawwal method, which is on-topic. I do not appreciate wrong labeling and calling it off topic when it's on topic.
Last edited by Marseille07 on Wed Jul 06, 2022 12:12 pm, edited 1 time in total.
marcopolo
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by marcopolo »

dbr wrote: Wed Jul 06, 2022 7:47 am
Ckprocker wrote: Wed Jul 06, 2022 7:32 am I wonder how many who run independent Ad Hoc withdrawal methods employ upper limit guardrails at least to some extent in their thought process.
Even multi-millionaires have gone under, not controlling spending.
If you are frugal, most likely not an issue. But if you like to spend money, then its a different ballgame.
Of course a person keeps track of what is going on. Ad Hoc does not mean completely out of control.

I know what the trajectory of my portfolio value is and I know what my withdrawal rates are every year and I know what my total spending is every year.
Exactly.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Wannaretireearly
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by Wannaretireearly »

Marseille07 wrote: Wed Jul 06, 2022 10:20 am
retiredjg wrote: Wed Jul 06, 2022 10:17 amOk. :happy
I mean...I am talking about a withdrawal method in retirement, not what 50K / 1M is.

And I'm sure you don't measure your WR daily either, so...I don't know why you go up and down insisting that's 5% on that particular day as if it is a big deal. It's not.
It’s just math buddy, let’s not confuse 50k/1M to be anything but 5%. You’re portfolio could go to tatters after this withdrawal event (market factors). You cannot assume otherwise and reinvent the withdrawal math based on future savings rate. Lol.

Anyway I’ve liked most of the conversation here! I’m not super close to retirement, but going by simple rules my brain can process, I would set my withdrawal rate between 2-3%. Knowing we do overspend on travel, so my upper bound would be 4%. That should take me thru to SS withdrawal age without becoming either bankrupt or regretful I didn’t spend enough on experiences!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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AerialWombat
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by AerialWombat »

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This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
nguy44
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by nguy44 »

9-5 Suited wrote: Tue Jul 05, 2022 11:21 pm
Sounds like the ol’ game has been won! Nice job. Hopefully a few fun experiences are in order to push that withdrawal rate up to 1.5% :wink:
Thanks, we'll try :happy . some family we planned to regularly visit overseas moved back to the U.S. during the pandemic, so our spending to visit them a few times per year fell from about $6K per visit to $500 per visit, oh darn :mrgreen: . I like cars, but I have found many cars in the $20k-$30K range that I am fine driving, so I have not sought ought, say the $50K+ range. But we will do our best, probably a little more spending on ourselves and more gifting to family/friends and the causes we support.
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goingup
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Re: Survey Question: For Retired or Those Close to Retirement, What Withdrawal Method are You Using?

Post by goingup »

Ad-hoc but I do know what we spend each year. Also look at the VPW chart in the wiki each year to figure the upper limit of a yearly withdrawal. There's a lot of headroom between the max limit and what we've been spending since 2019 retirement.
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