[Jorge]

And what standard growth/return % do you tend to use?

I feel like I find 20 different models with all different results when I search the web.

Context: I consider myself “semi-retired,” with passive and unreliable/variable income coming in per month due to things I have my hands in. I have reserves to draw from now (brokerage), and then reserves to draw from once I reach retirement age (Roth/rollover IRA). I would love to be able to find a calculator that allows me to draw from one while the other compounds, but not sure if I’m overthinking it.

The emotional context: I find myself feeling like I could or should be hustling a little more to grow my various streams — you know, the classic American mindset — but I want the numbers to show me I can work less so I can feel better about taking leisure time.

[Ed Griffin]

4%. I literally just use the calculator app on my iPhone.

[Louis]

I need to find the list of articles but a few years ago I read like 20 withdrawal rate articles. My conclusion was 3.5% was as good as it gets.

Related: Die with Zero approach – Has anyone created or found a calculator or spreadsheet they can share?

[Lauren]

You are over thinking it to a degree. For everyone 10% in stock, you can assume 1% growth. Your safe withdrawal rate can change from year-to-year based on the risk free treasury rate. Or you can peg 3.5-4%. Typically a model using a 5% growth rate and 4% withdrawal will help you with the principal preservation strategy (unless you’re super conservative.)

[Bo Avakian]

I’ve been fully retired for 3 years and my annual dividends exceed my expenses so feel pretty good about that. Once I collect SS it will be even better. Not really planning to withdraw any of my principal unless an emergency comes up sometime down the road.

I think one thing all withdrawal rate calculators do not take into consideration is the income your portfolio can generate over the “X” number of retirement years. If your portfolio generates 6% annually and you withdrawal 4% annually you can live on your portfolio in perpetuity while increasing your principal.

[Lex]

The safe withdrawal rate depends upon:
1. Your investment mix.
2. If you plan to increase withdrawals with inflation (and your rate of return vs inflation).
3. If you can pause withdrawals (or reduce them) when the market is down.

I cannot give you a withdrawal rate as I took nothing last year and 1% this year (to pay for a wedding). Planning to work part time to avoid boredom so hopefully will withdraw nothing until we buy a car or take an expensive trip.

[John]

From everything I have read 3% is the safe figure to sustain funds over more than a 30 year period. Andrew Hallam’s book is excellent – Millionaire Expat where he goes into depth on that.

Suggested: Does anyone have a good calculator for investments?

[John]

The problem with any calculators is they take assumptions as data points. Any incorrect assumption and the numbers generated can be far from reality. I found that keeping track of expenses and building a portfolio to exceed the average of several years expenses is more accurate than any prediction tool and more personal.

[Yvan]

Whithdrawl rates are great for long term planning, my planning/research says be cheap when returns are down and live more when they’re up and kind of hover around 3-5% in general and it’s great if you can be super frugal when things are really down (i.e. down worry about withdrawing 4% if you’re down 10%).

[Author]

Posts