Ok. A question. For those who have retired without a pension (and, not counting SS) what percentage of your net worth do you use as an annual spend?

Example: say I have $1mm. Do I use 5% or all the way down to 3%?

I have been grinding on this (and other) related questions for a couple of years. Talking with the Advisor in two days. Last year, I challenged him to plan my retirement.

Wife didn’t buy it...

I think, as Higgins said above, I am “working for free.” Also, the FIRE calculator says I am golden.

Push me over the decision edge.

I retired around 5 years ago at 50.
Been an interesting experience and time, too many thoughts to post about that at the moment.
But I didn’t use the formulas or percentages or retirement calculators like most seem to do. Like using 5% of net worth every year.
That thinking is scary as hell to me. And actually seems like the hard way.
I retired by working and investing, and when my assets and multiple passive/semi passive income streams exceeded the amount I was making in my “day job”.
I wouldn’t retire until I could do so and live only off my retirement income, never touch the principle, and in fact continue to build on the principle (ie continue to save and increase net worth) indefinitely.
Having a set pool of money and watching it decline every year, and also get crushed by inflation every year, in old age would terrify me. We have no idea what, say $1 million, will be “worth” 10-20 years from now. But my guess is much,much less than most think. That’s the hidden price we are going to pay for decades of reckless and irresponsible government.

It’s not relevant to me, but my yearly spending is around 2% of my net worth.

Mostly investing & stock market gains, but the wife has her teachers pension which helps. Also we were able to stay on the wife’s insurance, although we had to pay the full price for it. That cost around $18,000 a year now, but since we retired before Obamacare we wanted to make sure we had insurance available.

I’ve always kept track of my net worth, I use to keep track of my spending also. When I was originally planning I used the retirement planners which basically called for around 4% of investments plus SS and pensions.

Now as long as my net worth continues to grow I don’t worry much about my spending. We retired in 2007 so we went right into a downturn, so we didn’t make any large purchases right off the bat. But since then things have been pretty good of coarse, and we keep several years in fixed investments to weather any future downturns.

Most don’t have that deal, but sounds like he’s already semi retired if he’s only working 4 months out of the year.

When I told my boss that I was going to quit he asked me to stay on for six months to help with my replacement. I only had to work till noon, no nights or weekends. I’ll admit that that wasn’t to bad, I had hired my replacement and he really didn’t need my help. But that was never a long term option.

I don’t have enough time to do everything I want now. And if I find the rare day that I’m not busy,the wife will definatly find something for me to do. I’ve already turned over the yard work to others, and I find myself paying for other things I use to do myself. Not because I can’t, but because I don’t want to give up the time to do it.

I agree, I’ve been retired now for almost 15 years now. My net worth is now over double from when I quit. And I have spent more than my net worth originally was. I figured my lifestyle would stay the same, but I was wrong there also. It’s better.

I had time to do some things I couldn’t while working, I got my pilots license and bought a plane, we used it to travel quite a bit. We ended up moving to Florida and now live on a saltwater canal home with a nice boat in the backyard. We have had a very good 15 years so far while we were still healthy. Now I’m looking at 65 and and not sure the next 15 years will be as good, but I don’t worry about money much.

This IS retirement.

Also, golf and fishing without the fanatic passion of life long diehards are probably the worst most boring ways to pass the time.

Here's the deal:

A few weeks after you retire you realize that you are no longer getting up early to get to work. Its unusual because you have been in this deep groove of sleep, wake, work, for most of your life. Thats a tough habit to break BUT soon you will wake up (when you want to) and ask yourself, "what day is today"? Thats when the real reality of retirement hits you. Then, "what should I do today", after your cups of coffee, watching Let's Make a Deal and feeling some pressure to stay active, DO SOMETHING or just take the day off. Thats it in a nutshell! Between all that are the kids and grandkids, the e-bike outings, the Porsche 911 runs through the suburbs (best thing I have found for the ego), reading to catch up on, travel plans and so forth. You made it!

No discussion here of finances, investments, Medicare, Social Security or even being an Air Force Vietnam veteran, just the basics.................

Despite the boring times, you DO live healthier, less stressed over everything. It's now your time and although you want to charge at the starting gate (yeah lets buy that RV and see the country, how about rafting on the Amazon, jet ski's, Iceland for a vacation, etc, etc, etc, you pause, take a deep breath, slap yourself on the back for the years of survival, stability and value and simply start again by asking yourself, damn is this tuesday or thursday?

It is in one word: fabulous

Semi retired about 5 years ago -- Drove a Special Needs School bus for 3 years --then spent a little over a year doing tech support for one of my former employers. Went all in retired back in May.

So I sort of soft landed and got used to less income. Not been bored and don't miss it -- harder I expect for many of us who are defined by our jobs.

I think all retirements can be good if you can define all your days AS Saturdays and not Mondays,

And at least for me --if you are basically debt free -you can live on less than you think. And healthy is wealthy.
Mflo

I've looked into this question pretty carefully because it seems the 3%/4%/5% rule is either wildly undervalued or obscenely reckless, depending on your circumstances. There is a better approach, especially if you have higher assets.

Think of your retirement assets in three buckets. The first bucket is your long term investments - stuff you don't want to touch for several years. The second bucket is your short term assets. This is what you're going to need for the next two, three or four years, whatever you think you don't want exposed to the vagaries of the market. The third bucket is what you're going to spend this year.

The most sophisticated way to manage your draw-down is to put the proper amounts in each bucket. Over time you're best staying in equities because they've always returned the highest return, but again, this is over time. So you can go way up or way down with your long term money, but as long as you have the wherewithal and assets to hold your equities in a down market, you're better off keeping your long term money money in equities, specifically a couple of low fee index funds that follow the broader market. You'll almost never get a better net return from a managed fund or an active advisor than a low-fee S&P index fund. Since the great depression, the longest period of time the stock market has gone without recovering its previous high following a bust is five years, and the more typical cycle is closer to two years. In other words, the historical record is that if you can hold all your investments in the S&P 500 for five years, you will recover your investment even if you invested at the very peak. So the idea is that you hold all of your assets that you can do without for between three to five years in your long term equity bucket.

Second, to mitigate risk but still maximize your returns, you calculate what you spend each year and put the number of years you feel comfortable taking out of the equity market and putting it into safe, stable, but low/no risk investments to preserve capital. Think utilities and bonds. If you think you need three years' cushion to ride out a stock bubble bursting, they you put three years' spend into bucket two. if you think you need five years, you put in five. The idea is that you're still earning something on this money, but it's at very little risk and won't lose much even in a bursting bubble environment.

Finally, you take the money you anticipate spending in the next year and put it someplace completely safe that sacrifices return for security. Ninety day Treasury bills, money market funds, CDs, mattress covers, whatever makes you comfortable you can draw on that money immediately no matter what the economy looks like.

So, if on the first of the year you take out a year's expenses and put it in your savings account, rebalance your short term buckets to fund 2-5 years' contingency money and leave the rest in your long term investment fund, you're pretty insulated from market moves and you still get the benefit of long term capital appreciation.

Each year you look at the net increase or decrease of your investment fund and adjust your budget accordingly. In good years you'll earn far more than you take out, in down times you tighten your budget a bit and live on your contingency money. If the market is down you don't refill your contingency money (bucket number two) until it's drawn down, so you keep as much as possible in the market for the inevitable rebound. In good years you may want to take a few more dollars out and enjoy a treat.

The result of this plan is that you don't necessarily draw down the value of your investments even though you are able to withdraw more than four or five percent of your total investment value.

For those worried about running out of funds, here’s a story about how Jackie Gleason handled it:

http://forums.pelicanparts.com/uploa...1642636858.jpg

What a great story. It reminds me of one of my NBA favorites, Connie Hawkins. Hawkins was born lower than poor in the Bedford-Stuyvesant neighborhood of New York when it produced two things: heroin junkies and the best blacktop court basketball players in the world. Hawkins was acknowledged as the best of the best and was recruited to play basketball at the University of Iowa just in time for the great college points shaving scandal of 1961. Although Hawkins received a few perks for signing with Iowa that were not necessarily kosher with the all-amateur, all the time (yeah, sure) NCAA, he was never even associated with any of the gamblers implicated in the points shaving scandal, let alone took part. He was a freshman at the time, and freshmen weren't even allowed to play varsity, so there was no way he could have shaved points if he wanted to . But for reasons that are hard to understand, Hawkins got kicked out of college and banned from the NBA. He bounced around, playing for the Harlem Globetrotters, hustling playground games and playing in the upstart ABA before he was finally able to win a lawsuit against the NBA and enter the league. He got a pretty large settlement and made good money as an NBA player, but he lost too many years to the road and didn't play in the NBA as long or productively as he should have. But he still was able to achieve a more than comfortable life and achieved stardom in the NBA.

Despite his success on the court and monetary security off it, Hawkins had a peculiar habit. He always carried a hundred dollar bill in his pocket. Before every game he would hand it to his coach without saying a word. The coach would secure the bill and would return it to Hawkins at the end of the game:

"Perhaps, Hawkins’ career is best summed up by former ABA player (and later-Hornets coach) Gene Littles, who told Pluto that 'I played on a summer barn-storming team with him [when Hawkins already had his lucrative Phoenix contract], and Connie always kept a $100 bill balled up in his pocket. Right before he’d go on the floor, he’d give the crumpled-up bill to the coach and tell him to keep it until the game was over. I guess Connie figured no matter what happened, he’d always have $100. Probably that was how you thought if you came from Brooklyn and went through all that Connie did.'" https://www.espn.com/classic/s/basketball_scandals_molinas.html

Now that I’m pushing 65 I’m starting to feel my age. I’m a little tired from fishing yesterday, we ran 65 miles out in 2’ or so waves. Had to keep the speed down to the low 30mph range to keep the boat from going airborne. Things did settle down once we got out there. Back when I first retired at 50 I didn’t notice things like this.

Well I need to eat breakfast before I go golfing. This retired life is hard.
http://forums.pelicanparts.com/uploa...1647601044.jpg

I was "forced" into retirement at 62 while at the top of my game due to failing health. The house was paid for, the kids were completely independent and I had no serious expenses. I would have preferred to keep earning as I was coming into the "big" years for money.

Then I looked at my life in its' entirety and I realized that I had something that many people don't and many more may never have.


Enough. Not just materially but also the awareness that I have all that I need in every way and any desire for more is just greedy.

Retired Jan 1 this year at 57. It certainly has been an adjustment, still feels like a "staycation". The math seems to work, at least until age 92, time will tell.

Right now the concept of selling some portion of any remaining life left that I have seems silly. The stress and frustration of day to day work can be accepted if that is the price to support oneself, but if there is enough squirreled away there are certainly better ways to spend the remaining hours of the remaining days left of life.

I think a big hurdle to retirement (besides the money) is coming to grips with our own mortality, acknowledging and moving to the next chapter-likely the last, is a challenge. My father died at 54 and his at 51. I feel pretty lucky, but still trying hard to enjoy and appreciate each day, remove stress and not be a dick.

I am now 4+ years into retirement , I retired at 60 . My career with Lockheed Martin was enjoyable but a pressure cooker ☹️. My day to day stress now is zilch ! I can do anything I want and am pressured by no one .

I am not a crumudgeon and try to enjoy every day . I have enough projects to keep my mind and body sharp . I love everything about early retirement except paying for health insurance . If that's my only complaint life is good 😁

Do it if you can. Went at 55. 62 now. Energy level sure gets you after sixty.

I retired at 55 from a 31 year career in the Army. been retired for 5 years now. I have not been bored even one day and can't see myself ever wanting a job. I have many hobbies and projects that keep me as busy as I want to be. Between the retired pay and VA disability I don't need to work. We live comfortably and within our means. I would recommend for people to retire as early as they can while still physically able to do the things they want. You never know when your time is up. My father basically worked until the day he died (65 years old) and never even drew a full month of Social Security.