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Old 03-07-2017, 03:01 PM
 
Location: Haiku
4,089 posts, read 2,576,815 times
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Quote:
Originally Posted by Perryinva View Post
An SWR that includes all essential expenses is far different from an SWR that is only for discretionary, or even one that covers all expenses and much discretionary. Options!, as Mathjack says.
Just a comment on terminology, which ends up being used in different ways by people so they end up arguing in circles.

SWR = Safe withdrawal rate. It is a value determined by looking at historical data and making assumptions about a particular type of investor (65 years old), with a particular type of portfolio (50/50 - 75/25 stocks/bonds), and a specific withdrawal method (constant real dollar) and is 100% backwards looking.

SWR is mostly used for estimating how much you need to save to retire. It is an estimate. It is not a retirement plan. Nobody should withdraw the Bengen derived SWR of 4%.

What many people talk about here is really an actual withdrawal rate. That rate may be "safe" or not. Many factors go into it. But everybody should determine his own withdrawal rate using their own circumstances. For instance, a very popular withdrawal method is variable percentage (VPW).
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Old 03-07-2017, 03:05 PM
 
51,943 posts, read 41,806,773 times
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Also OP, if it makes you feel better I'm planning on a draw rate that will be at least 4%.

I intend to have enough money saved up that I can weather volatility and intend to keep a fair bit of money in higher-returning investments. Depending upon how that progresses my draw rate could be above 4%.

I also will have the majority of my retirement coming from my 401k so it will be the primary income source along with some small pensions and eventually social security. I'm 47 and I have about 8x my current annual salary in my 401k right now.
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Old 03-07-2017, 03:18 PM
 
171 posts, read 128,327 times
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Quote:
Originally Posted by TwoByFour View Post
So please elaborate on this. I am curious what you think is going on. Now, I did say that they make money off my trades, all 10 or so every year. But other than that there is no payments by me to Schwab. So tell me what I am missing.
Even if you have some kind of no-fee investments, they still benefit from keeping your money by making their own investments with it. It's not as if it's sitting in a lock box or something.
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Old 03-07-2017, 05:03 PM
 
Location: Haiku
4,089 posts, read 2,576,815 times
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Quote:
Originally Posted by cathedralhill1 View Post
Even if you have some kind of no-fee investments, they still benefit from keeping your money by making their own investments with it. It's not as if it's sitting in a lock box or something.
You don't seem to understand how a brokerage works. They do not have my money. They are the custodians of essentially a piece of paper that proves I am the owner of various investments that I bought.

Here is an example:

I own a fund called VFITX, which is from Vanguard. It invests in US Treasuries.

I bought VFITX through Schwab. Schwab paid Vanguard on my behalf. I paid Schwab a one time fee to buy it for me.

Vanguard took my money and bought US Treasures with it. They are holding on to those bonds on my behalf. They bought those from the US Government.

The US Government is the ultimate recipient of my money. In return they gave Vanguard an IOU, i.e., a bond. Vanguard holds that IOU in an authorized repository.

If I tell Schwab to sell my VFITX, they tell Vanguard who then sells the necessary bonds to give me my money back. Vanguard pays Schwab, who in turn gives me the money.

Schwab is the go-between to Vanguard. They get paid when I bought and when I sold. That is it. Schwab makes lots of money, but not much from me.
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Old 03-07-2017, 05:14 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by WVNomad View Post
Can I ask why you are going to roll it over? Would it possibly be better to leave it in the TSP to take advantage of their low management fees? I know the TSP has specific, and from what I understand, more limited withdrawal options than a 401K, but if you are not going to touch it for an indefinite period, would it not be better to just leave the funds there?
There 401K plan may be one of the ones burdened with high fee offerings. You ask a very good question. Ours ten years into retirement are still in our employers plan which offers a very large number of Fidelity funds including ones closed to the public. Also as you probably know the company holding the company 401K money will probably make a bit more if the roll into a IRA.
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Old 03-07-2017, 05:22 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by TwoByFour View Post
So please elaborate on this. I am curious what you think is going on. Now, I did say that they make money off my trades, all 10 or so every year. But other than that there is no payments by me to Schwab. So tell me what I am missing.
As I read your previous post I got the impression you possibly have a self directed IRA. If so people may not realize that your situation is different from theirs.
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Old 03-07-2017, 05:31 PM
 
29,782 posts, read 34,871,258 times
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This thread is sorta interesting as these discussions usually are. It has transgressed from the OP's question and now reflects people talking about things they don't have and it shows, or people who have a different situation questioning why someone with a different need is doing something.

My thinking to the OP question about a low withdrawal rate is that if makes all the sense in the world to that person. If you have accumulated a decent sum of money you have done so with a plan in mind and your decisions relate to that. We are entering our tenth year of retirement and over time many have question what we are doing and the reasons why. Many others understand and are of the same mindset. I am in the process of filing for SS on my own benefit and Like Bernstein said I can now say game over. Withdrawal rate beginning next year will be the SWR for tax sheltered investments. They may never be touched otherwise other than for serious medical or emergency. Things could have gone wrong but they didn't and the plan as intended for us has worked. After tax funds will grow and cover much more than it is reasonable to expect. Fixed income allows for continued investing. It sounded strange over time to many what we are doing and normal to others but we are there and that's what counts.
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Old 03-07-2017, 05:38 PM
 
29,782 posts, read 34,871,258 times
Reputation: 11705
Food thought about SWR rates in retirement when people with different backgrounds are investing. One of the blessing the wife and I have had are that we have very good pensions along with SS. That gives us a considerable advantage in retirement. It affords us the opportunity to take more risk with our investments and thus we are still able to be 70 percent equities. The low interest world has not had the same impact on us that it has had for others. People are very different and unless you know all the specifics it is hard to know who has apples and who has oranges.
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Old 03-07-2017, 06:19 PM
 
260 posts, read 136,817 times
Reputation: 517
Like many I don't want to leave this world with a huge pile of money, having skipped many fun and enjoyable activities. It's OK to leave something for my children, of course, but not so much that I must deny myself excessively.

OTOH, for many of us, even worse than leaving a huge pile of money is running out with 5 to 10 years of life left.

It's all about balance.
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Old 03-07-2017, 07:28 PM
 
51,943 posts, read 41,806,773 times
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Quote:
Originally Posted by larsm View Post
What I find most fascinating about this discussion is how many are happy to leave funds to the next generation, but about inheriting monies from their own parents are saddened that their own parents didn't spend more of their money to enjoy life.

At least that was the bitter sweet feeling I had at inheriting from my own parents.
That's possibly guilt because they let's face it, everyone likes to get some money but you've lost someone irreplaceable and also sense your own mortality. A lot of people don't lose anyone super close to them until older ages and there can be a lot of emotions swirling.

If I live past 70ish I want my funeral to be a party and I should hire a guy to carry around a supersoaker and spray anyone crying.
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