Imag: "You indicated that today your expenditures are about 2.5% of your savings, so you have about $40 in savings for every $1 you (annually) spend"Yes, that is the current situation. I just don't feel a need to spend the other 1.5% I could. I have enough gadgets and hobby things. Too much junque in the house. I sot of got burned out on travel. Was gone about 1/3rd of the time for the first 3 years of retirement. Trips to the Caribbean and Europe and Asia and Central America. The hassle factor of 9-11 made travel a much bigger pain, and the cattle car crowding on planes, delays, and trying to buy tickets is just a royal pain these days. "...I imagine that your investments grew during your 10? or so years in retirement, so wondering what the ratio was that first year, say, when you were 53.5, if you looked at how much your annual spending was for that particular year, as a percentage of your total savings you had then, what was it? "Back then, the SWR was about the same as today. Got clobbered a bit in the dot.com bust, and some stock in retirement accouts couldn't be sold fast enough to avoid some meltdown.(some WCOM ESOP type stock). Example: GE stock still not back to all time highs. Still solid stock and still yearly increasing dividend. For a few years, in terms of inflation adjusted income, I spent more for those first couple years on travel than I do today...then again travelling 1/3rd of the time, with 50% of that international, was a fair expense. Insurance/medical now a growing part of expenses (rates were a lot lower 10 years ago for coverage plus had decent group insurance plan then). Now individual policy with large deductible and co-pays - plus 10 years older which runs up category rate. "Was it the much-talked-about 4% (that is when you were 53.5 your spending that year was 1/25 of your total savings back then)? Higher? Lower? "Never exceeded 4%, and never exceeded 3% at any time. I had to work at spending that. I'd rather stay at a small tourist hotel in the Caribbean that a humongeious 'name hotel'.... less hassle. I don't want six waitpersons hovering over me at dinner, refilling my glass every time I take a sip, and eager to snatch my plane the second they think I am done using it. I don't need a wine sommelier, nor do I need $6/bottle 'imported beer'. Of course, my house is paid for, I have zero credit card debt, cars are paid for - so I just have annual living expenses. In terms of real dollars, I am spending less despite 10 years of inflation without the international travel. Now I am gone about 15% of the time on trips, and most of them by car. Next year I'll buy a new road car likely....about $25,000 which will maybe bump up next year's withdrawal to between 3 and 4% for the year. The current one has 170,000 miles and is going on 7 years old. I could live on, should everything go to heck in a hurry, on a current 1% of portfolio - with minor cutbacks. Of course, if that happened, and the markets dropped 50%, that would be about 2-2.5% of portfolio since I am about 71% in equities at this point. Oh, and I haven't 'inflation adjusted' like I could have according to the SWR model. With a 2% annual inflation, I could be taking 25% more per year from the initial 4% rate. (or 5% now of the initial amount). Now, one of the reasons I never starting taking 4% is that my portfolio is not as diversified as the 'ideal' case of a basket of index funds. I would take a large tax hit to accomplish that, and I am changing things slowly over time into better diversification. I am comfortable with what I am doing. I sleep well at night. The 4% rule applies for a diversified portfolio. If you are skewed one way or the other, you need to evaluate your risk and adjust accordingly. t.
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