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The 4% guideline is a conservative estimate to allow for 30 years of withdrawals from a fairly conservative portfolio.

Here is a link:

We retired in 2005. Initially, our withdrawals were slightly higher. When we sold our old home, most of that cash stayed in our savings account after paying off contractors for this place. In 2006, we had about 3 years of cash to fully cover our planned living expenses. Our last sale of stock was July 2007 until we sold some in Oct 2010. We took the dividends from our taxable account and slowly used money from the cash cushion. In 2010, we still had about 1 year of planned expenses in the cash cushion (savings account.)

Last year, we pulled over 6% from our portfolio with the majority going to charity(20% of our gain{33%+}) and the remainder to replenish our cash cushion.

The reason I can do this by having a plan. I know what we spend, on what and when. I know this since 2002, prior to retiring. Based on that, I have an amount of planned expenses. Since retiring, we have not met our planned amount.

I project those expenses with a 3.8% inflation rate(which we have not had yet) and project our portfolio growth at 6%(which we did not meet in 2008 but have surpassed by a wide margin in every other year.)

With those numbers, 3.8% inflation/6% growth(2.2% effective growth), our portfolio will continue to grow into the future beyond our withdrawals.

Since retiring, we have made 177 withdrawals and 18 deposits to our portfolio. For every $10,000 we withdrew, we deposited $1,586.

For every dollar in our portfolio the day we retired, we have remove $1.46.

Today, I sold small pieces of IRBT, HAIN, SPLK, SHOP, PLOW and CGNX. That will pay-off a 30 year mortgage on a small farm we bought in 2008.

Our portfolio growth YTD is 5.59% which in dollars is 2.8 years of our living expenses.

Long story short: Knowing what you spend and how all the financial parts fit together can allow you to manage retirement finances.

Does that help you?

All holdings and some stats on my profile page
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