I’ve read a bunch about the subject and will probably do something like a fixed-percentage variable spending scheme, like Vanguard proposes. But I’m curious what people are actually doing in real life. Is anyone out there managing their retirement finances, and if so, how did you figure your SWR?

Edit: So here’s the system I’m thinking of using. The numbers are just an example.

First determine my SWR, which is what I’m having a problem with, but let’s say it’s $60,000/year. This comes out to $5000/month.

Initially, I’d fill up my bank account with $5000, and treat it like an allowance. Each month, I’d just top my account back up to $5000. On most months, I wouldn’t have spent the whole thing anyway. The next year, I’d make an adjustment for inflation, and that would be my new monthly allowance. Repeat until I’m dead.

Thoughts?

  • flatbield@beehaw.org
    3·
    1 year ago

    For planning I used detailed monte carlo model for planning that included expected age varying costs. Like SWR but not constant spending. Played with simpler models too.

    For execution between now and age 70 pensions, SS, and an annuity will phase in to cover all of our basic inflation escalated expenses. Portfolio will only be for discretionary stuff. I also have a spreadsheet that I used as kind of a control chart to track spending, assets, and spending capability over time.

    I might try to do something more sophisticated in the future … Like a monte carlio model with partial variable spending and taking CAPE into account but for now that is beyond what I do.

    Personally I think the constant inflation escalated payout people talk about is not that useful during the execution phase. Handy during planning though.