So what’s your retirement withdrawal strategy going to be?

[Moneymatters]

The recent market decline / contraction /correction/crash made me realise I haven't really thought how to approach withdrawal in retirement.

I'm currently expecting/plotting to have up to 10 years of early retirement begining either; the moment I'm laid off, or a few years from now.
To fund the early retirement lifestyle I want, this will result in an "unsafe withdrawal" (That sounds like family planning poster..) rate until pensions kick in. (Those pensions will more than cover expenses and reasonable lifestyle and I expect to preserve or grow remaining investments from that point onwards.).

A large retirement allowance from my employer will allow me to decide if it's worth using that for dividend income to further simplify matters. Especially for those early retirement years when I might benefit a lower aggregate tax rate compared to Cap gains tax.
But I suspect I'll use that lump sum for more safe investments. As Mae West famously said, "Is that a bond tent, or are you just pleased to see me.".

Currently I have a vague plan to keep at least two years of expenses as cash and potentially several years as Bonds.
Q/ Is the basic logic to not touch the cash unless the market is suffering a correction/decline, then only sell bonds once you've run out of cash if the decline protracts? Holding equiity as long as possible for it to recover lost ground..

I stumbled on this. and for reddit it was quite enlightening.
A discussion with people that recently FIRE'd and how they are dealing with the market correction/end of days.
https://www.reddit.com/r/financialindep ... _with_the/
(That newly divorced guy. Just ouch.)

Paraphrasing one comment of "most people FIRE after the markets have hit a hot streak that helped them hit their FIRE number." And hot streaks often precipitate a large correction.
The general advice for those not yet FIRE'd was to keep working for a couple more years beyond hitting their FIRE number to put more safety into their plan.

So now I'm thinking about potentially extending my working years beyond current plan but actually enjoying myself a bit. This likely means a few more personal goals to distract me. First pet project will be to build a countdown display timer to have on my desk (at work.)..

[RetireJapan]

Ha, love thinking about this stuff. Thanks for starting the thread.

Well, I had a similar moment earlier in the year: https://www.retirejapan.com/blog/my-inv ... all-wrong/

Since then I sold a lot of our investments (in February/March -great timing on the stock market, but Kuroda ****ed me ) and have been yen cost averaging back into mutual funds ever since.

I now only have mutual funds, my wife has mutual funds and some Japanese dividend payers that she is going to keep indefinitely.

We're still running her business and I am hoping to ramp up RetireJapan, so the plan going forward is to have 2+ years' worth of spending in cash, use that to supplement our income if necessary, then top it up by selling our mutual funds back to their set allocation.

So far so good: we are continuing to invest and haven't needed to touch our investments yet.

[Deep Blue]

I plan to live off income from investments, and leave the capital untouched or hopefully growing.

If there is a more tax-efficient way to do this (perhaps selling off assets to the maximum of allowed CGT, or keeping income low to avoid higher income taxes) I will look into it at the time and adjust as necessary.

[captainspoke]

Now retired for I guess in the middle of my sixth year. Tho I have investments (I'm US so it's there), I kept my taishokukin here, and have not yet used half of it (maybe another year or two to hit half?). And I gave some of it away. The rest of the taishokukin should last another 10 years, perhaps a little longer. My pension is almost enough for my part of things, but that's because in our case we are two pensioners. My wife worked throughout our marriage (and before), and tho she quit a few years early, her pension is as much as mine (more?). And she's still working a little (online classes), set up her own biz for that (had passed the bookkeeping test earlier), did her own taxes for that this year (she uses a package I think called Yayoi). Tho she's never been an investor (very japanese in that way) I couldn't ask for a more financially savvy partner.

I haven't touched actual investments--the bit of money I had been saving/investing. I do have some dividend payers, but that's a relatively small portion overall, my sandbox, where I allow myself to play. Perhaps not the smartest strategy, since I do pay taxes on it here--and then res tax and health, kaigo, etc., but kind of proof of concept.

Life's been cheap thru the pandemic--cooking/eating at home, no big trips. A recent expense was a new dishwasher, and I'm sure comparable things will arise as time passes. Last year we had some re-wiring done along with replacing a couple a/c units. My car is old, but it may be my last one, I'll try to make do with it until I give up driving (or we switch to one car, wife and I still each have our own).

[Moneymatters]

Now retired for I guess in the middle of my sixth year. Tho I have investments (I'm US so it's there), I kept my taishokukin here, and have not yet used half of it (maybe another year or two to hit half?). And I gave some of it away. The rest of the taishokukin should last another 10 years, perhaps a little longer. My pension is almost enough for my part of things..

Thanks Capt! Before I start. I took my mum car shopping when she’d past 80 a while back. Just say’in. The only driver assists are the rear camera and parking sensors.

If I thought I could enjoy my work I’d do it for longer. Keep the taishokin as cash and draw from it until pensions started. I’d love the simplicity of it but don’t see myself staying the course as it were. I admire all those who can!

We have an under counter dishwasher that I ordered online and replaced myself. Super easy. Just screwdrivers and about 1,000 to 粗大ゴミ the old unit. The first unit lasted about 15 years of once a day use. So that’s over 5,000 arguments avoided!

FYI. After a multi year hiatus I just cleared 400km cycling for June on Strava. Come at me bro. Ha ha. Moistly 50km rides.

No. That isn’t a typo.

[captainspoke]

... We have an under counter dishwasher that I ordered online and replaced myself. Super easy. Just screwdrivers and about 1,000 to 粗大ゴミ the old unit. The first unit lasted about 15 years of once a day use. So that’s over 5,000 arguments avoided!

FYI. After a multi year hiatus I just cleared 400km cycling for June on Strava. Come at me bro. Ha ha. Moistly 50km rides.

No. That isn’t a typo.

I think I read about you installing your own DW--my compliments! Having seen the guy do it, I think I could probably do it, but then there are sometimes some fine details that are not immediately obvious. I do have another project, redoing a closet (under our stairs). It's a good space, but the floor is a little spongy, and then follow up doing the walls.

For cycling, are you aware of, or already posting on TCC? https://tokyocycle.com That's a really nice community. This spring to now I've been riding 3-5 times a week. A shorter ride is usually about 30km/90min, longer is 42-45, maybe 2:15 to 2:30 (depending if you look at overall time, or moving time). I'm not on strava, but garmin totals are attached, and I'll probably be out tomorrow and then Wednesday (I like every other day). May total was 720km (37hrs, 42min), but I was pushing hard. I prefer going more often but shorter (advantage of being retired), others who work are 'limited' to longer rides on weekends.

[Moneymatters]

... I do have another project, redoing a closet (under our stairs). It's a good space, but the floor is a little spongy, and then follow up doing the walls.

For cycling, are you aware of, or already posting on TCC? https://tokyocycle.com That's a really nice community. This spring to now I've been riding 3-5 times a week. A shorter ride is usually about 30km/90min, longer is 42-45, maybe 2:15 to 2:30 (depending if you look at overall time, or moving time). I'm not on strava, but garmin totals are attached, and I'll probably be out tomorrow and then Wednesday (I like every other day). May total was 720km (37hrs, 42min), but I was pushing hard. I prefer going more often but shorter (advantage of being retired), others who work are 'limited' to longer rides on weekends.

OK. I'm just registered at Tokyocycle. I'm still relatively new to this as a "hobby"/"moneypit"/"Excust to eat back double the expended calories" and that forum looks like a welcoming and useful resource.
Now I just realised my application is due to be reviewed by an admin! Let's see if I get in. I really shouldn't be trusted with free text fields..

Kudos on those numbers. And you are spot on about the longer weekend rides for the wage slaves, rainy season was a particular challenge. I finally managed a mid-week pre-work ride last week (I think 50km) which I'll foolishly attempt again tomorrow. at least there are 5 weekends in July so my 400km target looks reachable despite us likely hitting Danger wetbulb levels in Tokyo.

I'd love my family to move out...sorry.. back now. I'd love my family to move for a couple of weeks so I can attempt some bigger DIY jobs. I fancy doing the flooring in the LDK myself but it's a huge job. after summer I'll likely rewallpaper the entrance,stairs and landing. It saves a ton of money.

[jcarrera01]

I’m still pretty far away from my retirement, but just for fun I’ve been looking at different retirement withdraw strategies. The 4% rule, buckets, fixed dollar (yen), etc.

What are you guys thinking? Personally I’m leaning towards the “bucket” strategy, but we’ll see once 65 (or earlier) rolls around.

Edit: Is there anything Japan specific we should be thinking about?

With the 4% rule, do you also have to have in mind that everytime you withdraw money, you pay 20,315% tax on capital gains? So instead of 4% rule, it would be a 5% withdraw, then pay the 20,315% on taxes, so you end up with a 4% on cash?

[RetireJapan]

With the 4% rule, do you also have to have in mind that everytime you withdraw money, you pay 20,315% tax on capital gains? So instead of 4% rule, it would be a 5% withdraw, then pay the 20,315% on taxes, so you end up with a 4% on cash?

Depends where you are taking the money from, I guess. If it is from a NISA account, no tax to pay, but for a taxable account then yes, you would have to include any taxes in your calculations.

[jcarrera01]

With the 4% rule, do you also have to have in mind that everytime you withdraw money, you pay 20,315% tax on capital gains? So instead of 4% rule, it would be a 5% withdraw, then pay the 20,315% on taxes, so you end up with a 4% on cash?

Depends where you are taking the money from, I guess. If it is from a NISA account, no tax to pay, but for a taxable account then yes, you would have to include any taxes in your calculations.

I’m maxim out my ideco (68000 per month) and Tnisa but I still think that’s not enough to achieve FIRE. So the rest has to be invested on a taxable account, where I will need to pay 20.315% taxes every time you withdraw the 4%. The interesting thing is that none of the FIRE books I read in Japanese about this topic mention about these taxes when doing the calculation….