The bows & arrows of not so outrageous fortunes: making that first year’s withdrawal

Six months ago, I had a lot to think about; it had been one year since my final paycheck, and plans for the first withdrawal from my stock portfolio were on hold, due to the market’s historic nosedive right on New Years Day 2016.  Luckily, I still had several months of living expenses in my checking account and was able to hold out awhile longer, hoping for some decent recovery in the stock market.

So I watched & waited, and when Wall Street looked a little rosier around the first of April, I took a closer look at my own finances: 

• ***** in personal checking
• ***** in savings 
• $445,000 in personal & retirement investments

When I left my job in December 2014, my stock portfolio was $447,000.  (I hoped it would grow & be closer to 500K when I was ready to begin withdrawals.)  Not only did it do zilch that first year, but on 1/1/2016 it was 435,000--12K lower.  But that’s the breaks, so after holding out for 3 months my portfolio made some gains closer to that Dec 2014 balance and I prepared for my first sale of stocks. 

I knew I’d need at least 21K to live on for one year & figured on earning about $4,500 in dividend & interest income in 2016.  Would I be safe withdrawing 17K?   

(This was a far cry from the amount I estimated paying myself a couple years ago, but the last year has shown me I need to take a much more conservative approach.) 

When it comes to making annual withdrawals from your retirement portfolio, there’s so many trains of thought.  I liked this one best:

Withdraw 4% of your portfolio’s balance every year or 95% of last year’s recommended withdrawal, whichever is greater.

I created an excel worksheet that crunches the numbers, all I have to do is enter the portfolio’s yearly balance in Col B, when I’m ready to make that annual withdrawal.  

Col C will display 95% of the previous years withdrawal;  Col D will calculate 4% of the portfolio’s current value.  I’ll then enter in Col E the greater value of C or D.

So that’s what I did—sort of.  According to my chart, I was ‘authorized’ to take $17,800 from my portfolio.  But the preceding 15 months had been rocky and it just seemed like a lot to cash out, so I only withdrew 16K instead.

To be honest, I regretted taking even that; why did I cash that out in one sitting?  Why not take 8K now & another 8K six months from now?  Or 4K quarterly?  That money could’ve stayed in the market vs. sitting in my checking account gathering dust.   I wished I could put some of it back.

And then along came Brexit…

Last Friday when Great Britain rocked the world with their vote to leave the European Union and investors panicked the world over, I watched my own portfolio plunge in value & shrugged my shoulders—what can you do.  I was good until 2017 anyway.

The following Monday as the bloodbath continued (the Dow had now sunk almost 1000 points)  I visited a couple investor forums I frequent, and so-called retirement veterans were warning “get out of stocks, go all in cash, this could last a couple years”.  I smelled temporary insanity.  

It’s scary to buy when everyone is selling, but I hadn’t seen prices this low in a couple years so…  the $16,000 I’d withdrawn from my portfolio… I put $5,000 of it back in.

Date          Transaction                                                                                     Amount

06/27/2016 BUY 100.73 shares Total Stock Mrkt Idx Adm $49.64 per share    $5,000.00

Those 100 shares I bought for $49.64 are now worth $55.00 each, and yes their price will go up & down & up again, but the important thing is, I was able to put some of that wampum back into the swim, and at a LOW PRICE.

Doesn’t this all sound like a major pain?  Sometimes I think I’d sleep better if I’d just kept on working… or stuck my money in a safer place!   The End!

Into each life some rain must fall… but I’d appreciate it if it didn’t fall into my car too

I did it—after all these years, I switched my auto insurance.  Bright & early Monday morning, I contacted Metromile and said I was ready to give their “pay by the mile” insurance a go.   My personal sales rep (Evan) said “Doug, great choice—you won’t be sorry!  We’ll get your Metro Pulse (the mileage tracker you plug into your car) in Express mail today, you’ll be covered effective Wednesday, June 29.”

So the morning of Wednesday June 29 (that would be yesterday) I climbed into my car & drove to the car wash.  I pulled into the next to last stall when I remembered the last time here, another customer had warned me this stall was dry for a reason, the hose was ‘flukey’.   As I’m backing out to get into the next one, the hose hanging overhead catches on my sideview mirror and it’s nozzle somehow whiplashed into my car’s back glass, smashing thru. 

I didn’t know what hit me, I thought someone had shot my rear window out.  I jerked to a stop in front of the rusty Problem?  Call 412-… sign by the coin machine, fumbled for a pen from my glove compartment and scribbled the number down on my hand.  I then took a deep breath and drove home as carefully as possible, as glass pebbles shook from my hair & from that jagged hole into my backseat.

When I got home & pulled into my parking space, ran upstairs and tried calling that number on my hand (and got no answer, I let it ring 30-40 times).  I then called my sister Shawn, while Mr. Winn (the Korean who lives up the hall) pounded on my door shouting “Neighbor!  Someone smash your car!”

I then called Safelight Auto expecting to hear “We’re on our way!” just like in the commercials--nope, the soonest they can get here is... Friday??  (But they did give me a better quote than I expected, $314.00 including cleanup & mobile service.)  I headed back downstairs with my camera & some towels, trash bags and packing tape, and prayed for no rain.

Before: 

That windshield sun-shade that’s been hiding in my trunk for the last 10 years has finally found some use.  As I laid it across, the rest of the pulverized glass gave way

 

 

After (Friday): 

Safelight’s expert repair, I couldn’t have asked for a more professional service.  After he left, I grabbed a couple buckets & gave the car some much needed TLC

So after all this, I come back upstairs to my apartment (to wait for the police to show up and arrest me for leaving the scene of an accident) and there’s a small brown package resting against the bottom of my front door—it’s from Metromile. 

The Metromile Pulse, my ‘Big Brother’ tracker.

I come inside, my answering machine is blinking.  Hi Douglas, Evan from Metromile!  Your Pulse was just delivered, get it plugged into your car right away & don’t get into any accidents your first day!  Ha ha, just kidding Doug… stay safe!

Okay.

Someone to watch over me—I’m thinking, I’m thinking

 

I think it was the timing more than anything.  Back in April, when I was doing my first year of ‘early retirement taxes’, I was horrified to learn I owed $1,000 in federal, state & local (versus the $230 I estimated) and had just picked myself up off the floor when I got hit with another whopper: an ambulance bill (from my trip to the hospital for kidney stones 8 months prior).  It had only been partially paid by my insurance, so I had to cough up $572.00 on top of everything else.

As l sat here reeling, I opened my next piece of mail:  a notice from my auto insurance carrier.  Dear Mr. Morris, your annual premium is due; send $530.00 pronto, Tonto.

I know, I know.  Everyone has bills to pay & everyone who drives has car insurance.  But I DON’T drive—well, hardly!  And they needed to know!

I called Erie Insurance.  Hi Doug, this is Carl.  How can we help you?  “Hi Carl, can you tell me how long I’ve been with Erie?”  Sure Doug, since April 2004.  I told him I deserved a discount.  I’ve never filed a claim, never gotten a speeding violation or even a parking ticket.  I drove a total of 800 miles last year.  I—I even pay extra for roadside assistance and never used it, the one time I needed my battery jumped I called AAA.

Carl got all excited.  Doug, we can’t go any lower!  You’re free to shop around but you won’t find a better rate--you’re already getting a safe driver’s discount!  He said my only option was to drop the coverage amounts to the legal minimum, but strongly advised against it.  Then he asked if there was anything else he could do.

Nope.

So this morning, I got in my car (for the first time in a couple weeks) and for some reason was reminded of that plea on deaf ears.  I felt frustrated all over again.  After I returned home, I went online & began googling how to lower my auto insurance premiums and came across this little 2 minute video.

THIS WAS EXACTLY WHAT I’VE BEEN LOOKING FOR.  I went to Metromile.com and took a look around, then decided I wanted to talk to a real person & gave them a call.  I got a very straightforward agent (Evan) who asked me a couple questions about my driving habits, then explained how their plans work (you’re billed monthly) with a $20-40.00 base rate and charged 2-5 cents a mile, depending on your quote. 

I told Evan I wasn’t interested in some “bare minimum” insurance, I wanted the same coverage & deductible I currently have.  He said “Good, find your insurance paperwork and let’s come up with a quote.” 

He said “Based on driving 1000 miles a year, you’d reduce your current insurance almost by half, 45%.”  Er… wow.  He explained to me how the device you plug into your car works (it doesn’t check for hard braking or speeding like those Progressive contraptions, it only records miles).  We must’ve talked a good 15 minutes, I didn’t commit to anything (yet) but told him it was very encouraging.

He said “Can I send you a couple links that might help you in your decision?”  Here’s a good article in The New York Times and here’s a more straightforward one in NerdWallet.

I’ve been going back & forth on this most of the day.  What if I suddenly wanted to start driving 50-100 miles a day?  Okay that isn’t happening, but I googled the distance to my sister Shawn’s house and on top of the $14-15.00 in gas it costs for the round trip, I’ll be paying at least $5.00 extra for those 120 miles.  But then again, it’s not like I make those road trips often… and I wouldn’t be getting a $530.00 bill next April.  

But how do I know the monthly base-rate or cost-per-mile won’t increase substantially a year or even 6 months from now?  Evan told me he couldn’t make any promises, but said they were very transparent with their pricing methodology & wouldn’t have their current ranking or member base if they pulled stunts like that.  “Doug… I’d give it a 1% probability of such a thing occurring.”

Aw, that’s reassuring!     I’ve got some thinking to do…