4 those Retired: If the market drops...

[bizlady]

Please take part in this poll ONLY if your household is already retired. If the debt mess is not settled, and the market were to drop (a conservative) 25%, how would that impact your retirement?

 

[73ss454]

3 years ago I was retired for 2 years and when the market got hit I took a PT job for 1 1/2 years. Now that I'm 62 I'll just take my SS and sit through what ever comes and stay retired.

 

[grumpy]

My retirement, from a financial perspective, is about as bullet proof as it could be. Yes, if my government pension payments are held up I will have to pay living expenses from our investments. I don't see any scenario in which those payments would not be resumed once the debt ceiling is raised. The only real impact a steep drop in the markets would have is that our children and grandchildren would inherit less.

 

[easysurfer]

I voted the second option. I'd definitely feel the pinch, but hope that the market will go up by 26% the following year

 

[Animorph]

I voted the second option. I'd definitely feel the pinch, but hope that the market will go up by 26% the following year

Yep, I'll just wait for it to go back up. And I expect to buy equities if they go down 20%, so I'll be back to even a little faster. It's an opportunity.

 

[veremchuka]

Since I don't take any distributions I don't think it would effect me though I'd be looking to buy at bargain prices! I would be freaked out at a 25% drop though!

 

[easysurfer]

I start the year out with 2 years worth of cash for emergency. If after the first year, I probably wouldn't sell equites at a loss, but use the 2nd years emergency cash and wait for the market to bounce back. Now after the 2nd year, if the market is still in the dump, then.... haven't got that thought out yet.

 

[JakeBrake]

I chose option 2. I retired in July, 2007. My retirement portfolio went down by 34% when the market crashed in 2008. I now have more money in my retirement portfolio than when I retired, but the way Quicken figures it I am still down about 5%. I am now at SS FRA and can start drawing SS whenever I feel the need. My plan at the moment is to delay until I'm 70. Obviously, If there is a major downturn, I can and will cut expenses.

Why, just today I drove by several bridges with no one living under them.

 

[arebelspy]

I'm nit voting because I'm not retired, but looking at the poll options, I don't understand the "My retirement would survive but I'd cut expenses and/or go back to work" option. Isn't going back to work meaning your retirement didn't survive?

 

[W2R]

I voted, "No problem, I can absorb this and maintain my expense level ".

And that is true. Still, I would probably spend less until my portfolio recovered simply as a reflex.

Also, I might claim Social Security earlier than planned since I am eligible. Then I could buy low.

 

[Stevewc]

I Plan to Hang Tight.
Looking for a buying opportunity if all turns south.
Steve

 

[Coolius]

I intend to take advantage of any panicked selling, have some dry powder ready to use. Probably will buy some oil majors like CVX, COP, etc., and some stable companies like KO, PEP, JNJ, CAT.

I suspect the debt deal will come at the last moment, Obama & Boehner are simply playing chicken for political leverage, with the American Public taking all the risk of destruction, damage and ruin.


The markets will recover.

 

[scrabbler1]

My ER income does not depend on the value of my portfolio. Instead, it depends on the monthly dividends the taxable portion generates. Or, to put it another way, it depends on the monthly dividends per share from one particular bond fund which generates most of my monthly income.

I have built into my ER budget a cushion, or surplus, so that if the monthly dividend from that big bond fund is a lower than usual (like it was at the start of July) I can handle it without any problem.

And if that dividend were to be cut by, say, another 20%, I have alternate plans to cover my expenses without dipping into principal.

I do have a stock fund component in both my taxable account and my IRA but I simply reinvest those dividends and cap gains distributions and have never withdrawn principal (except to buy a new car in early 2007).

As I did in late 2008 when I ERed, I used a dip in the market as a buying opportunity to pick up shares at bargain prices. If there another dip like that I would react similarly.

 

[KingB]

I voted 1 assuming the market recovers later. If it doesn't, we just have to exit the world 2 years earlier (from 99 to 97).

 

[Alan]

I voted 1, assuming my investments dropped 25% as I am many years away from needing to sell equities.

If the market dropped 25% I don't expect my investments to drop 25% as I am now in equities only 34%.

 

[chinaco]

A big stock market drop is always a problem... if one is invested in the stock market!

Managing it is a different matter.


IMO - if one cannot manage a 25% drop in the stock market... they have no business being in it in the first place. Because there is no doubt it will happen (at least temporarily)... just a matter of when. For that matter, they may not be in a strong position to FIRE or retire... but that would depend on a number of other issues.

 

[donheff]

IMO - if one cannot manage a 25% drop in the stock market... they have no business being in it in the first place. Because there is no doubt it will happen (at least temporarily)... just a matter of when. For that matter, they may not be in a strong position to FIRE or retire... but that would depend on a number of other issues.

+1 But if it happened by choice, as in this case, I would be truly PO'd. Unfortunately we will undoubtedly fail to replace the current bums with a coherent group of new bums so we will be bound to repeat the fiasco in the future.

 

[utrecht]

If the debt mess isnt settled? We see these stalemates over and over again in the government, in the NFL, with American Airlines. After all the threats of work stoppages, government employees not getting paid, SS recipients not getting their money ect, it always gets worked out in the end. People just love to make all kinds of idle threats and then they compromise. I just wish they would just compromise in the first place like we all know they are going to and quit with the nonsense in between.

 

[rescueme]

I just wish they would just compromise in the first place like we all know they are going to and quit with the nonsense in between.

What's the fun in that?

Anyway, it makes for good press. Those who are for/against (any item under discussion) can say they fought the "good fight".

Compromise without proper debate leads to those (both in and out of discussions) with the feeling that they "gave up", too early.

It's just human nature, IMHO...

 

[MichaelB]

Please take part in this poll ONLY if your household is already retired. If the debt mess is not settled, and the market were to drop (a conservative) 25%, how would that impact your retirement?

This has already happened to some of us more than once ('00, '08). Life goes on and portfolios recover.

 

[rescueme]

This has already happened to some of us more than once ('00, '08). Life goes on and portfolios recover.

Yes.

Retirement isn't for sissies ...

 

[Moemg]

I already lived through this at the start of my retirement . I cut back a little and let my portfolio heal.

 

[Nords]

If the markets tank then we'd probably put some spare cash to work... 1-2% of the portfolio.

I voted the second option. I'd definitely feel the pinch, but hope that the market will go up by 26% the following year

Technically if a stock market worth $1 drops by 25% (to 75 cents) then it would need to gain 34% to get back above $1...

 

[temsike]

We keep a 60/30/10 globalized FIRE portfolio and use a 4% annual withdrawal rate that adjusts with inflation (CPI or PPI whichever is less.

If the stock market drops 25% that means our portfolio drops 15%. At years end, we would re-balance back to 60/30/10 and continue to withdraw from cash. We would continue our withdrawals but not add in the inflation adjustment until the portfolio got back to par or more.

 

[temsike]

Technically if a stock market worth $1 drops by 25% (to 75 cents) then it would need to gain 34% to get back above $1...

That's why it's important to sell fixed income and buy equities (i.e. re-balance). It's a guaranteed way to buy low and sell high.