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A Test of ER Resolve
Old 01-20-2016, 11:58 AM   #1
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A Test of ER Resolve

As one who ER'd on 12/31 you can all blame me for the current market turmoil. Nothing like losing 5% (or is it 7% by now) of one's NW in the first couple of weeks of retirement to bring any lingering second thoughts to the surface.

I'd been pretty conservative with a 56/44 AA (now down to about 51/49) and had 100% success rates at 1.5x expenses in both Firecalc and Fidelity RIP, but STILL... dang. Anyway, still sleeping well enough at night. The real test will come if (when?) we drop enough that my equity position drops below 45% and I need to reallocate. I have a big enough cash/bond position to live on for several years and dipping into that to buy stocks will test my resolve all over again.
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Old 01-20-2016, 12:03 PM   #2
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Rather than look at all of the paper losses you've taken, Perhaps you'd feel better by looking at the after-tax effect on your income stream. If your portfolio is down 7% then (perhaps) your after tax income stream is only down 4.5% or so.
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Old 01-20-2016, 12:34 PM   #3
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.......... (now down to about 51/49).........
Don't look.
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Old 01-20-2016, 12:57 PM   #4
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I hear you. I've been retired 18 months but still feel nervous knowing that downturns early in the retirement can really lessen the chance of success. And what if this time really is different? (I don't think it is - but as I type this is down 2.5% just today.)
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Old 01-20-2016, 01:12 PM   #5
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Originally Posted by stepford View Post
As one who ER'd on 12/31 you can all blame me for the current market turmoil. Nothing like losing 5% (or is it 7% by now) of one's NW in the first couple of weeks of retirement to bring any lingering second thoughts to the surface.

I'd been pretty conservative with a 56/44 AA (now down to about 51/49) and had 100% success rates at 1.5x expenses in both Firecalc and Fidelity RIP, but STILL... dang. Anyway, still sleeping well enough at night. The real test will come if (when?) we drop enough that my equity position drops below 45% and I need to reallocate. I have a big enough cash/bond position to live on for several years and dipping into that to buy stocks will test my resolve all over again.
I feel your pain brother. ER on 8/1/ 2015. It has not been pretty. I have spent the past 35 years in the Accumulation phase. I have just begun the Distribution phase. So far, I am not too impressed. I thought it would be more fun! I lived through 2008-2009 with less stress. I guess living without a paycheck changes the equation a bit. DW just got back from grocery shopping and I almost bit her head off. Gotta go kick the dog now!
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Old 01-20-2016, 01:13 PM   #6
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Hang in there!! In six months this will all just seem like a bad dream.

As I told a friend after the 2008 debacle: "Almost the worst happened and here we still are...if we can survive that mess and still go on vacation, go out to eat and carry on without working, we're good to go for anything!"
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Old 01-20-2016, 01:16 PM   #7
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just remember....
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Old 01-20-2016, 01:24 PM   #8
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Originally Posted by stepford View Post
As one who ER'd on 12/31 you can all blame me for the current market turmoil. Nothing like losing 5% (or is it 7% by now) of one's NW in the first couple of weeks of retirement to bring any lingering second thoughts to the surface.

I'd been pretty conservative with a 56/44 AA (now down to about 51/49) and had 100% success rates at 1.5x expenses in both Firecalc and Fidelity RIP, but STILL... dang. Anyway, still sleeping well enough at night. The real test will come if (when?) we drop enough that my equity position drops below 45% and I need to reallocate. I have a big enough cash/bond position to live on for several years and dipping into that to buy stocks will test my resolve all over again.
I know exactly how you feel, having ER'd a couple of months before the '00 crash. You have a nice AA, enough fixed income to fund years of expenses and a nice chunk to rebalance into equities, buying low. It's tough right now but hang tight.
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Old 01-20-2016, 01:27 PM   #9
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I am conducting an experiment in my Donor-advised fund. I stopped contributing to it on 12/31/2014 and have been disbursing the money to charities using a 4% WR. I took out 4% (of the fund's value as of 12/31/2014) in 2015, and the same amount in 2016. The fund is already down almost 17% (60/40 AA, blended fund so rebalancing is automatic). Yikes.
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Old 01-20-2016, 02:20 PM   #10
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Nothing like losing 5% (or is it 7% by now) of one's NW in the first
couple of weeks of retirement
You only "lost" if you took your money out of the market. I did not surrender any of my stock and have not lost a penny even though I am around 50/50.
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Old 01-20-2016, 02:44 PM   #11
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Yep, I ER'd earlier in 2015. Would have loved to see the 2012-2014 market repeat...

But, still very relieved that I've relaxed the AA from 70% + stocks to roughly 50/50 stocks/bonds. I did most of this in 2014 and 2015, and perhaps lost the 2015 ACA subsidy due to higher MAGI. Well worth the price to sleep at night...

Thankfully, we sold the second house last year, just before the stock market dipped. So we're holding 2+ years in cash and a few more years in bonds (after tax account for easy access), hoping to ride things out.

I've tried not to follow the market as closely as when I ER'd almost a year ago. I just stick with a monthly expenses & net worth rollup, mainly to insure our spending is within bounds and there isn't some screwup in the IRA/brokerage accounts.

Bottom line: I'm learning to stick with the AA plan, for better or worse, and just live my wonderful life.
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Old 01-20-2016, 04:04 PM   #12
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You only "lost" if you took your money out of the market. I did not surrender any of my stock and have not lost a penny even though I am around 50/50.
Yes, I prefer to think of it as my unrealized gains are simply lower now than they were at the end of 2015.
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Old 01-20-2016, 04:36 PM   #13
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I am planning to ER in about a year and a half, although I have wondered if I would make it that long. Firecalc was 100% and probably still is, but I did not run it again. The decline makes me more inclined to wait anyway.
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Old 01-20-2016, 06:08 PM   #14
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I know how you're feeling. I ER'd on May 1st 2008. There are members who ER'd around that time frame as well as those who ER'd in 2000. And we're still ER'd. Take some solace in that.

Full disclosure: DW and I went back to work part-time in 2010. Me for 6 months, DW for 10. Looking back, it had a great psychological benefit. Looking purely at the numbers, we didn't have to do it and it didn't make that much of a difference.
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Old 01-20-2016, 06:15 PM   #15
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We are already cutting back. Drinking an 8 dollar bottle of wine tonight instead of a 12 dollar bottle. Sacrifices must be made
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Old 01-20-2016, 06:28 PM   #16
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You only "lost" if you took your money out of the market. I did not surrender any of my stock and have not lost a penny even though I am around 50/50.
+1. In 2008 our rental property lost 50% of it's value. In 2014 it came back plus. If you did not sell, it is not a loss yet.
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Old 01-20-2016, 07:13 PM   #17
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At critical stage of hanging it up in April @ 55, certainly dont need this crap, but I guess if we must retire early we will see many of these crazy cycles as we move forward. Cash reserve definitely a big plus.


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Old 01-20-2016, 07:38 PM   #18
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Got pissed off this morning when a package was sent priority vs slow boat. Cost 12 bucks more than I wanted to spend...

Then I took a peek at the account and was down six digits for the DAY and that was before lunch time. Oh Puke puke puke.

Keep it in perspective ... Perhaps it's a badge of honor that we are getting battle tested at this early stage of FIRE.
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Old 01-20-2016, 07:39 PM   #19
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We are already cutting back. Drinking an 8 dollar bottle of wine tonight instead of a 12 dollar bottle. Sacrifices must be made

These kind of sacrifices makes one wonder if retiring is worth it!
Last week, I tried to slide an $8 bottle by my GF and it met with little appreciation, so I bought an $11 bottle tonight for this weekend to please my "high maintenance" GF.


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Old 01-20-2016, 11:06 PM   #20
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I don't think we are going into a recession and thus this will just be a moderate price decline. Perhaps close to the end of it.

Recessions are preceded by a flat yield curve and we have the opposite. Business is decent. We don't sell a lot to the Chineese so that is mostly their problem (remember Greece?). The Fed is not going to tighten with weak equity performance like we've had. More then likely, there will be some positives that have not been discounted and then we'll see the market climbing back up.

Well that is what my crystal ball says. Smile and be happy. Happy days will be here again.
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