Any near term FIRE members reconsidering?

[Grigori]

The softness in the market has me concerned that my wife or I might freak out. I have been doing OMY for two years, and have enough, plus a really healthy cushion. when I cut our stocks in half as a spreadsheet and firecalc exercise, we are still good to go. The main thing I've been trying to study, and educate my wife so that we keep the course. I've warned her that sometime we will likely face a significant market decline, and have to rebalance into stocks, and that having stocks is the main way we'll have to protect against inflation, so we can't put all the money in to CDs and T-Bills like her dad does. Right now we have 38% stocks; I can't convince her to buy any more. This year, since I believe I am way over due to FIRE
I have been putting every dollar into a VACATION ONLY fund, so that I make sure we take some trips regardless; it's about the only way I can get myself up to the office, and even then it's hard. We might cut back a little to feel SAFE, but it won't be on VACATIONS !

Will FIRE December 31, 2014 (44 days left in the office).

 

[2B]

The softness in the market has me concerned that my wife or I might freak out. I have been doing OMY for two years, and have enough, plus a really healthy cushion. when I cut our stocks in half as a spreadsheet and firecalc exercise, we are still good to go. The main thing I've been trying to study, and educate my wife so that we keep the course. I've warned her that sometime we will likely face a significant market decline, and have to rebalance into stocks, and that having stocks is the main way we'll have to protect against inflation, so we can't put all the money in to CDs and T-Bills like her dad does. Right now we have 38% stocks; I can't convince her to buy any more. This year, since I believe I am way over due to FIRE
I have been putting every dollar into a VACATION ONLY fund, so that I make sure we take some trips regardless; it's about the only way I can get myself up to the office, and even then it's hard. We might cut back a little to feel SAFE, but it won't be on VACATIONS !

Will FIRE December 31, 2014 (44 days left in the office).

You should expect one or more 10% corrections in any given year. A 20 to 30% correction should be expected every 2 or 3 years. Fortunately, the nominal 50% drop in 2008/2009 usually only happens every 30 or 40 years. Up until now, the market has always come back in a reasonable period of time.

If you FIRE in January you get health insurance with the employer subsidy for a month. No big deal but....

I'm planning to pull the plug 5 Jan 2015 with one goal to take vacation over Christmas and New Years weeks. I also want to avoid any question on some company contributions to my SERP account that vests on 12/31/14. It's not a fortune but it's mine. Where's Scrooge McDuck when you need him!

The company has given people 2 weeks notice even when they are terminated for cause. If for cause, they get cash. Any RIFs have to come in for the money so who gets the better deal? In return we are asked to give 2 weeks notice when terminating. I'll do that and I will stay a bit longer if asked to smooth out any transition for my last project. This company has been very good to me when I needed the opportunity.

 

[jollystomper]

I'm not too concerned. I'm fortunate the market only affects one of my retirement "legs". We have planned our savings so that withdrawals to supplement my pension do not need to come from our market investment principal until we hit 63 (in 7 years), when we are currently targeting to start taking SS if needed.

 

[Options]

Not watching the market at all. With a conservative 2.5% WR and a 40/60 AA, I'm not thinking about Mr. Market's short term moves. I've calculated what my short term losses would look like if stocks tanked 50%, and I'm still comfortable. FIDO, Firecalc, Financial Engines have me dying with altogether too much money left over. Even ESPlanner, in its most conservative mode, shows a standard of living that's consistent even in worst case market conditions.

As noted above, Kitces recent work on SOR demonstrated it's roughly the first decade of retirement SOR versus the first 1-2 years that's most important. If you're worried about SOR, remain flexible with your WR, consider going back to work PT in a worst case scenario, or even consider an annuity at 70, 75, or 80 should the PF start looking shaky then. IIRC, this is Dirk Cotten's basic advice. And I believe it's Otar who provides warning signal methods for various stages of PF life health (before, during, and after retirement) when one should take alternative action should the situation warrant.

The key, as in all things, is flexibility, alertness, and agility.

 

[Grigori]

You should expect one or more 10% corrections in any given year. A 20 to 30% correction should be expected every 2 or 3 years. Fortunately, the nominal 50% drop in 2008/2009 usually only happens every 30 or 40 years. Up until now, the market has always come back in a reasonable period of time.

If you FIRE in January you get health insurance with the employer subsidy for a month. No big deal but....

I'm planning to pull the plug 5 Jan 2015 with one goal to take vacation over Christmas and New Years weeks. I also want to avoid any question on some company contributions to my SERP account that vests on 12/31/14. It's not a fortune but it's mine. Where's Scrooge McDuck when you need him!

The company has given people 2 weeks notice even when they are terminated for cause. If for cause, they get cash. Any RIFs have to come in for the money so who gets the better deal? In return we are asked to give 2 weeks notice when terminating. I'll do that and I will stay a bit longer if asked to smooth out any transition for my last project. This company has been very good to me when I needed the opportunity.

Thanks for reminding me that we are unlikely to see a 50% drop in stocks next year ! I'm going to use the total portfolio return approach, and keep balancing back to 38% to 40% stocks, with the rest in bonds/cash. If we have a bad sequence of returns, that will mean we will be living on bonds we sell, and cash, until stocks recover. Fortunately we have well over 10 years living expenses in bonds/cash, and pensions/social security will be coming in 6 to 10 years as reinforcements, depending on what social security timing strategies we wind up with.

I need to fess up a little - technically I'm FIRE 2015. I'm giving three notice the middle of December, so I can call myself a December 31, 2014 FIRE. Plenty of notice. Yes, they've been good to me, and so has the oil business lately. However, like you, I'm waiting until January 9th for the exit interview. There won't be any W*RKING days for me in 2015 other than that exit interview. I'm going to pick up the five days of monthly and annual flex time and floating holidays in January, be paid for staying home.

And of course get another month of COBRA, plus get my wife enrolled in some benefits she isn't enrolled in at the present. COBRA still looks like it could wind up being cheaper than the health insurance now available with the ACA if our income is too high for subsidies.

Plus I get paid for 6 weeks vacation for 2015 by staying until December 31st. It's amazing all the little treats you can pick up if you dig through the HR site, and their policies.

One thing I want to miss is the performance review cycle in February / March ! Why would I want to go through that for a raise I won't be able to use? I'll miss the April bonus too, but I'm ready to FIRE.

 

[Andre1969]

Hopefully it's true that we won't see another ~50% drop anytime soon! FWIW, depending on how you want to look at it, I've already seen two drops of ~50%, going from peak to trough. The first was from a peak in 2000 to a trough sometime in late 2002. It was long and drawn out, and somewhat masked by the fact that I kept investing throughout that period. So while my return was around -50%, my asset total was only down around 31% (~69K to ~48K). Also, since I didn't have much invested back in those days, it didn't take much of an additional investment to sway things.

The second time was from October 2007 to November 2008, when I saw about a 50.5% loss (~422K to ~210K).

But, if I want to put a more optimistic spin on it, there has never been a single calendar year (12/31 to 12/31) that I saw a 50% drop. Even 2008 was only about a 37.5% drop (ended 2007 with around 415K and by the end of 2008 it was around 260K). When you consider that I was still investing that whole time, the loss was actually greater, but I didn't invest enough that year to make it a 50% loss.

 

[Sunset]

I'm hoping the market tanks about 20% or more, so I can buy some good deals.
Sure I'm FIRE'd , but like some others I only used a portion of savings in the retirement calculators (75%) and we were good !
This allows me to sleep easy knowing we could easily take a 25% drop in the market.

We also have a number of years of cash available.
Yesterday I bought a little VTV , just in case the market went back up for a few years.

 

[Sunset]

...
Plus I get paid for 6 weeks vacation for 2015 by staying until December 31st. It's amazing all the little treats you can pick up if you dig through the HR site, and their policies.
...

Perhaps you can sign up for a massive FSA, and spend it, while only making a month or two contribution, although I think if you take COBRA maybe you have to make the FSA payments (really unsure).

 

[mtheulen]

Class of 2016 here, and we're gonna have 4 years of expenses in cash/short-term FI.

Need a plan to handle market dips/pullbacks. If a 5% decline causes you angst, you aren't prepared, IMO.

X2 Mike

 

[NanoSour]

Oh, market is recovering a bit this AM - is everything OK now?

-ERD50

Made my 2014 IRA contribution at yesterdays close…wahoo! Market goes down and up. Stay the course.

 

[FUEGO]

I take a look frequently but don't really look at month over month changes more than, well, monthly. We lost $50k in September which represents 1.5 years of living expenses. Oh well.

If the portfolio loses another few hundred thousand dollars then I might be more concerned and consider backup Plan A (temporary reduce or defer expenses, consider small additional side income).

Otherwise I'm liking the drop in prices. I'm sitting on $40k+ in cash and I'm thinking about making IRA and solo 401k contributions with about half that money to offset DW's continuing income and to shelter my small side hustle income so we can pay zero tax (actually get a huge refund in the form of a refundable additional child tax credit x3).

 

[Meadbh]

I am retired but if I was still working I would see this as a buying opportunity. As it is, I am not too worried, because I expect to underspend my projected expenses for 2014, my car loan ends in July 2015, which will help cash flow, and I can take 2015 income from my cash buffer. I can also defer making major travel plans (e.g. Australia) in favor of less costly vacations. In fact, I'm glad that I took some of my gains in 2014.

 

[athena53]

Retired in May and I'm trying to stay calm. Our investments are still up about $100K over what we put in this year. We withdrew only $20K this year and that should last us for a few months. I've got over $40K in cash still in the brokerage accounts and can use it either for future withdrawals or buying opportunities.

I've seen my portfolio recover from past dips; the difference now, of course, is that I'm not constantly funneling in new money from payroll deductions. If we have a 2008-style drop, I may decide to take out a mortgage when we downsize rather than pay cash for the new home, or even start SS early to minimize selling equity investments when markets are down. We could also cut discretionary spending; the biggest item there is travel. DH and I can be downright cheap when we have to be.

One day at a time.

 

[2B]

The Vanguard Total Stock Market Admiral Shares (VTSAX) is up 6.69% YTD. I realize that small cap is flat YTD and the Total Internation Stock Index is down 1.19%. We aren't talking a crisis here or even a bad year. If you are feeling angst now, you need to revisit your expectations of being in the equities market.

 

[eytonxav]

BBQ-Nut,

If the possibility of a downturn is freaking you out, I suspect your OMY comment may turn into OMY*X, with X>1

 

[tuixiu]

Small cap really needs perspective... it has clawed back a few percentage points of the 35% you gained in 2013?

 

[GTFan]

Not watching it too closely. Earlier in the year before I FIRE'd I set aside about two years of cash and equivalents knowing that there will always be bear markets and bull markets.

This. Retiring in Dec. of this year and will have 3 years expenses in cash, so I'm not worried about short-term issues.

 

[2B]

Small cap really needs perspective... it has clawed back a few percentage points of the 35% you gained in 2013?

Scrooge McDuck is alive and well in most of us. We just want more.

 

[ziggy29]

If someone were going to retire within the next few months, it wouldn't be a terrible thing to ratchet down their AA or "buckets" to have a little more safe money so the longer term capital can let it ride through a potential correction or bear market. Even now we're only about 6-7% off the all-time highs so while the best time to "get out" passed earlier in the year, it's still not far off the top.

I think this would be reasonable advice for anyone about to retire within the next (say) 2-3 years. If you can configure things so that you have enough cash and "safer stuff" to spend down in case this is 2001 or 2008 all over again, the risk of "retiring at the wrong time" can be managed a bit.

 

[copyright1997reloaded]

I retired in May 2009, with the market in the midst of a long tail spin. When I made the decision to retire in April 2009, the SP500 was down 40-45% from the peak. I was "hopeful" that the lows had been made and I had a good cash/fixed income cushion (2-3 years worth of expenses). I also asked myself if I lost another 20-25% on my equity positions, would I still have enough to pay basic expenses (enough to keep me from absolutely having to get a job). The answer was yes, and I went with the decision to retire.

Interestingly enough, I'm back working full time (teaching at the college level) after having worked a few years part time. But it's not for the money (although it is partially for the health care benefits as I am quite a few years away from medicare). I like the j-o-b, the hours aren't bad, and I have the summers off.

 

[Palmtree]

The Vanguard Total Stock Market Admiral Shares (VTSAX) is up 6.69% YTD. I realize that small cap is flat YTD and the Total Internation Stock Index is down 1.19%. We aren't talking a crisis here or even a bad year. If you are feeling angst now, you need to revisit your expectations of being in the equities market.

Well said. Things are still far from it being a really bad year.

 

[Bestwifeever]

The Vanguard Total Stock Market Admiral Shares (VTSAX) is up 6.69% YTD....

Ehh, give it a few days--down 2.12 percent today.

Being re'd and in our midsixties, we are pretty conservative here and still feel a little twinge or two at Mr. Market's wild ride this week. Staying the course come hohw though.

 

[Bigfish]

Fire May 2015

I plan to FIRE in May 2015, my AA in my rollover IRA is 50/50 and I have three years in a taxed savings account by the time that's gone SS will kick.Even so it gets my attention.
BF

 

[EastWest Gal]

We think we can get by on about 2/3 of our current assets. Have 2 years in cash and inherited treasuries that mature next year. Cross our fingers and enjoy the ride. Of course the group wants me to stay on in the new position but less frequently. Will have to consider.


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[FedExCourier]

Retiring in 7 weeks and have 4 years in cash, 5 to 10 years in balanced fund and TIPS. I have given notice and can't wait to start really living.