Any near term FIRE members reconsidering?

[BBQ-Nut]

Watching the Dow and S&P take a sharp downturn....not liking the trend...but not panicking and holding my ground.

BUT - it is making me concerned/worry about my plans to FIRE in '15.

If the market continues to sell off and slide - I may have to face OMY

I don't want to start FIRE with a 'bad sequencing'.

Anyone else feeling the same way?

 

[pjm-7]

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.

 

[REWahoo]

Watching the Dow and S&P take a sharp downturn....not liking the trend...but not panicking and holding my ground.

BUT - it is making me concerned/worry about my plans to FIRE in '15.

If the market continues to sell off and slide - I may have to face OMY

I don't want to start FIRE with a 'bad sequencing'.

Actually it may turn out to be the best sequencing you could possibly ask for. Retiring at the peak only to face a big downturn after you retire is far more hazardous to your mental and financial health than getting the downturn out of the way first. If (and that's always a big IF) this turns out to be a garden variety correction, won't it be nice to have it behind you before you pull the plug?

OTOH, if this turns out to only be a minor blip and the market continues going up, oh boy...

 

[W2R]

This isn't that sharp a downturn! At least, not IMO. Look what we went through a few years ago.

And REWahoo is right. I retired in 2009, during the recession. I had no idea whether the market was just getting wound up for an even worse recession than it had already been. All the talking heads seemed to be predicting doom 'n' gloom, that's for sure. But I couldn't have picked a better time. The market surge for five straight years after I retired (so far), has been phenomenal. It really helped us 2009 retirees to get a good financial start to retirement.

Really, predicting whether or not the market will thrive or plummet is pretty hard to do. It's all blind luck, or so it seems to me.

 

[photoguy]

Although I fired this year I'm not too worried about the market sell off. Basically we planned from the beginning to have a portfolio/nest egg that would be able to survive through a bear market from the start.

People with a typical 60/40 stock/bond portfolio should be able to handle bear markets without a problem (at 3-4% WR) -- that's 10-13 years of expenses in fixed income.

 

[martyb]

While I'm not panicking, I will most likely not begin taking withdrawals until I feel like things are more on the upswing. Since retiring 3 months ago, my TSP and also wife's 401k are down a bit. We don't need the money now, so no reason to start spending it.

 

[walkinwood]

S&P 500 was at 1831.98 on Jan 2, 2014. What downturn? Take a deep breath. I too was worried about the drop from Oct 2007 to my ER date of May 2008. Little did I know!!

In any case, you shouldn't ER with any misgivings. Going back to what you have (in terms of work) is not always feasible.

On the other hand, you will encounter sharp downturns - maybe even early in your ER. You just need to think hard about your SWR method, your AA and your ability to stomach a 40-50% drop in the stock market. We've been through that in 2008/09 and it tests you. I give a lot of credit to this board and all the amazing material it referenced. Thankfully, I read & internalized a lot of it & didn't panic.

 

[dallas27]

Not that im panic'd, but i should point out there is a downturn for those if us heavy in international and small caps. Sp500 isnt the only metric.




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[pb4uski]

Watching the Dow and S&P take a sharp downturn....not liking the trend...but not panicking and holding my ground.
....Anyone else feeling the same way?

No, and with all due respect if a 4.8% correction has you second guessing your retirement plans then you may not be ready. We're just giving back some unrealized gains that were a bit fortuitous to begin with.

 

[nun]

I retired 7 months ago. I update my account balances at the end of each month and rebalance if I stray from my 60/40 AA. I have enough in my stable value fund to last me for 7 years so I have little interest in the daily fluctuations of the stock market. Also, once my pension and UK and US social security start I'll have even less interest in the value of the stock market.

 

[RobLJ]

Am still planning to semiretire June 2015, but DW will work for 3-5 years, although not at the current place or wage, so it's very different from going the full Monty FIRE like you. Since I've got another 10 years to go until Social Security, the timing of full FIRE and her going to part time all have about 2-4 year margins. I'm 60-25-15 allocation, similar to nun but more cash & extremely short term bonds.

 

[scrabbler1]

I retired October 31, 2008, when the markets were really crashing. It was a huge break in my favor to jump-start my financial position because I was able to buy 20-25% more shares of my targeted bond fund than I had anticipated when I was putting together my ER plan. Having those extra shares is particularly helpful now because the monthly dividend per share has fallen off since 2008. Because the company stock I liquidated at the same time back in 2008 got updated only once every 3 months, its price had not taken a full beating since it was last updated at the end of September (third quarter). In short, I was able to "sell high" and "buy low" all at the same time!

 

[Totoro]

I'm semi-FIRE right now, eyeing a near term FIRE, and actually happy this is happening and hope it continues. I have an asset allocation of roughly 50/50 right now and waiting for a moment to boost that to 85/15.

The interesting thing about this (so far smallish) correction for me is that it coincides with a strengthening dollar and a dropping euro. This means that in euros so far this has been a 2% correction for the stock part. My wealth in euro is almost stable, in usd I dropped 4% or so.

So not fully sure what to think of this, although since I live in the eurozone at the moment I tend to take the positive view.

 

[2B]

I can't see how we are in anything unusual. Yes, international and small cap have been hit near the 10% range recently but these areas had been pretty strong over the past few years. Different asset classes are supposed to perform differently. My total portfolio is only down a little over 2% from its peak a little over a month ago. I'm still safely ahead for the year.

We should expect a nominal 20% correction every few years. We haven't had one of those for several years. A 10% correction usually happens once or more per year. They've also been pretty rare.

I have 34 "in office" days left until my resignation which is scheduled for 5 January 2015.

 

[Huston55]

Watching the Dow and S&P take a sharp downturn....not liking the trend...but not panicking and holding my ground.

BUT - it is making me concerned/worry about my plans to FIRE in '15.

If the market continues to sell off and slide - I may have to face OMY

I don't want to start FIRE with a 'bad sequencing'.

Anyone else feeling the same way?

According to this article, it's not the first (or one) year or two that matters; it's the first decade.

Understanding Sequence Of Return Risk – Safe Withdrawal Rates, Bear Market Crashes, And Bad Decades | Kitces.com

If you're a little anxious, you may want to look at your AA. I just semi-FIREd and am at 60/25/15. That AA plus some guaranteed income streams gives me the confidence I expect I'll need when there is a real downturn. At least that's the plan.

 

[rodi]

I will admit to feeling a bit nervous that this may be the start of bad sequencing... I retired in June. I'm hoping it's not. Don't have a crystal ball... so who knows.

I'm staying the course and DEFINITELY not going back to work. Like Huston I have a few income streams that help out. But you asked if people had concern or worry.

I am a worrier by nature. So of course I worry. I need to channel my inner Alfred E Newman....

 

[tuixiu]

Actually it may turn out to be the best sequencing you could possibly ask for.

Agreed 100%.

We're planning on retiring in January, my attitude is if we're going to have a pullback I'd rather have it start now so I get a better sense of where we stand.

It isn't like we already gave our employers a three month notice, if there is sufficient carnage in the market will just suck it up and keep working until we feel comfortable. That sounds like a lot better position to be in than being the dude who triumphantly retired then came sniffing around a few months later for rehire.

 

[BBQ-Nut]

Agreed 100%.

We're planning on retiring in January, my attitude is if we're going to have a pullback I'd rather have it start now so I get a better sense of where we stand.

It isn't like we already gave our employers a three month notice, if there is sufficient carnage in the market will just suck it up and keep working until we feel comfortable. That sounds like a lot better position to be in than being the dude who triumphantly retired then came sniffing around a few months later for rehire.

That is my strategy as well - hold off on the actual notice until right after the new year - that way I also get the paid holidays for some 'pocket money' to start FIRE.

And if the market decides to keep going down - well, then, keep working until I 'feel' better about things....but the though of OMY just makes my gut sink.

 

[ERD50]

....

I don't want to start FIRE with a 'bad sequencing'.
...

It might seem like semantics, but I think it useful to look at it this way -

Those bad runs in FIRECalc weren't people retiring into bad sequences, they were people retiring after a major rise in the market. IOW, if the market has risen 30% in three years, are you really more prepared to retire now than you were three years ago (ignoring adds/withdraws from your portfolio and other timing effects)? You still own basically the same 'stuff', only the assigned value has changed. And generally, after we see a fast and steady rise, we see a correction (though knowing just what levels each will hit is very tough, IMO). Values tend to revert to the mean.

Although, if you have a 100% safe withdraw rate, and the future is no worse than the past, then that WR will survive the dips.

....
If the market continues to sell off and slide - I may have to face OMY
...

If you are that close, and that freaked out by this little blip (which may or may not turn into a big blip, but we can't tell from this little blip), than OMY might be the thing to do.

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

-ERD50

 

[Andre1969]

I get a bit jittery when I see the point losses to the Dow, S&P, and Nasdaq, and then the accompanying dollar losses to my various accounts. But then, when I look at the percentages, it makes me feel better. Overall, I'm down about 3.5% from a peak I hit back in July or August. Actually, down a bit more than that, since I'm just looking at totals, and not taking into account additional investing. But, at worst, I might be down about 4%.

I had a gut feeling that this was going to be an off year, simply because I did so well in 2012 and 2013.

My retirement goal is actually a floating target...sometime between now and April 2020. Just depends on how well the market does, how fast the BS bucket at w*rk fills up, etc. When the market gets shaky like this, I'll admit it does make me appreciate the j*b a bit more. As long as I have the j*b, I can let the investments ride, let the dividends keep reinvesting, and keep adding to the 401k and Roth. I just look at is as buying on sale!

 

[ERD50]

....

I don't want to start FIRE with a 'bad sequencing'.
...

It might seem like semantics, but I think it useful to look at it this way -

Those bad runs in FIRECalc weren't people retiring into bad sequences, they were people retiring after a major rise in the market. IOW, if the market has risen 60% in three years (like SPY has done), are you really more prepared to retire now than you were three years ago (ignoring adds/withdraws from your portfolio and other timing effects)? You still own basically the same 'stuff', only the assigned value has changed. And generally, after we see a fast and steady rise, we see a correction (though knowing just what levels each will hit is very tough, IMO). Values tend to revert to the mean.

Although, if you have a 100% safe withdraw rate, and the future is no worse than the past, then that WR will survive the dips.

....
If the market continues to sell off and slide - I may have to face OMY
...

If you are that close, and that freaked out by this little blip (which may or may not turn into a big blip, but we can't tell from this little blip), than OMY might be the thing to do.

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

-ERD50

 

[robnplunder]

Not me. This "downturn" isn't a significant one so far. Even it turns out to be one, it won't change my mind. What keeps me doing OMY is other things like my parents potential LTC cost, secular bear market (vs corrections), etc. Ask again if market goes down another 1000 points.

 

[Willers]

I am in a similar situation with my target date being 12/31/15. A couple of points that might help:

I have a couple of really poorly performing funds this year (one Int'l and one aggressive large cap that I need to hold because of cap gains exposure) that have crushed my returns but I'm still up for the year. Other than the fact that this year's curve is not great for DCA'ing, should a correction really matter if you are still up? What if we were +30% for the year and we had a 10% drop? I'd still be thrilled. Others wouldn't if they mentally locked in those gains the minute they happened. I also try to consider the last 12 months or at least the current YTD to get some perspective on how things really are.

Actually, I look at the EOY 2015 date as a close to best case scenario for those nervous about valuations. If we see a drop it gives you a chance to replenish before you go out. If the market goes up then that is more cushion. Just don't mentally "lock" those gains in as your base.

As mentioned earlier, if this drop made you nervous then you should probably take a hard look at your AA and at your planned WR/expenses. You may in fact be cutting it too close for your comfort level.

Good luck to both of us!

 

[mrfeh]

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.

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.

 

[Live And Learn]

I set my goal at a 3% WR from my portfolio high and 3.5% using 80% of the Equity portion and 90% of the fixed income portion to help me stomach market declines. Hopefully that keeps me from another OMY or TMY stint !!