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Old 09-24-2016, 11:46 AM   #21
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Originally Posted by harley View Post
My recommendation is to have enough money in cash/cds/money market accounts to be able to ride out any big drops. If you aren't forced to sell assets at a low price it's a lot easier to not panic when all around you are freaking out. 3 years is a good number for me. Long enough to outlast most downturns without being too much of a drag on your AA. Other than that, just checking things out ahead of time so you aren't surprised with a new roof or HVAC or something just after you FIRE is a good idea. There's always something that can happen, but after a couple of them happen and you realize you're still safe, it gets easier. You're just experiencing the noob FIRE butterflies. It's normal, so take a deep breath, and you'll be fine.

Asset Allocation % aside, I try to keep 7-8 years of spending in cash and bonds, figuring that will allow enough time for the equities to recover from any decline without selling.

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Old 09-24-2016, 12:03 PM   #22
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DW was planning to retire earlier this year and had inherited property up for sale that was earmarked for student loans she'd taken on. In order to facilitate her retirement, we opened a HELOC to pay off the loans until the property sold. Well, they both paid about the same time, so I invested the property proceeds and will pay off the HELOC next year. Oh, and DW decided to delay retirement 3 months. We'll keep the HELOC to manage income after it's paid off as it will lessen the risk of having to sell in a down market. My experience has been that even in a continued down market, an asset class will recover within a few months to where you're comfortable selling it.

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Old 09-24-2016, 12:15 PM   #23
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Our passive income (dividends, interests) will exceed our needs by quite a bit, even in this low yield environment, when we move to a lower cost of living area in a few months (paid for home, low property taxes). Plus I have quite a bit invested in cash-like instruments like CDs and i-bonds for ballast, so I am not overly concerned about a market correction. In retirement, taxes can be managed a lot more effectively than when I was working, so I do not worry too much about that either.

My biggest concern is healthcare, which is already one of our top expenses. If ACA was repealed and pre-existing conditions made health insurance impossible to obtain or completely unaffordable, it would be an existential threat to our financial well-being and retirement in the US. Thankfully, we have the option to pack up and leave to get excellent and affordable coverage in Europe if it came to that.
42 y/o, married, retirement portfolio = 43 x annual expenses
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Old 09-24-2016, 04:12 PM   #24
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Originally Posted by Navigator View Post

I am not really asking for any financial advise, but have a different question for those who have retired. What sort of real financial problems have you faced in retirement and how did you solve them or what do you do about them? Could better preparation at the beginning of retirement have averted these problems?
I retired in mid 2014. In 2015 my kids decided to break all their bones in sports injuries. That was $9k in our of pocket costs. But I had an emergency fund with more than that in it. This year the medical bills are lower and the emergency fund has been refilled.

My biggest worry is sequence of events. Until I'm 5-10 years in, I suspect I'll continue to worry about this.
Retired June 2014. No longer an enginerd - now I'm just a nerd.
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Old 09-24-2016, 04:55 PM   #25
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DH has been retired for 6 years. We planned for and paid cash for a few big items (HVAC, roof, windows) but also had a couple of expensive surprise items.

One year our health insurance went up $400 a month and we just had to absorb it. And then there's my shiny new hip that happened in a year where we had a high deductible health insurance plan. Having a nice cash stash made us feel better about paying for a large expense.

We understand that stuff breaks and sh!t happens. Have insurance for things that can be insured and have a lump of cash for things that can't be insured. We started this phase of our lives with no debt and very low cost of living that we can control to a certain extent.
Married, both 61. DH retired June, 2010. I have a pleasant little part time job.
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Old 09-24-2016, 07:11 PM   #26
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On my monthly Excel balance sheet calculation I include cells that show what things would look like with a 10%, 20%, 30%, 40% and 50% stock market decline, and what SWR the current spend would be in each scenario. I find this helps avoid the what if jitters by quantifying it.

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Old 09-24-2016, 09:05 PM   #27
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Originally Posted by RenoJay View Post
On my monthly Excel balance sheet calculation I include cells that show what things would look like with a 10%, 20%, 30%, 40% and 50% stock market decline, and what SWR the current spend would be in each scenario. I find this helps avoid the what if jitters by quantifying it.

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+1 - I've set up a whole stress testing spreadsheet that also reduces rental income and allows me to feel a level of comfort that I know the parameters. I'm feeling ok down to a 40% drop - beyond that would need real life style changes ... but given history it would probably be only for a couple of years before things stabilized.

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Old 09-24-2016, 09:33 PM   #28
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I'd like to thank everyone for their insights. This has been most helpful. Before retiring, I spent a lot of time learning how to invest, but never gave much thought to how to handle my finances when retired. I like the idea of stress testing a portfolio, not just for market drops, but also for unexpected expenses and tax increases - this will be my next project!
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Old 09-24-2016, 10:21 PM   #29
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I retired less than 3 years ago and so far have had to buy a new roof, furnace and hot water tank. Now doing many thousands in dental work. I have also gifted a lot of money to family and still have much more than I started with.
My comfort is taking SS on my ex's record so half until I am 70. After 70 I could live on SS alone since it will be pretty high. If markets crash I will cut back on spending maybe sell some junk I should sell but don't want to bother. I have about 25K sitting in banks or money market ear marked for dental bills mostly so could put off some dental a few months or years. I had surgery last week so could put off implants or even get more teeth pulled and dentures but I won't need to. If worse came to worse I would sell my house and buy cheaper to save on property taxes and free up some cash.
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Old 09-25-2016, 02:40 AM   #30
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There seems to be some "fluff" in most budgets. We have a certain amount set aside for travel and home improvements that could be delayed a year or two to ride out rough spots. We also could cut back on entertainment & eating out. When we were younger, there were times where we would crop cable for a year or two to save money, as an example.

Personally, I have found that you will have the time and energy to research and save money on ongoing expenses. We cut our cell phone bill by $62 a month last year, and I am saving $1400 by having a routine medical test delayed 60 days until I am on medicare. Back when the big bucks were rolling in, I wouldn't have chased the savings so hard-I had other fish to fry.

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