Do We Have 10+ Year Retirees?

[Lsbcal]

Quote:

Originally Posted by NYEXPAT Retired 32 years this October! Assets halved early on due to divorce, now probably 50% higher. Spending has doubled in the past 4 years since my son was born. SS for the whole family more than offsets the increase.

So far on this thread you are the winner.

[Lsbcal]

Having done a lot of VPW simulations, I'm convinced one needs to spend even through downturns. For me there is a certain tension between wanting to increase our stash and enjoying it before ... the end.

In the 2008-2009 downturn we had a 55/45 portfolio going into it and something like a 45/55 portfolio at the low point. I only rebalanced after the market started up again (July 2009).

Currently we're 7% above the inflation adjusted starting portfolio of 2003. Our portfolio is currently 60/40. A chart showing the roller coaster:

[Souschef]

When I retired in 2009, I had been putting every dollar allowable into my 401K for years
So in the 2007 / 2008 period i was really buying low. When I retired, I rolled the 401K into an IRA.

It is now worth 5X what it was when I retired.

[haha]

Quote:

Originally Posted by Lsbcal Having done a lot of VPW simulations, I'm convinced one needs to spend even through downturns.

Does this mean something other than that even during a downturn one will continue to eat and still need a place to sleep, which one hopes is warm in winter and tolerable in summer?

I think I agree since I have never contemplated becoming a breatharian or living full time in a tent.

I am cheap and quirky, but I also have limits.

Ha

[audreyh1]

Quote:

Originally Posted by haha Does this mean something other than that even during a downturn one will continue to eat and still need a place to sleep, which one hopes is warm in winter and tolerable in summer? I think I agree since I have never contemplated becoming a breatharian or living full time in a tent. I am cheap and quirky, but I also have limits. Ha

I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it.

With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

[rk911]

13-yrs as of last august. other than to buy a new motor home and to fund some home improvements we haven't touched our investments. haven't reached RMD age yet, either. we have positive cash flow each month as we continue to live beneath our means off of our pensions and SS. discipline, a wife who started investing for us (surprise! surprise! surprise!) and some luck put us here.

[big-papa]

Quote:

Originally Posted by audreyh1 I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it. With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

Bingo! The main thing with these methods is making sure that the dollar amount calculated for withdrawal during these downturns is still sufficient to live on, especially when considering SS and/or a pension. Then again, there's no rule that says you need to slavishly follow the calculated withdrawal amount, either, whether the amount calculated to withdraw is more than you need in a given year or a little less.

[Another Reader]

The only portfolio withdrawals I take are RMD's from the inherited IRAs. Since the savings and investment deposits are about equal to the RMD's there is essentially a zero withdrawal rate right now. Add in the equity pay downs on the remaining mortgages, which of course are difficult to access if needed, and the "portfolio withdrawal rate" becomes negative by a significant percentage.

It's going to be more difficult to match deposits and withdrawals when I have to take my RMD's, but by then I hope to have two more mortgages paid off.

[mexexpat]

15+ years. We downsized considerably, not because we had to, but because it made sense.

[Lsbcal]

Quote:

Originally Posted by audreyh1 I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it. With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

Thanks Audrey, that's about sums it up nicely.

Actually in a decent market year and a normal spending year we probably won't be spending up to the VPW assigned limit because it is higher then we need. So I keep a running total of the unspent monies and would dip into it if a series of years were to draw down our portfolio as could happened in very bad markets of the past. For example, a bad sequence started in 1966 and lasted into 1974.

I always want to pull back in a bad year. I totally understand the emotional tole a downturn can take on a retiree. I guess sometimes it might be better to spend somewhat less just to feel you are "doing something" about it.

[CyclingInvestor]

Retired in 2006 at age 48.

Spending has drifted up (along with dividend income) over the years, more than double what it was, but I used to be a chronic underspender.

AA still at 100% individual dividend-growth stocks (since 1993).

[Rianne]

Great information. It's refreshing to hear the successes, even with downturns and unplanned spending. We are newbies in RE, 2014. Have not touched portfolio other than to get out of ST bond funds 12% of portfolio to laddered CD's. We still have LT and balanced VG + 8% in EE bonds (4% RR) and I bonds. The rest stock index VG. We reinvest all dividends. So, in general 55/40/5.

We squirreled enough after tax cash to offset DH consulting ($42K) which takes up < 20 hours/week. Interesting to see what 2018 tax hit will be. We stay within ACA MAGI and have a high deductible with HSA for HI.

DH taking advantage of U of I sporting events, tennis , basketball and football (Illini football ). Inexpensive pleasures. Plan to take SS at 64 or when DH tired of consulting from home. Should bring (combined) $35K + $12K pension kicks in at 65.

All calculators, I've used almost everyone suggested on this forum, give 100% at a much higher spending than we do. Since 2015 our total spending @ $62K. No mortgage, no car payments.

Long live FIRE!

[albundyz]

Retired from Mega-corp, chose lump sum in late 2007, age 56. I waited and had to decide on what to do with lump sum. For 6 months, I waited and collected 5% interest on MM. Then, I decided to put 25% into s/p index fund. Market went down. Later, I put another 25% into same fund. Market went down, later I put 25% into same fund, market went down. I had enough cash to wait out the downturn. I never put in the remaining 25%, but was considering working at McDonalds (ha) when downturn stopped and reversed. Never changed spending habits. During the 5 yrs before my retirement, I had made some small mistakes with the stock market, but that experience benefitted me greatly as the recovery unraveled. I did not panic and fortunately, I did not put the lump sum into the s/p index fund immediately upon retirement......

[audreyh1]

Quote:

Originally Posted by Lsbcal I always want to pull back in a bad year. I totally understand the emotional tole a downturn can take on a retiree. I guess sometimes it might be better to spend somewhat less just to feel you are "doing something" about it.

That does seem like a natural reaction.

However, I have to say that it hasn’t happened to me. I’m sure because I always had at least an extra year’s worth of spending money set aside, plus we do bank unspent funds from the good years.

So when I see that our desired spending budget is covered for at least another year, I keep spending as planned regardless of market shenanigans. And a year later, at least so far, things have usually settled out enough that I’m OK with maintaining planned spending.

I expect after a few years drop at some point in the future I’ll have to face pulling back on discretionary spending. But I’m prepared for that and thus won’t worry about it until it actually happens.

[jkern]

Retired at 51 in June 2009 (officially laid off, but never went back to work).

Portfolio 6/09: $400k 403b (65/35) and $500k cash (CDs) Total = $900k

Severance and unemployment equivalent to 2 1/2 years of pay
Daughter just started college which cost me $40k over the next 4 years
Upgraded/remolded house over next 5 years which cost $175k
Bought 3 condo's during Real Estate crash for $290k
Was conservative budget wise for about 3 to 4 years just in case

Today:

Daughter is 27 and all taken care of
House is fully upgraded and awesome
Just replaced auto last July
Rentals are humming along

Portfolio: $925k IRA (40/40/20) and $50k cash Total = $975K

Value of 3 rental condo's: $775k

Total investments: $1.75M

Plan to start Social Security towards the end of the year (62)
SS and rental income will fully fund my Standard of Living ($60k/yr)
Might have around $950k to $1M in IRA as emergency reserve.

[jasg]

Not quite at the ten year mark, two months short but I have been thinking about the upcoming milestone.

A1. We have not had to cut spending.
A2. AA was 95/5 until late 2013, 70/30 until late 2016, 60/40 now but 15% of portfolio is in TIAA TREA as a hedge.

I got caught in a layoff a month after the market bottomed in March 2009 at age 60 and decided to retire. So in addition to the anniversary, I hit 70 and start RMDs this year.

I was a bit surprised when I rolled up our withdrawals since 2009 in my tracking spreadsheet. It shows:

• Total portfolio at FIRE was down 42% from end of 2007
• Taxable savings lasted through 2018
• Total withdrawals (including this year's RMDs) were two-thirds of the initial FIRE balance
• Current portfolio is twice the FIRE balance
• We are now following a Boglehead Three-fund strategy. TIAA Traditional (stable value @3.25%) is 25% of total and is counted as Bond
• Based on past spending, it looks like RMDs will cover expenses

[LARS]

Retired in 1995 at 38 years old. Still, going strong. No adjustments necessary so far...

[marko]

RE'd in late 2005.

We were newbies in direct investing on our own but in late 2008, by the time we thought of making changes it was March of 2009 and we were off to the races. I must thank DW for beating my head against the wall to knock the skittishness out of me at the time.

The Great Recession ("end of the world as we know it") was a great gift as it has given me considerably more guts to stay the course. We actually increased from 60/40 to 70/30 over the past decade despite that I'm heading into age 67.

Our spending didn't change during the recession and hasn't really changed in the past 13 years. When we first RE'd we were pretty careful but over time loosened the purse strings.

Our lifestyle vs a set budget pretty much keeps our spending within a certain limit; sort of a 'shepherd moon' approach. We live the way we want and it coincidentally falls within the SWR. We withdraw from only our banked dividends (and occasional cap gains) and haven't sold a single MF share since we RE'd.

[Offgrid Organic Farmer]

Quote:

Originally Posted by Rianne ... -At any point did you have to curb your spending? -How did you adjust your portfolio during 2008-2012?

The massive layoffs of 2008 caused us to lose our last remaining apartment complex.

We were living on my pension when I retired in 2001, so by 2008, we were not using the apartment complex income. Losing it was an emotional hit, as we had to file bankruptcy.

But it did not really affect our monthly budget.

We still made more than we were spending.

From 2009 to 2014 we saved up enough, that in 2014 we bought another rental real estate, to start the process over again.

[Andre1969]

Quote:

Originally Posted by Lsbcal I always want to pull back in a bad year. I totally understand the emotional tole a downturn can take on a retiree. I guess sometimes it might be better to spend somewhat less just to feel you are "doing something" about it.

I think it's definitely a psychological thing. My investible assets went down by a pretty good chunk in September of last year, because I bought a house and put a pretty big down payment on it. Even though the market hadn't started to drop, yet, and technically I didn't "lose" money, simply shifted it from cash to home equity, it still bothered me, seeing my investible asset total drop by about 8.8%.

I noticed I started doing little things, like eating out less, not that I ate out a lot to begin with. And, it got worse in October, when the market truly started to drop. I also cut back a bit on driving wherever I could, and other minor extravagances. But, in the overall scheme of things, it really meant nothing. According to my spreadsheet, I "lost" $121,269 in value from my investible assets in October. My little cutbacks here and there might have managed to save at best, a couple hundred bucks. And in my case, I'm still w*rking, so it's not like I had to tap into investible assets, anyway.

But, psychologically, I guess, it still felt like I was doing something. Admittedly, it got a bit worse during the furlough. This time, even though the stock market, and my net worth, kept going up, I still felt the need to cut back on expenses wherever I could. And, with another shutdown looming, I just have this "we're not out of the woods yet" feeling.