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Old 07-28-2015, 10:07 AM   #21
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1. I'm not collecting SS yet. If I need to tap into it before age 70 it's there, but I hope to defer it. If we have a market meltdown I can tap into SS instead of selling investments at distress-sale prices.
Do you really think that in a diversified portfolio there wouldn't be some investment categories not in a state of "distress-sale-prices" you could harvest during a market meltdown?

I retired in mid-2006 and promptly found myself sliding down the Great Recession. Portfolio dropped about 30% in what seemed like an endless spiral down to hell. Yet, I was able to reach in for my annual WR without selling anything at an ugly loss. I stopped auto-reinvestment of fund dividends. One CD matured and there were a few others that had very modest early withdrawal penalties. I had a fair sized stack of cash in a MM I was doing some trading with. I even had a couple of equity positions that remained in good shape that I trimmed.

Admittedly, my WR is low. And I know that if the recession had been deeper and lasted longer (became a full fledged depression), I might have gotten into painful selling. But I think most diversified portfolios could cover 2 - 3 years of 2% - 3% withdrawals without being forced to sell positions at "distress-sale-prices."

I bet if you look at your portfolio, you'd see you could cover quite some time. I'm assuming it's diversified, of course.
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Old 07-28-2015, 10:33 AM   #22
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I was worried and constantly looking at my portfolio for the first 6 months after ER. Now I rarely look and worry very little about $. I'm at 9 years free now, you get better and better at not doing anything! Not worrying is such a nice thing - you will get there, assuming you saved enough .
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Old 07-28-2015, 11:15 AM   #23
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Do you really think that in a diversified portfolio there wouldn't be some investment categories not in a state of "distress-sale-prices" you could harvest during a market meltdown?

I retired in mid-2006 and promptly found myself sliding down the Great Recession. Portfolio dropped about 30% in what seemed like an endless spiral down to hell. Yet, I was able to reach in for my annual WR without selling anything at an ugly loss. I stopped auto-reinvestment of fund dividends. One CD matured and there were a few others that had very modest early withdrawal penalties. I had a fair sized stack of cash in a MM I was doing some trading with. I even had a couple of equity positions that remained in good shape that I trimmed.
I agree- the portfolio is well-diversified so I could probably live on dividends (I also stopped reinvestment of dividends but not capital gains) and the occasional bond maturing. I could also sell bond funds but as interest rates rise that may be at a loss. I know I'll have to deal with a bad market some year or other; I hope it's later rather than sooner.
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Old 07-28-2015, 12:35 PM   #24
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Just want to thank everyone so far for posting. I discovered this blog a few weeks ago and it's great knowing that others share the same concerns. I do agree that in every major step I've taken there's always been anxiety.

What has helped is that I have numerous models that I've run myself with different scenarios including budgets that match to those situations. Worst case scenario is taking early SS and knowing we'll be just fine. With no debt at this point it makes things much easier and we can do flexible spending if needed.

The last step I'm taking is to make sure both my sons stop coming back to the well to get bailed out. With a bit of outside counseling I'm working through that.
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Old 07-28-2015, 12:44 PM   #25
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The last step I'm taking is to make sure both my sons stop coming back to the well to get bailed out. With a bit of outside counseling I'm working through that.
I doubt you can stop them from asking, but you can sure stop them from receiving...
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Old 07-28-2015, 01:15 PM   #26
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I used to have financial anxiety, but that has taken a back seat to health anxiety when I was diagnosed with a life-threatening disease (which I have overcome).

Yes, there is nothing like the above to remind one what is more important in life (or potential lack of it thereof).

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... I follow the news, read a lot on the markets, etc. I was reviewing my net worth weekly. Now I see that I need to let go of this bad habit...
I still look at my portfolio daily, actually several times a day. I do not trade that often, but do not want to miss a good buy or a bubble bursting. I look at the market gyration as adding spice to life, and try to see if I can overcome greed and fear.

It's only money.
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Old 07-28-2015, 01:53 PM   #27
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I retired in 2008 and we immediately went into a brutal bear market . I lost almost 40% of my portfolio so I was extremely upset . The good thing was it made me realize that even with a much lower portfolio I could survive . I stayed invested and made the money back so now a days the day to day drops do not bother me.
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Old 07-28-2015, 02:54 PM   #28
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The last step I'm taking is to make sure both my sons stop coming back to the well to get bailed out. With a bit of outside counseling I'm working through that.
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I doubt you can stop them from asking, but you can sure stop them from receiving...
"But I'm on a fixed income. Can you loan a few bucks until the first of the month?"
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Old 07-29-2015, 12:36 AM   #29
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I would guess nearly everyone has this anxiety initially, to one degree or another. Easing into retirement (and thus, no earned income) by going PT for a while should certainly help. It definitely has for me. I would think being within 5-10 years of claiming SS should also be reassuring.

Transitioning into retirement via PT certainly has its advantages. I dropped from full-time to roughly 10 hrs/wk a little over a year ago at age 62 and anticipate going full-retiree sometime in the next year or so.

While adjusting to the reduced income (though DW's still working for a few more), I've been gradually getting the mechanics set up for periodic withdrawals from IRA to MM, monthly transfers from MM to checking, initial Roth conversion, etc. It's been fun and comforting to watch my preliminary pseudo-paychecks showing up in our checking account knowing that as the earned income sources drop off, I'll just adjust the amounts of the withdrawals/transfers accordingly. Having the process itself become second nature well in advance of pulling the big switch should make the transition just that much smoother.


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Old 07-29-2015, 05:23 AM   #30
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I fear what will happen when interest rates rise and I fear that we are in a stock market bubble.
Well bonds AND stocks aren't going to crash. They move in opposite directions. That's why you own both. Together they allow your portfolio to rise in all markets, good or bad.
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Old 07-29-2015, 06:44 AM   #31
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I think I'll always have a little financial anxiety before I ER, even though the numbers all say I will be comfortable (or at least not having to live in a box under an interstate bridge.

I agree with the comments above about not hating the job enough and keeping the kids out of the house. Starting the end of the year I'll be working from home full time as the work location has moved and I don't want a 100 mile round trip commute, so I'll have to see how that impacts my feeling for the job. The main financial thing I want to get out of the way before er s college for our youngest child. I guess I have a little anxiety about dealing with the remaining cost if I ER now, even though in truth my cash position to keep me from having to touch my investments for 7 years includes that. So that anxiety is unwarranted, but I never claimed to be fully rational.
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Old 07-29-2015, 07:02 AM   #32
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Well bonds AND stocks aren't going to crash. They move in opposite directions. That's why you own both. Together they allow your portfolio to rise in all markets, good or bad.
While this is often true, it doesn't have to happen this way. In late 2008, stocks and many bonds both fell. Falling bond fund prices actually helped me a lot because I was buying a boatload of shares at bargain basement prices. I gritted me teeth and held on to the stock fund shares and they rebounded nicely in 2009.
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Old 07-29-2015, 02:29 PM   #33
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61 and still working part time (three 8 hour days/week), 90% of the reason is I both enjoy it and find it personally satisfying and 10% from worrying a bit plus feeling that an extra next egg cushion can't hurt (FI and could fully retire if I wanted).

I might have the decision made for my by 2017 as the office will move and if the commute is too far then forget it (Wash DC area, so commuting can be UGLY). Teleworking not allowed for contractors, so no help there.

Larry
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Old 07-29-2015, 02:39 PM   #34
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++To all of the above posts. It's interesting to note that others have gone through, or are going through the same thing I am. Currently in year three of OMY syndrome, and still trying to reconcile my financial anxiety with the facts of my financial situation. I will be 59 this year and if I retire WR rate will be 2.8 - 3%. Theoretically we should be fine, but who knows? I don't hate my job. I don't love it either and recent events are causing me to like it alot less. Back to lurking and trying to make a decision.
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Old 07-29-2015, 03:06 PM   #35
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While this is often true, it doesn't have to happen this way. In late 2008, stocks and many bonds both fell. Falling bond fund prices actually helped me a lot because I was buying a boatload of shares at bargain basement prices. I gritted me teeth and held on to the stock fund shares and they rebounded nicely in 2009.
Since 1928 there's been 24 years in which stocks finished the year in negative territory. Out of those 24 years only 3 times did 10-year treasuries also finish the year in negative territory.
1931 - Stocks -43.8% / Bonds -2.5%
1941 - Stocks -12.7% / Bonds -2.0%
1969 - Stocks -8.2% / Bonds -5.0%
And in 2 out of 3 of those years, bonds bounced back big the very next year. In 1941 bonds were only up 2.29%, although stocks were up 19.1%.
So, again bonds AND stocks are not going to crash, yet there's people who have this idea that they are both going to crash.
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Old 07-29-2015, 03:07 PM   #36
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The financial anxiety tends to abate once you retire. When you're w*rking, you have more control over your financial situation since you are continuing to earn money. Once you pull the trigger and retire, the question "do I have enough money, or should I continue w*rking?" becomes moot.
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Old 07-29-2015, 03:09 PM   #37
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Bir48die,

I feel your pain. I ER'd at 45, so I'm somewhat anxious because the money may have to last a long time. On the other hand, I realize that having this time is a good thing!

I too have been trying to wean myself off from excessive financial tracking. Leading up to ER, I tracked net worth almost weekly, probably a counterproductive exercise. Now I do a monthly expense vs budget rollup and net worth tally. I still plan to track expenses monthly to keep us on budget, but I intend to push out the net worth check to every quarter or even less often.

One thing that helped overcome my financial anxiety is my anxiety regarding everything else that can go wrong. Our parents died early and were plagued by chronic illness. We live an active outdoors lifestyle, so we want to enjoy life while healthy. So we focus on the next 10-20 years where we are more likely to have our health and robust finances. As for the last 20+ years, our finances may be less solid, but most likely, so will our health.

FB
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Old 07-29-2015, 03:27 PM   #38
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I agree- the portfolio is well-diversified so I could probably live on dividends (I also stopped reinvestment of dividends but not capital gains) and the occasional bond maturing. I could also sell bond funds but as interest rates rise that may be at a loss. I know I'll have to deal with a bad market some year or other; I hope it's later rather than sooner.
Agree on all athena53.

I'm just one of those who is convinced that it's easy to overdo it when setting aside cash to cover the contingency of ALL asset classes crashing simultaneously in a down market. It could happen...... But......

And, most of the time, it's expensive to hold a lot of cash!

For folks living 100% on portfolio withdrawals (pre-SS and no pension), it's probably a bit more critical to hold a sizable hunk of cash or near-cash. We cover about half of our spending with DW's pension and my SS and the other half with portfolio withdrawals.
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Old 07-29-2015, 03:31 PM   #39
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Another thought: Since retiring, I learned that I need to make a conscious effort to put worry aside and focus on everything else, namely living my life. So I "ration" time spent with budgeting and net worth tracking/hand-wringing. I'm down to a monthly review and hope to stretch out the net worth review to every 2 months, then quarterly.

During the last monthly budget review, I discovered that we are trending 5% high. Fortunately, we found 5-10% fat in the budget that we could cut with minimal impact on lifestyle. This greatly helped with the worry by giving us a sense of control.

I must emphasize that the payout is well worth the worry & risks. This has been an amazing time emotionally and spiritually. I feel alive more than any other time in my life. It is as if I've been living in a dull haze most of my life. The fog has been slowly lifting since ER. Like most here, I highly recommend retirement, early or otherwise!
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Old 07-29-2015, 05:02 PM   #40
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Another thought: Since retiring, I learned that I need to make a conscious effort to put worry aside and focus on everything else, namely living my life. So I "ration" time spent with budgeting and net worth tracking/hand-wringing. I'm down to a monthly review and hope to stretch out the net worth review to every 2 months, then quarterly.

During the last monthly budget review, I discovered that we are trending 5% high. Fortunately, we found 5-10% fat in the budget that we could cut with minimal impact on lifestyle. This greatly helped with the worry by giving us a sense of control.

I must emphasize that the payout is well worth the worry & risks. This has been an amazing time emotionally and spiritually. I feel alive more than any other time in my life. It is as if I've been living in a dull haze most of my life. The fog has been slowly lifting since ER. Like most here, I highly recommend retirement, early or otherwise!
FreeBear...I have really enjoyed your posts.

I, too, have much anxiety about FIRE. I just did this week! Yikes.
I have lined up a PT j*b months ahead but I am still not certain I will
do it.

I am pretty confident we can live on 2 to 2.5% WR very comfortably. But, at such an early age (early 40s) with a STAHM for a wife and a couple of kids, who knows what the future holds.

My gut says most on this board will be just fine. The same tools that got us this far will carry us through most ups and downs. There are certainly character traits that are common to those who aspire to FIRE. These don't disappear.

Good luck all!
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