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Has anyones plan changed?
Old 03-19-2009, 11:15 AM   #1
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Has anyones plan changed?

I havent posted in a while. I have been reading alot of blogs lately re the financial mess the country is in. Also lots of discussion about whether "it really is different this time" ( and it might be given the money gov. is spending) and that the stock market is to risky even for a 10 to 20 year time frame.

I am 54. Had planned to slow down in 5-6 years but have lost about 30% in market. Trying to decide whether to move about 60% into cds etc to make sure dont lose lots of prinicpal . Obviously worried about inflation.

What is consensus on this board? Is everyone staying the course on stocks/ bonds? Moving to cash? If a million would have been enough 5 years ago to retire , will it be in 5 more years ( I doubt it if you live 25 years in retirement and no guarantee of social security).

Is 4% still safe withdrawl rate? Everyones thoughts please.

Thanks
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Old 03-19-2009, 11:28 AM   #2
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I havent posted in a while. I have been reading alot of blogs lately re the financial mess the country is in. Also lots of discussion about whether "it really is different this time" ( and it might be given the money gov. is spending) and that the stock market is to risky even for a 10 to 20 year time frame.

I am 54. Had planned to slow down in 5-6 years but have lost about 30% in market. Trying to decide whether to move about 60% into cds etc to make sure dont lose lots of prinicpal . Obviously worried about inflation.

What is consensus on this board? Is everyone staying the course on stocks/ bonds? Moving to cash? If a million would have been enough 5 years ago to retire , will it be in 5 more years ( I doubt it if you live 25 years in retirement and no guarantee of social security).

Is 4% still safe withdrawl rate? Everyones thoughts please.

Thanks
Ive been sticking to my asset allocation of 75/25. So Ive been buying stocks/mutual funds/etfs on the way down. Our plans haven't changed yet but obviously we took a beating financially last year. Obviously it could be different this time. Thats the risks we take. Id like to think 4 years from now Im patting myself on the back for buying at such low prices As for 4% I guess it still is. I have not seen a recent study saying differently.
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Old 03-19-2009, 11:31 AM   #3
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No change to my opinion. Still fully invested, still piling money into the market, still think the 4% rate is sustainable long term, still plan to have a year of cash on hand, still plan to have DH quit at 50. Blah blah blah.

I would never move that much to CDs. Ever. YMMV.
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Old 03-19-2009, 11:36 AM   #4
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My current plans aren't changing much, but I now realize it may take longer to get to the "finish line" than I originally thought. That's at least partially offset by saving a lot more money now than in years past.
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Old 03-19-2009, 12:04 PM   #5
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Already retired, so my main goal is to stay retired! I did review our budget lately, and noticed that our spending was down. We seem to be eating out less which is fine with me even though it means I do a lot more cooking.

But we are in kind of the winter "lull" of our traveling and spending tends to go down anyway when we aren't making a serious cross country trek.

An added bonus right now - the cheap diesel prices really lower the barrier to moving the RV all over the place!

I would like to start doing more international travel in a year or so. I'm hoping our investments will support it. A year an a half ago we had excess funds to easily support plenty of more expensive travel. That excess has kind of evaporated, but how long am I willing to wait for it to return? We'll just be getting older — we can't sit around waiting for too long. I guess since I'm not ready to go on such a trip in the next couple of months it's kind of moot right now. In the meantime we'll make the most of RV travel.

Of course, when we are ready for the more expensive international travel, the answer will be moderation and compromise - we'll prioritize and pick the most meaningful trips.

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Old 03-19-2009, 12:31 PM   #6
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My plans, either with retirement or with my asset allocation, haven't really changed. In fact, I've been boosting my equity position over my 70/30 target allocation.

I'm 49 and was thinking of calling it quits at 50 (November). I may or may not work a little longer. But this has nothing to do with the size of my portfolio and little to do with the market (actually, the market is creating an incentive to work because I see it as an opportunity to remain in the accumulation phase while prices are low).

In my opinion, if the current market is causing people to delay retirement, then they shouldn't have been thinking about retirement in the first place. Retirement plans should incorporate the possibility of a significant market drop. As far as the 4% rule of thumb, it incorporates the likelihood of a more significant market decline. Of course, things could get worse and "it really could be different this time." But I doubt it.

As for me, the one thing I've discovered about my personnel asset allocation is that I like to have a good deal of cash around - say 4+ years worth. Instead of rebalancing by selling bonds and buying equities, I've been rebalancing by using my cash reserves. But this makes me feel a little uncomfortable or "naked," even though I still have over 2 years in cash. I'll continue with my 70/30 asset allocation, but a good fraction of the 30 (~10% total) will be cash or cash equivalents. This isn't a rational financial decision and it has nothing to do with concerns about the equity/bond market. It's the "feel good" mentality of knowing I have immediate liquidity to buy anything I want (e.g., a down payment on a 2nd house, even though I may never do this). It's a feeling of freedom.
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Old 03-19-2009, 01:07 PM   #7
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Posting this yet again... I moved to cash. It should be noted, though, that I never counted on more than 3-4% in my investment calculations, because I see myself as just that unlucky (e.g., if I invest in stocks, I might as well as expect Great Depression II).

I moved to cash because I started questioning the wisdom of why stocks are expected to go up 8%+ year over year. Why should we expect that P/E ratios increase? Why should we expect that stock prices grow faster than the economy and even the company? Pertinent to recent events, why should we expect that with our increasing debt, that it is not in the government's best interest to channel investments away from stocks and to treasuries? And, does economic growth now belong to Asia as the US increasingly turns to protectionism rather than innovation?

It may not be different this time around, but the risk just isn't worth it anymore, for me, for a variety of reasons.
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Old 03-19-2009, 01:28 PM   #8
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50/50 at FIRE went to 45/55 due to market. Made a small exchange and decided to sit at 40/60 for damage control for maybe
1-2 years.
However I just re-routed my DCA from bonds to stock funds (cheep cheep cheep) and will continue to accumulate until (unless) I see a major league market recovery. Target AA stays at 50/50 plus or minus 10%, unless there are darn good reasons to change that stance.
No flights to cash happened, nor are they planned.
FIREd but will not drawing on investments for quite a while.
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Old 03-19-2009, 02:18 PM   #9
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I contemplated early retirement (which could have started around now). I can still afford to retire, but I'll keep working for a while. I have a pretty decent job, all things considered, and my pension will grow, etc.

I've significantly increased my exposure to equities during the down-turn. I'm about done with that, so bring on the recovery now, please.

To answer a question, I think that 4% is still o.k. for a 30 year (not so early) retirement, provided that risk-taking is controlled. I'd suggest there isn't a need to exceed 40% in equities at retirement, as that captures most of the portfolio longevity benefit with modest risk. We'll probably have some inflation a few years down the road, so keep an eye on that.
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Old 03-19-2009, 02:28 PM   #10
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I'm on autopilot, living off pensions and interest income. So the market gyrations mean little to me, my only worries are about future inflation and treasury default. But I don't lose any sleep over it, and carry a healthy amount in TIPS. In the meantime, I'm enjoying my retirement. If you don't enjoy the goal you've worked towards, you've set the wrong goal.
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Old 03-19-2009, 03:11 PM   #11
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Retired 2.5 years, 50, still 100% individual stocks, living on the dividends (fortunately only increases so far, no reductions). PG should increase the dividend in April, JNJ in May. All dividends in my portfolio look pretty safe unless the recession gets alot worse.

I have been adding a few more (fairly cheap) vacations onto my schedule - bike riding on the coast next week, San Juan Islands at the end of April.
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Old 03-19-2009, 03:29 PM   #12
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my only worries are about future inflation and treasury default.
I'm with ya there. I believe that before portfolios have fully recovered, inflation will pick up and depleted portfolios will be supporting increased prices. Sort of a one - two punch deal.
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Old 03-19-2009, 04:26 PM   #13
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Still 100% VFINX-equivalents. Still buy-and-hold. Tempted to go to 110% now but don't want the hassle.

Still believe that ~4% will be safe. Still targeting FI (and possible RE) at ~47. Still plan to move to ~80%/20% around that age.

I have cut back on spending over the last year, but that's just for giggles and not wholly caused by the current economic downturn.

I would change my plan if the current downturn makes the FIREcalc 100% safe number drop in the next five years or so.

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Old 03-19-2009, 04:31 PM   #14
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Retired 2.5 years, 50, still 100% individual stocks, living on the dividends (fortunately only increases so far, no reductions). PG should increase the dividend in April, JNJ in May. All dividends in my portfolio look pretty safe unless the recession gets alot worse.

I have been adding a few more (fairly cheap) vacations onto my schedule - bike riding on the coast next week, San Juan Islands at the end of April.
Easily wins the biggest b*lls award on the forum.
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Old 03-19-2009, 04:35 PM   #15
Confused about dryer sheets
 
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Thanks for all the comments. They are really helpful. I am suprised at how many are still hanging in there with stocks. Guess I am a chicken.


I dont know if I am using FIRE CALU correctly. I put in 1. 5 million, 20/ 80 stocks/ bonds for 30 year retirement at 50k year and if I read it right it says zero chance of sucess. This cant be right ( I dont think) because if I took 4% a year that would be 60k and projected 10k a year less at 50k. I will re run.

I apprecaite any additional comments anyone has.

Thanks.
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Old 03-19-2009, 05:06 PM   #16
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I tried it after reading your post, and got 100%. Maybe you had a typo or something.

As for the rest, I held on "like grim death" as they say, thoughout the market declines of the past couple of years. I don't really know enough to do anything else. My plan to retire in November hasn't changed, and my financial plan has not changed either.

I am not planning to use a 4% withdrawal rate, at least not at first. I will probably withdraw between 2% and 3% until I get a little more confidence in the market, and I will use my excess dividends over that amount to rebalance.
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Old 03-19-2009, 05:14 PM   #17
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I'm 54, still working, and I consciously let me AA move from 75/20/5 to 60/35/5, but I don't plan to let fixed or cash go any higher. I am still contributing fully to my 401k and whatever bonus (not much these days, $0 last quarter) I get goes into my brokerage account. I was on track to retire at 56-58, I am sure it will be longer now but can't project a year. Two employees of mine retired last summer, I am afraid to even call them...
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Old 03-19-2009, 07:59 PM   #18
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I haven't sold anything and I am still buying equities. But over the past few year, my asset allocation has drifted, through market gyrations and rebalancing, from an ideal 65% stocks/35% bonds&cash to about 40/60 and back to 50/50. I am tempted to leave it between 50/50 and 60/40 permanently.

But so far, our plans have not changed that much. FIRE seem to have been delayed by a year or two, but we are still on track to reach FIRE at age 45-50.
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Old 03-19-2009, 10:16 PM   #19
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Riding the bucking bronco all the way down with no change in plans... will hopefully ride it right back up.

If not, keep on waking up early to pull the oars for 8 hours for longer than anticipated.

Best of luck to OP and everyone.
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