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Have you failed (financially) at ER and returned to work?
Old 10-03-2014, 07:37 PM   #1
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Have you failed (financially) at ER and returned to work?

Just curious. I imagine those that did figure out they were undercapitalized might be busy working and not posting at ER dot org.

I'd be curious about anyone you know that retired then had to go back to work for financial reasons.

For those interested in picking a nit, "going back to work for financial reasons" means at least 75% of the reason for returning to work was the need or want of more cash.

As for defining "work", I'll leave that up to your creativity.
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Old 10-03-2014, 07:57 PM   #2
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I really haven't, but then again the average retiree in my city has a generous state pension. The one case I can think of that is close is a friend that started to phase out of his business. He hired a manager and started to head toward retirement. He's back managing the business because they just can't adjust their lifestyle and are again feeling the pressure. Their choices and consequences, but I do feel bad for him because he's a super nice guy stuck on a treadmill that has no end.
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Old 10-04-2014, 10:41 AM   #3
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We ER'd on May 1, 2008 and returned to work in 2010 - me for around 6 months, DW for about 9.

I didn't feel like we "failed" at ER, but that we were being flexible & shoring up our diminished portfolio. Looking back, we didn't "need" to go to work, but at the time it helped psychologically and financially. It did give us a great deal of confidence to continue our ER.
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Old 10-04-2014, 11:36 PM   #4
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catchy title, but failure is when you run out of money and scrape by on SS
I think walkinwood was simply prudent.
Compare that to a couple I met who ER'd at 55 and 10 years later were complaining about how they had run out of savings, and just had SS. Yet in those 10 yrs neither had taken a job.
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Old 10-05-2014, 05:52 AM   #5
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I worked with a guy who failed twice. The first failure was caused when he tried to start his own business around 55 years old. The second seems to be related to a second wife. He is around 70 years old.

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Old 10-05-2014, 06:49 AM   #6
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The late 50's / early 60's secretary at my former j*b took an early retirement package during a downsizing that occurred a couple of years after I left. She probably had only about 10 years at the company the time, so neither the base pension nor the incentive would have added up to anywhere near income replacement.

I was anything but surprised when I heard the news. This is a person who had gone through bankruptcy just a few years before, 100% due to overspending as best I could tell. Early on, I gave a few hints about living within one's means and retirement savings strategies. I gave up quickly based on the reactions I received. She got married during the time she worked for me, and she was very quick to mention that her beau "had money". Casino trips seemed to pick up in frequency afterwards.

Within a year or so after the layoffs, I heard she was sniffing around about getting rehired. I would give you good odds that her desire to return to work was financially required. My hope is it was because she found living on early-claimed SS and a small monthly pension too restrictive. Given her record, though, I suspect she had taken the lump sum option on the pension and burned through that in record time. Maybe her husband's money, too.

Deficient personal finance skills, a live-for-today mentality, and no motivation for long-range planning and are a bad combination. Whatever the particulars may be, though, she is reaping what she has sown.
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Old 10-05-2014, 07:02 AM   #7
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It seems unlikely one would fail early on (suggests a grossly inadequate plan to begin with?), that would come many years into retirement, when finding work could unfortunately be difficult at best. Failing later most likely means making adjustments, could be significant, painful, discouraging. That's why I think it's wise to retire only when you can do so with a very conservative withdrawal rate, who can predict what'll happen over 20-40 years?
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Old 10-05-2014, 07:59 AM   #8
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It seems unlikely one would fail early on (suggests a grossly inadequate plan to begin with?), that would come many years into retirement, when finding work could unfortunately be difficult at best. Failing later most likely means making adjustments, could be significant, painful, discouraging. That's why I think it's wise to retire only when you can do so with a very conservative withdrawal rate, who can predict what'll happen over 20-40 years?
Yeah, I always thought that retirement failure would be one of those things where, if you're paying attention, you should be able to see the train wreck coming years, or even decades in advance. For instance, if you start burning through your retirement portfolio a bit faster than anticipated, and that seems like a constant trend, you should either cut back spending, or think about bringing in income somehow. If you catch the problem early enough, often just a difference of a few thousand dollars per year is all it takes.

Of course, life can always throw curve balls at you, like a sudden illness, death in the family, or other unexpected expense. But often there's just poor planning to blame.
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Old 10-05-2014, 08:09 AM   #9
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It seems unlikely one would fail early on (suggests a grossly inadequate plan to begin with?), that would come many years into retirement, when finding work could unfortunately be difficult at best. Failing later most likely means making adjustments, could be significant, painful, discouraging. That's why I think it's wise to retire only when you can do so with a very conservative withdrawal rate, who can predict what'll happen over 20-40 years?
No-one. One might even be dead

The difficulty lies in knowing what a very conservative withdrawal rate is.

In the mean time, we are using our most healthy years to finance less healthy ones, or even years that may never materialize at all.

I guess some are wired to prioritize "now" much more heavily than "future". Those are the ones that run out of funding and run into austerity.

Some prioritize "future" much more than "now". Guess those are the ones that utter "rosebud" on their deathbed
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Old 10-05-2014, 09:15 AM   #10
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Worked with a guy who retired in 1999 at 50. He said at the time he thought he could live off the growth of his portfolio. His financial adviser put him in almost 100% tech stocks. Well he's back at work at 64 with no retirement savings. I feel bad for him. A nice guy but not a clue about money.
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Old 10-05-2014, 09:27 AM   #11
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No-one. One might even be dead

The difficulty lies in knowing what a very conservative withdrawal rate is.

In the mean time, we are using our most healthy years to finance less healthy ones, or even years that may never materialize at all.

I guess some are wired to prioritize "now" much more heavily than "future". Those are the ones that run out of funding and run into austerity.

Some prioritize "future" much more than "now". Guess those are the ones that utter "rosebud" on their deathbed
Well said, Totoro.
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Old 10-05-2014, 09:38 AM   #12
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The difficulty lies in knowing what a very conservative withdrawal rate is.
I suspect you mean the difficulty is predicting what the future will bring, no question there - there are many variables/unknowns. But with all the historical data and academic studies, it's certainly doable to calculate a safe withdrawal rate for given circumstances, and then deciding what personal safety factor would make that very conservative. There are no guarantees or universal numbers, but if for example you accept 4% as a SWR for a 30 year retirement, a 2% WR would arguably be very conservative. Still doesn't guarantee 100% success...
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Old 10-05-2014, 09:40 AM   #13
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Spending the better part of the last 5 years at a staffing agency, I ran into a lot of stories from people who went back to work. There was every story imaginable and most of them were because they got bored and needed to get out of the house.

However, one particular story stands out most. I was interviewing a man in his mid 50's who had retired in his mid 30's with a real estate portfolio. He made it through 20 years of retirement but he came upon hard times. If I recall correctly, the recession hit him hard and his real estate holdings were in a particularly bad area that saw major declines (not all from the downturn but because of the area turning lower socio-economic which affected his rents).

He came to our organization looking for temp work in his previous industry. However, being 20 years out of the workforce, he was basically unemployable for anything over 12/hour. He knew that his cash was running short and he was being preemptive in finding additional cash flows.

I'm not sure what happened with him; he wasn't cashless yet, but he knew he couldn't sustain his portfolio for much longer. This hit close to home as my own plans had been heavy in real estate holdings for ER.




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Old 10-05-2014, 09:52 AM   #14
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My BFFs parents definitely fit the criteria.

As federal employees they didn't have much SS. They retired before full retirement and took some kind of lump sum... so no pension. "Invested" the lump sum in a business that failed. Mom went to work while dad pursued the business. Never downgraded lifestyle - so daughter (my BFF) had to move back in with them and help them pay their rent. That drove her nuts so she moved out again (and in with me - that's how I met her.)

Mom continued to work... dad continued to pursue the failed business. Finally he took a part time job for a few years. Mom "retired" a few years ago - but still does freelance work. Daughter gives them money every month since they can't make it on SS alone. They have significant health issues in their 70's. They moved to a lower COLA area - but still can't make it on SS. His SS is teeny since most of his worklife was for the feds. Her SS is better but not enough to support them.

They still haven't fully accepted they can't have the lifestyle they had before they quit their high level government jobs. But they have to now that they're dependent on their grown daughter for income.

Unfortunately, my BFF is not able to save for her own retirement because of the support she gives her parents.
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Old 10-05-2014, 09:57 AM   #15
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I always watch to see the ages of the people who work in retail stores, such as Walmart. Many are clearly in their late 60's and working in positions such as cashiers, that require long periods of standing. At the same time, they are obviously there because of need. Men and women who had been in positions of much greater responsibility in their younger years, but for whatever reason... health or financial reverses, must supplement their SS or Pension income with part time work. In most cases they could not go back to their previous profession... in any position.

It is very easy to categorize people who cannot retire as poor planners or being financially irresponsible, except to note that the US median income has dropped 8% since the year 2007. A person who was 58 years old in 2007 and is now at a 65 year retirement age, has not had an increase in wages, during a time when the cost of living has risen by 12%. An empirical observation, but an indication of the times.

We consider ourselves very fortunate to have come through the past 25 years without suffering a financial disaster due to health, investment losses, or the necessity of providing for the care and sole support of loved ones.

Planning is important, but no amount of planning can foresee the vicarious twists of fate.
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Old 10-05-2014, 10:43 AM   #16
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Old 10-05-2014, 10:52 AM   #17
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I'd be curious about anyone you know that retired then had to go back to work for financial reasons.
All the people I know who successfully retired early are on this forum. The ones I know in the physical world who retired early were all unsuccessful and either went back to work or were forced to reduce their standard of living.

Where I worked (abroad) it was common for people to leave work with large lump sums. They all had lofty dreams, yet almost all burned through the cash and in short time were back looking for work.
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Old 10-05-2014, 11:03 AM   #18
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All the people I know who successfully retired early are on this forum. The ones I know in the physical world who retired early were all unsuccessful and either went back to work or were forced to reduce their standard of living.

Where I worked (abroad) it was common for people to leave work with large lump sums. They all had lofty dreams, yet almost all burned through the cash and in short time were back looking for work.
Good to know! I guess I'd better stay engaged here...
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Old 10-05-2014, 11:06 AM   #19
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Regarding the issue of knowing will the pot of $$ last, is always never guaranteed.
There are many things that would destroy nearly anybody's plans (ex one of those rare extremely expensive diseases, or simply theft of all your money).
My simplistic determination is to assume things will be relatively normal with ups and downs.
Then I looked at my pot of $$$ and used the standard 4% rule on 3/4 of my $$$. This in my mind allows for the market to drop 25% and I won't worry.
So my plan is to withdraw 4%, and I will only need to cut back on the % if my $$$ drops in value by more than 25%.
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Old 10-05-2014, 11:20 AM   #20
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Yeah, I always thought that retirement failure would be one of those things where, if you're paying attention, you should be able to see the train wreck coming years, or even decades in advance. For instance, if you start burning through your retirement portfolio a bit faster than anticipated, and that seems like a constant trend, you should either cut back spending, or think about bringing in income somehow. If you catch the problem early enough, often just a difference of a few thousand dollars per year is all it takes.

Of course, life can always throw curve balls at you, like a sudden illness, death in the family, or other unexpected expense. But often there's just poor planning to blame.
+1.
If you see it coming early enough and adjust your SWR, the shortfall you need to fill could be small enough that it can be met with a change in lifestyle or a part time job. The key is being ready to change in response to a far off, uncertain risk.

Like I said, in our case, with the benefit of hindsight, we didn't have to go back to work. But faced with a similar situation in the future, we will do exactly the same thing.
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