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Old 11-12-2008, 05:12 PM   #21
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Before spending any more time on Tango, I'd suggest you check out her

original post on 3-2-06. (I have a pretty fair memory for an old phfart)
Yes you do... I think you mean this one on 3/20/06...

please critique us!
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Old 11-12-2008, 05:29 PM   #22
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Yes you do... I think you mean this one on 3/20/06...

please critique us!
You do have a memory Jarhead. Hope you are doing well.

Perhaps a case of financial Munchausen Syndrome?
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Old 11-12-2008, 05:39 PM   #23
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I strongly believe we are close to the bottom - certainly a lot closer than we were a year ago.
At times when the market is plummeting, sometimes all we have to hang on to is belief. We don't really know what will happen in the future, or even if the future will follow the past in general. We analyze, observe, conclude, yet when push comes to shove, we know very little... still, we believe.

t's as though we belong to the Church of the Faithful Investors or something.

Now, if only tithing were enough to satisfy this church!
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Old 11-12-2008, 06:01 PM   #24
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Thanks, REW, Rita, and BD. You've really helped save my sanity. When the stock market finally recoups some, let's have a virtual party! Drinks are on me!

Rita, we did have some awareness/comfort level with more normal drops and didn't panic when the stock market dropped after October 2007 (I don't think I posted any SOS stuff back then). But it's this daily sell-off, combined with the bad economic news that has gotten to us. But your analogy of Mr. Market recovering from the flu is actually very helpful----as long as I can believe that Mr. Market is youngish and healthy enough to survive this (is the federal government the nurse/doctor in this scenario---and bailouts the antiviral medicine?).

We used to always say that if finances became tight during ER, that we could get a job at Starbucks or Home Depot! But now we can't even "joke" about that since these places are hurting and not hiring, so it's one less cushion to fall back on, if needed.

Yup, BD, the portfolio has been about 50-50 fixed (mostly individual muni bonds) - stocks (mutual funds) (at least before all this), with the fixed income side providing more than enough dividends and interest. And we are able to live on a SWR of 2%. We try not to think a lot about SS since it may not exist quite as it does today when we turn 62 in 7 years, but it may be $1000 each, which would help, possibly bringing our withdrawal rate to 1%. If Medicare still exists in ten years, that will be a big burden lifted---our health insurance is currently $12,000 a year. And we have enough in the fixed portfolio for many years (can't put an exact number on it)---depending on inflation and expenses (like the ever-increasing health insurance).

I'm sorry about the panic and doomsday rantings! But in this market, it has not felt exactly comfortable to be retired at 54, with what may be 40 more years of life----and no pensions---just a self-funded retirement. Those of you who have COLA pensions and/or employer-provided/subsidized health insurance, count your blessings.
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Old 11-12-2008, 06:08 PM   #25
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Jarhead---you have a point about needing something else to occupy my mind! I would agree, for my mental health. I admit it---I'm a worrier! But even having a high net worth, it's still painful to lose 25% of the net worth I retired with---and knowing it could take years to make it back. When friends moan and groan over losing $50K from their 401K, I of course can't say how much I lost. But trust me, unless you have tens of millions of dollars, losing a million hurts!
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Old 11-12-2008, 06:13 PM   #26
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You do have a memory Jarhead. Hope you are doing well.

Perhaps a case of financial Munchausen Syndrome?
Ha---I don't see the analogy with Munchausen Syndrome. It is defined as "Münchausen syndrome is a psychiatric disorder in which those affected fake disease, illness, or psychological trauma in order to draw attention or sympathy to themselves." Maybe I am overreacting and worried too much and I've needed some sympathy---but the disease/illness/psychological trauma is very real. My net worth (like most everyone's) is down significantly (25%+) from when I retired----and that's something I have difficulty accepting.
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Old 11-12-2008, 06:29 PM   #27
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Back to the calculator topic, TM, if you're not seeing what you want from FIRECalc then you could pay for a FinancialEngines.com subscription.

The advantage of FE is that you can enter your entire portfolio (FE has a lot of performance data on various assets) and then tweak whatever you want to change. You can enter the effects of reaching SS & Medicare age, mess with your tax assumptions, and generally vary just about every parameter to your heart's content. The only thing you can't do is enter in your real retirement date-- ERs have to tell FE tht they're retiring tomorrow.

The biggest advantage of FE is it requires about five hours of data entry that will keep you from being so obsessed concerned about the market. (If you're gonna worry, it'll help you do it constructively.) It's also a Monte Carlo calculator, so it'll factor in that extra edge of conservatism that you may favor.

Another great feature of FE in your case is that you can mess with inflation. Put yourself in that fixed-income portfolio you're fantasizing about, and start cranking inflation up. Run your dream scenario at 3.5%. Then 4%. Then 4.5%. Then imagine if this year's inflation kept up for 30 years!

Try those scenarios again with your current mix of equities/bonds. My guess is that your current AA will handle inflation a lot better than a fixed-income portfolio.

As for your currrent attitude, this is what bear markets do. You'll see at least one or two more before you're 80. If you don't want to go through these particular variations of sleep-at-night concern then it might be worth looking into a Vanguard annuity with a COLA... not so much for the financial benefits but for the emotional.
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Old 11-12-2008, 06:40 PM   #28
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Thanks, Nords. I'll consider the FE subscription---and it would be a more constructive use of my time.

I did spend some time with a simple Monte Carlo calculator, but was stumped about the volatility. This market is extremely volatile, but I wouldn't know how to put a percentage on it at this point, like 7.5%.

Wondered about an annuity. I actually do have mutual funds with Vanguard---guess I trust them/have faith in them as much as I can any company at this point.

I've spoken to my Fidelity broker---he of course has faith in the market correcting, maybe by the end of the first quarter of next year. He also burst my fantasy of stability through muni bonds, noting that some municipalities are going to have trouble with their tax basis going down with all the home vacancies. That hurt to hear, but in a way it makes me better able to tolerate what's going on with the market. If no place is safe, then that's that and I will learn to live with it (or at least try harder to!).

I promise that my next few posts will be about something other than my portfolio!
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Old 11-12-2008, 06:43 PM   #29
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Yup, BD, the portfolio has been about 50-50 fixed (mostly individual muni bonds) - stocks (mutual funds) (at least before all this), with the fixed income side providing more than enough dividends and interest. And we are able to live on a SWR of 2%. We try not to think a lot about SS since it may not exist quite as it does today when we turn 62 in 7 years, but it may be $1000 each, which would help, possibly bringing our withdrawal rate to 1%. If Medicare still exists in ten years, that will be a big burden lifted---our health insurance is currently $12,000 a year. And we have enough in the fixed portfolio for many years (can't put an exact number on it)---depending on inflation and expenses (like the ever-increasing health insurance).

TM,

I don't think you have a portfolio problem.
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Old 11-12-2008, 07:59 PM   #30
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TM, it looks like you are freaking out with an SWR of 2%, (with SS yet to come). Consider that many on this board are at or over 4% - I'm not sure there are many here to advise you relative to this.

BTW, for a truly ER, I think 2% is more reasonable than 4%.

My net worth (like most everyone's) is down significantly (25%+) from when I retired----and that's something I have difficulty accepting.

If you look at the squiggles in FireCalc, you'll see that 50% drops in NW are common, even with conservative withdraw rates. Some notes from this link indicate that even a 2% SWR can see around a 50% drop (I didn't recheck those numbers, I think that is correct):

FireCalc Dips in Net Worth - Anyone Scared?

-ERD50
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Old 11-12-2008, 09:03 PM   #31
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BD---you're right---it's not a portfolio problem. It's a problem with my perception---of thinking/feeling I needed so much to retire and then consequently acting like the sky is falling when I no longer had that amount that gave me the psychological comfort level. But I'm going to work on it!

ERD, thanks. Your post and thread helped. It's just ironic---you started it in January and spoke of the "recent market uncertainty." Funny how some of us were a little uncomfortable back then when we hadn't seen anything yet! And actually I wasn't panicky then and didn't post on the thread. I hadn't even checked a FIRE calculator since retiring in August 2006. So it does seem like I can go a couple of years without having an emotional meltdown! I will (try to) hang tight from here on in....and try not to implode for another couple of years!
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Old 11-12-2008, 09:30 PM   #32
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TM, at 2% withdrawal rate, I do not see how you could run out of money. SS is not going away in 7 years either. Same with Medicare. Relax. It appears that it is the loss of money that makes you upset, not the fear that you will go broke. Remember that there are retired people who rely more heavily on SS and Medicare than you do, i.e. not having that portfolio to rely on. And as other posters have pointed out, many in this forum are drawing more than your 2%.

How much in percentage has your portfolio dropped? Mine has dropped 30% since Oct 07. I am a bit concerned, but not panicky. In fact, I am slowly buying back. It's not the end of the world.
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Old 11-12-2008, 09:55 PM   #33
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my problem with losing 30% (& i'm pretty sure i'm down more than that) now is what happens if that happens again? these so-called once in a 100 year events have occurred twice in my father's life so far and he's "only" 80.

i'm not that familiar with financial history, but from what little i'm learning the hard way about recent bubbles, it seems there's a lot more volitility now then there was before the last once in a 100 year event. is that correct, anyone? if so, do monte carlo calculators keep that in mind?

or is it just a coincidence that early retirement calculators are named for the gambling capital of the world?
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Old 11-12-2008, 10:00 PM   #34
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Tango - I went back to your 2006 post, and looking at the above, like Bikerdude, I don't think you have a portfolio problem. Guess you may have missed the announcement from the cockpit: "Uh, folks, we may be experiencing a little turbulence up ahead, please return to your seats and fasten your seatbelts...and, uh, don't worry, this is, uh, normal, and uh won't damage (bump) uh, your portfolio the aircraft".

In all seriousness though, I'm not retired yet, but my paper losses are probably around 1.5 million, including the value of some real estate held for sale, and a few stock options that are now not worth the toilet paper they are written on, plus the equities and munis in my taxable funds & 401k. I do plan to do some tax loss harvesting this year, offsetting whatever cap gain distributions I get, re-investing in some lower cost ETFs.

I have had to do force myself to:

1) remember that the companies I hold are still producing good to excellent value and that many of them are trading at bargain basement prices (wish I had more free cash to dump in while they are down)

2) find other things to obsess over

3) Turn off the %*+$ TV and internet and stop checking my port on a daily/hourly/minute by minute basis

4) Exercise more (the endorphins seem to help)

So, find something enjoyable to do, and go do it. Otherwise, try to find a job locally to help keep your mind off it. But to capitulate now and go to only munis (and planning to stay there) would probably mean giving up any recovery that will (eventually) come, and REALLY losing the $1 million (remember, right now its only on paper unless you were holding a bit of speculative WM, as yours truly was).

Hang in there Tango!

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Old 11-12-2008, 10:07 PM   #35
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If I lose another 30%, then I am down to 0.7x0.7 = 49% of my high in Oct 07. Personally, I will just have to find ways to live off half of what I had earlier. I am sure I will have lots of company. In fact, many people still working may be worse off, having become unemployed or live in fear of being so. We might even have deflation, where things are cheaper. I will just accept my declining living standard along with the rest of the world.
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Old 11-12-2008, 10:28 PM   #36
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If I lose another 30%, then I am down to 0.7x0.7 = 49% of my high in Oct 07. Personally, I will just have to find ways to live off half of what I had earlier. I am sure I will have lots of company. In fact, many people still working may be worse off, having become unemployed or live in fear of being so. We might even have deflation, where things are cheaper. I will just accept my declining living standard along with the rest of the world.
I had almost this exact conversation with another retiree about a month back. Most of the people on this forum are the kind that tend to take control of situations, and no matter how bad things get, we are likely to be better off than those who tend to let life push them around.

Individuals in either group can be the subject of exceptional good or bad luck, but in general we ought to do better than average. What more can we hope for?

Although, I have to admit, that market drop AGAIN today sure didn't help!!!! Another 4.5%!!! Yikes!!!!

-ERD50
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Old 11-12-2008, 10:41 PM   #37
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Although, I have to admit, that market drop AGAIN today sure didn't help!!!! Another 4.5%!!! Yikes!!!!
-ERD50
Didn't the bear market of 2000-2003 feel like this? Well, our memory is short, but it was this bad for me, proud shareholder of mucho tech companies. Markets around the world are still dropping. Everything is down, even gold, which is a good thing.

Recently, the only thing that goes up in value are pieces of paper, called dollars, euros, yen, renminbi, Canadian or Australian dollars, etc... Aren't those things very inexpensive to print and drop from helicopters? This can't go on forever. In 1929, the US did not want to increase the money supply, and run a budget deficit. This time, they have every intent to do the opposite. So, I am watching for the market bottom to "rebalance".

By the way, does anybody else notice that China's consumer spending went up 22% year-over-year, as reported just a day or two ago? We have been the spendthrifts, and they have not even started yet. Got to be some companies out there selling raw materials or goods to them, don't you think?
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Old 11-13-2008, 01:10 AM   #38
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FDave, I liked playing with the Monte Carlo calc, although there was a scenario where I would have run out of money---and I think in about 20 or 25 years...with a high volatility rate of 7.5%, which of course doesn't pertain if it's in fixed income stuff only earning 3 percent.
If you put zero in for volatility, you produce a truly fixed income.
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Old 11-13-2008, 10:43 AM   #39
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With a portfolio the size of yours, if you are so worried why not just withdraw it all from the market and put it in CD's. I should imagine that you are quite frugal and could not see how you would ever run out.
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Old 11-13-2008, 10:54 AM   #40
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DM, I think once I recoup some of the losses, I will keep about 80 to 90% in fixed income (CDs and munis, possibly an annuity) and the remainder in mutual funds. Trying to worry less, even though the thread about level of concern now versus 2000 shows that 70% of us are more concerned now. I've convinced myself that what goes down will come up.....eventually....
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