I hit my number

[fh2000]

I hit my number last week. DW wants 5% more cusion, which I understand and agree to do OMY.

From another recent thread about the reasons for what we are waiting for, and I agree with many that they are our reasons too. Below are 2 reasons unique to us:

1. 2nd child will graduate HS next year and move on to college (college fund is set aside already), so we are still "tied down" until then.
2. waiting for the market correction (10%? 20%?) It is better to RE right after downturn (if number is still good), instead of right at the market high, no?

 

[growing_older]

I have wondered about this. Since I am accumulating and watching my number, I expect to reach it when stock are on a long upward leg. I am concerned this means I automatically preselect for a few down years to start my ER. Makes me think I should consider some combination of life events plus my number to pull the plug, or add a cushion like you mention to counter the tendency to retire just when everything is up.

 

[daylatedollarshort]

Congratulations, fh2000!

 

[walkinwood]

If you have "hit" your number, I assume that you have a SWR methodology in mind & that methodology has withstood the test of time - at least back to the early part of the last century.

If those assumptions are true, you "should" be fine irrespective of the current state of the stock/bond market.

Imho, you mention a more important reason to work for one more year - your own (and DW's) feeling of comfort/confidence in your plan.

Congratulations and all the best

 

[GalaxyBoy]

It is better to RE right after downturn (if number is still good), instead of right at the market high, no?

The trick, of course, is knowing when that exact moment in time is. No one has the crystal ball.

As the Bogleheads say, "stay the course."

 

[Aiming_4_55]

Congrats fh2000!

 

[Katsmeow]

1. 2nd child will graduate HS next year and move on to college (college fund is set aside already), so we are still "tied down" until then.
2. waiting for the market correction (10%? 20%?) It is better to RE right after downturn (if number is still good), instead of right at the market high, no?

Well - item 1 is not unique to you, although perhaps not typical of most retiring. When DH retired 3 years ago, we still had 3 adolescents at home. I semi-retired at the same time. Three years later, one of the 3 is out on his house, 1 is in college, and the third will graduate high school soon.

Item 2 - I think the issue is that if you have to be at the top of the bull market in order to have enough to retire then you may want to consider waiting. I've been pondering fully retiring and have been running numbers a lot. One thing that I have done is see how I do if I deduct 10% from the portfolio and then run Firecalc. The success percentage does go down, but is still over 95% so I'm OK with it.

 

[obgyn65]

Well done !

 

[truenorth418]

Congratulations!

 

[MBAustin]

Congratulations!

Have you considered pulling 2-3 years of living expenses out of the stock market and moving them to something less volatile? Then you can disregard Mr. Market to a greater extent and make the decision when you are both ready. Just a thought.

 

[heeyy_joe]

Regarding your investment portfolio, do you know your overall beta? Test for a 30% drop in the market against your portfolio beta. If you can get good success percentages under this scenario I say you have no worries.

 

[Midpack]

I hit my number last week. DW wants 5% more cusion, which I understand and agree to do OMY.

2. waiting for the market correction (10%? 20%?) It is better to RE right after downturn (if number is still good), instead of right at the market high, no?

Congrats on hitting your number target!

The two statements above are interesting taken together though you seem to recognize it given your second parens. That said, retiring into a run up vs a big downturn has historically been higher success rate. Too bad we can't actually predict either - timing, severity, duration, etc.

 

[Huston55]

Regarding your investment portfolio, do you know your overall beta? Test for a 30% drop in the market against your portfolio beta. If you can get good success percentages under this scenario I say you have no worries.

Heeyy Joe-

Can you explain how to calculate this based on AA and where there's a tool to test it?

 

[fh2000]

Regarding your investment portfolio, do you know your overall beta? Test for a 30% drop in the market against your portfolio beta. If you can get good success percentages under this scenario I say you have no worries.

Heavy_Joe,

My Port is 60/25/15 (stock/bond/cash). My beta is then 0.6? A 30% drop will reduce my port by 18%, looks like. My assumption is that bond and cash will stay flat when that happens.

I will not have enough to ER then.

 

[grasshopper]

Here is my 10 year investment timeline. Choosing a time to ER is always a big decision.



2003 paid off home
2006 retired
2006 bought ranch the sold home
2008 looks like about 15% drop in investments
2013 over the top.

 

[Lagniappe]

I pulled the plug last April and was concerned that I might be retiring at just the wrong time given the market run up. The market continued its rise. I made sure I had 3-4 years expenses in cash to ride out a downturn without touching anything I had in the market. It's hard to watch all that cash earning nothing during the last year's runup, but then I remember why its there, so I can sleep better during downturns.

 

[Live And Learn]

How did you determine "your number" ? My goals were 90% success to age 90 using Fidelity's RIP tool plus 100% succes rate in FIRECalc.

I wish you well on your "one more year" - for me the BS bucket got awfully heavy awfully fast. Tying your timeline to your childs college date will (hopefully) make that extra year easier to endure.

 

[W2R]

Congratulations!

 

[DeborahB]

Every time I think the stock market will go down - and it sometimes has, and badly! - it has gone up and exceeded itself. So I just don't worry too much about that. If you have cash when it's down, it's a buying opportunity.

Congratulations!

 

[fh2000]

How did you determine "your number" ? My goals were 90% success to age 90 using Fidelity's RIP tool plus 100% succes rate in FIRECalc.

My calculation on FIRECalc says 100%. I just ran Fidelity RIP and see it shows 90%. I think this is how RIP shows the result:

"Historical Likelihood of Your Money Lasting Throughout Retirement3 (based on the assumption that markets perform significantly lower than the historical average) Learn about Historical Performance Analysis ---- 90%"

It is interesting that RIP tool is more conservative than FIRECalc.

 

[SumDay]

It is interesting that RIP tool is more conservative than FIRECalc.

Actually, I have the opposite impression. For us, FIRECalc is more conservative than the RIP tool, and actually just about any other calculator I've tried. But I trust FIRECalc more - it collects more data than most.

 

[Huston55]

My calculation on FIRECalc says 100%. I just ran Fidelity RIP and see it shows 90%. I think this is how RIP shows the result:

"Historical Likelihood of Your Money Lasting Throughout Retirement3 (based on the assumption that markets perform significantly lower than the historical average) Learn about Historical Performance Analysis ---- 90%"

It is interesting that RIP tool is more conservative than FIRECalc.

Actually, I have the opposite impression. For us, FIRECalc is more conservative than the RIP tool, and actually just about any other calculator I've tried. But I trust FIRECalc more - it collects more data than most.

You can adjust the confidence in RIP. I use 95%. It's in the tabs after you run scenarios.

 

[tdv2]

I also use both calculators regularly. I get a little more conservative result out of RIP as well. You need to keep in mind that the RIP tool factors in tax where firecalc doesn't. Can make a difference if the bulk of your assets are in tax advantaged accounts. For me 2/3 of my assets are outside my 401k/IRA's.