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Idea of retiring soon seems daunting
Old 03-31-2010, 01:43 PM   #1
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Idea of retiring soon seems daunting

I used to think those who were able to retire ten years ago had it made, everything seemed 'easy'. Fuel prices were low (we RV), housing prices were going up & up, seemed any and every investment 'paid off', etc.

However, the last ten years have not been exactly 'pretty', and now I wonder how those that did retire ten years ago got any sleep.

Now I'm in the position to retire soon, and after taking a hard look at conditions today and what might be ahead, the idea of retiring seems daunting......perhaps even VERY daunting.

There are so many moving parts. Thought I'd see what my 'financial advisor' suggested the other day. He would have me put all the lum sum pension (rolled over to IRA) in taxable bonds and the 401k (also rolled over) in utility stock. I thought to myself, if this were ten years ago, that may be good advice......but today? I don't think so.

The stock market seems like Vegas to me anymore. The bond market seems ready to implode. CD's are dead players, etc. But putting it (retirement) off seems to have its own risks, the Pension Protection Act, entitlement reform, the cost of trying to enjoy retirement going up, etc.

So I guess my question is, where do you buy a cast iron stomach, since you must surely need one to retire.
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Old 03-31-2010, 01:53 PM   #2
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Since the future is unknowable, there may never be a 'good time' to retire. Preparing for it helps build that cast iron stomach - or reduces the anxiety to a level that you don't need one.

For me, studying the available literature helped a lot. I read almost all the books mentioned in this forum and also kept up to date with online journals. I checked my plans using every retirement planning tool I could find. Bouncing ideas/plans off the wonderful people on this board helped a great deal too.

Flexibility is important too. Keep yourself open to the possibility of going back to work, and know that you may not get the same job/pay that you have now. DW & I are working part-time now, but will stop again as soon as we feel comfortable about the future. Meanwhile, we are not letting this bump in the road affect our outlook on life.

It is a huge decision. Be grateful that you are smart enough to recognize it.
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Old 03-31-2010, 01:55 PM   #3
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Originally Posted by Dogtrack View Post
I used to think those who were able to retire ten years ago had it made, everything seemed 'easy'. Fuel prices were low (we RV), housing prices were going up & up, seemed any and every investment 'paid off', etc.

However, the last ten years have not been exactly 'pretty', and now I wonder how those that did retire ten years ago got any sleep.

Now I'm in the position to retire soon, and after taking a hard look at conditions today and what might be ahead, the idea of retiring seems daunting......perhaps even VERY daunting.

There are so many moving parts. Thought I'd see what my 'financial advisor' suggested the other day. He would have me put all the lum sum pension (rolled over to IRA) in taxable bonds and the 401k (also rolled over) in utility stock. I thought to myself, if this were ten years ago, that may be good advice......but today? I don't think so.

The stock market seems like Vegas to me anymore. The bond market seems ready to implode. CD's are dead players, etc. But putting it (retirement) off seems to have its own risks, the Pension Protection Act, entitlement reform, the cost of trying to enjoy retirement going up, etc.

So I guess my question is, where do you buy a cast iron stomach, since you must surely need one to retire.
Retiring in two weeks, at age 61+. The one thing that makes this easier or me and my wife is that we've run our numbers in multiple places, and through our very conservative financial advisor, and they all say we're pretty safe(95%+ for what that's worth). But I also trust our financial advisor and most all of our money is in Vanguard index funds. From all I've read over the years I think a mix of bond/stocks in low-cost index funds is the best investment. So I both understand and agree with what our financial advisor says. I would not trust someone who says to put my money in utility stocks. That just seems like putting all your eggs in one basket. What if that one sector goes down? I don't want to criticize that decision because I don't know enough to do so. But my reading has convinced me that broadly diversified, low-cost index funds, split between stocks and bonds is a smart move. So that's what we've done for the last 5 years and that's what we'll continue to do. Believing that our investment policy is wise is the closest I can get to a cast-iron stomach. If you're not really confident in your investment choices then personally I'd recommend holding off on retirement until you are.
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Old 03-31-2010, 02:49 PM   #4
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I would say that the worst thing you could do is jump off the retirement cliff before you are ready, including both the financial and the mental/lifestyle parts. So what I suggest you do is educate yourself on investing, historical market performance, etc. This may or may not lead you to get rid of your advisor, but it will help you understand more about how investments/markets behave over long periods of time and how you can find a way to get comfortable. But if you aren't educated, you will have to plan and act from a position of ingnorance and fear. That is not the way to make a major life decision.

FWIW, DW and I are in the back half of our 30s with two small kids and plan on semi-retiring within 5 years. We will be relocating to a lower cost area and plan to stretch our portfolio by generating income either via part time work, consulting/contract work, and/or a small business. We plan to remain flexible and minimize draws on our portfolio for the first 5 years of semi-retirement.
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Old 03-31-2010, 02:58 PM   #5
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I would say that the worst thing you could do is jump off the retirement cliff before you are ready, including both the financial and the mental/lifestyle parts. So what I suggest you do is educate yourself on investing, historical market performance, etc. This may or may not lead you to get rid of your advisor, but it will help you understand more about how investments/markets behave over long periods of time and how you can find a way to get comfortable. But if you aren't educated, you will have to plan and act from a position of ingnorance and fear. That is not the way to make a major life decision.
Well said.

As for myself? While I contributed to my retirement portfolio for many years, it wasn’t till my mid-50's till I really got serious on what I had to do concerning "my" investments, "my" plan, and "my" knowledge. I felt I could not delegate that responsibility to someone else; it's too important for the rest of my life to leave the knowledge/decisions to others.

BTW, I did retire at age 59; it will be three years on May 1st. Considering the last three years (investment climate wise), I'm more confident than ever on what I have done in preparation for this change of life...
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Old 03-31-2010, 03:04 PM   #6
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I would say that the worst thing you could do is jump off the retirement cliff before you are ready, including both the financial and the mental/lifestyle parts. So what I suggest you do is educate yourself on investing, historical market performance, etc. This may or may not lead you to get rid of your advisor, but it will help you understand more about how investments/markets behave over long periods of time and how you can find a way to get comfortable. But if you aren't educated, you will have to plan and act from a position of ingnorance and fear. That is not the way to make a major life decision.
I agree, but that said, be careful that this prudence and caution doesn't turn into "One More Year Syndrome"...
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Old 03-31-2010, 03:06 PM   #7
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I agree, but that said, be careful that this prudence and caution doesn't turn into "One More Year Syndrome"...
OTOH, it's good advice to make sure the pool has water in it before you dive in ...
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Old 03-31-2010, 03:07 PM   #8
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However, the last ten years have not been exactly 'pretty', and now I wonder how those that did retire ten years ago got any sleep.
Look back over the last 100 years and look for a decade that did look pretty.
1910 - WWI, Spanish Flu
1920 - Rise of Fascism, steady increase in unemployment after the war, "the lost generation.
1930 - depression, dust bowl
1940 - WWII
1950 - Korean war, and a good size recession
1960 - Cuban Missile Crisis, Vietnam war, social change
1970 - Vietnam war, oil shocks, 'Me Decade'
1980 - high inflation, unemployment, cold war tension
1990 - small recession - not a bad 10 years
2000 - Two bubbles burst
You can fill in all the recessions and other economic issues.

So, what is your criteria for deciding to ER?

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So I guess my question is, where do you buy a cast iron stomach, since you must surely need one to retire.
Second, give your fear a name. You can only deal with a fear once you identify it.

Third, everyone's fear is different and it changes over time, so is how they deal with it.
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Old 03-31-2010, 03:07 PM   #9
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Being of a cautious mindset (to say the least), I assumed the worst when planning for retirement. My retirement plan has multiple redundancies and I think/hope I have already dealt with most of the "what if"s.

I was not tempted to retire even a day earlier than November 9, 2009 (my retirement date), because that was the second day on which I could retire with eligibility for lifetime medical care and that seemed important at the time.

That said, I sometimes wish I had retired earlier. The value of the time that I now have, is so much greater to me than the value of extra spending money. Which is not to say that I am not enjoying my new Venza, Kindle, etc etc. But, I don't really think most retirees need goodies as much as they need free time and lowered stress. Just something to think about. You only have ONE life on this earth, so be sure you spend your time wisely.

Even though it hasn't been relevant to my own retirement, I could see how one's stress level could rise again in ER if one does not have sufficient funds to provide peace of mind. That wouldn't be good. So make sure you have enough to feel secure, then let 'er rip.
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Old 03-31-2010, 03:09 PM   #10
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I retired in 1999. Was it daunting? Yes! It was obvious that the market was in some kind of crazy bubble AND we had Y2K around the corner with lots of uncertainty.

I still retired because my net worth had risen enough that I felt I had a pretty good cushion. I also converted from riskier to (somewhat) safer assets in 1999 and 2000.

But it was not a pretty ride - not at all. I still can't believe we had to endure 2 really nasty bear markets during our first 10 years. We certainly didn't anticipate that!

Last year I posted a look back thread around my 10 year anniversary. How I Stayed Retired for 10 Years after Retiring in 1999

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Old 03-31-2010, 03:10 PM   #11
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My retirement plan has multiple redundancies...
Belt - check
Suspenders - check
Duct tape - check
Gorilla glue - check

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Old 03-31-2010, 03:11 PM   #12
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OTOH, it's good advice to make sure the pool has water in it before you dive in ...
Agreed. But the key is to try to strike the balance between recklessly getting out too soon and being so cautious that retirement is always "next year."
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Old 03-31-2010, 03:16 PM   #13
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Belt - check
Suspenders - check
Duct tape - check
Gorilla glue - check

Yep, exactly!!

multiple income streams - - check
diversified investments - - check
balanced Wellesley fund *and* index funds - - check
pension - - check
TSP - - check
cash - - check
paid off house and no debts - - check
low bare bones expenses if necessary - - check
no dependants - - check
guaranteed health insurance - - check (though I guess everybody will have that soon)
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Old 03-31-2010, 03:25 PM   #14
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Yep, exactly!!

multiple income streams - - check
diversified investments - - check
balanced Wellesley fund *and* index funds - - check
pension - - check
TSP - - check
cash - - check
paid off house and no debts - - check
low bare bones expenses if necessary - - check
no dependants - - check
guaranteed health insurance - - check (though I guess everybody will have that soon)
Working wife? --- CHECK ....
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Old 03-31-2010, 03:43 PM   #15
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I agree, but that said, be careful that this prudence and caution doesn't turn into "One More Year Syndrome"...
Not much risk of that. We are ready to jump now (although the portfolio isn't).
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Old 03-31-2010, 03:46 PM   #16
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Working wife? --- CHECK ....
W*rking dh2b...CHECK
2 lazy dogs for daytime company...CHECK
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Old 03-31-2010, 04:04 PM   #17
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We didn't know about this board when we retired, but have discovered since then that we did all the reading, checking and number running (over and over) that most here did. Read lots of books. Unlike others here though, the book that was most important to me was "The Great Crash". It convinced me that markets were prone to booms and busts, and that I had better plan for the worst. By the way, it is a great read. It's a real page turner, and the only place I have seen the word usufructs actually used. (Yes, I had to look it up.)

Turns out that what happened was pretty much the worst. However, our conservative portfolio of indexed stock and bond funds performed as expected. Here is what our balance history looks like
balance.gif
and this was with constant withdrawals for living expenses. The crash took our portfolio down about 25%, but like most here, we had enough cash to live on so we didn't sell anything (except for rebalancing), and now our portfolio has recovered to within spitting distance of its all-time high.

I'm not bragging about my investment ability here. Lots of folks on this board have done much better with their investments, but a plain Jane portfolio seems to be working.

There is no magic about this. You just have to get your expenses in line with your what your investments can realistically be expected to produce - inflation included.
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Old 03-31-2010, 04:06 PM   #18
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Agreed. But the key is to try to strike the balance between recklessly getting out too soon and being so cautious that retirement is always "next year."
Which is exactly what I hope I've reached since I'll be retiring in two weeks. And I think I have. It's always possible that some catastrophe will come along and ruin all our plans, or at least make things interesting. But on the other hand we don't want to be too cautious. For the OP though it doesn't sound like he's very comfortable with his decision. So that makes me think he's being closer to reckless than to overly cautious. But only he can answer that.
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Old 03-31-2010, 04:10 PM   #19
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Working wife? --- CHECK ....
There ya go!

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W*rking dh2b...CHECK
2 lazy dogs for daytime company...CHECK
Even better!
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Old 03-31-2010, 05:51 PM   #20
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Yep, exactly!!

multiple income streams - - check
diversified investments - - check
balanced Wellesley fund *and* index funds - - check
pension - - check
TSP - - check
cash - - check
paid off house and no debts - - check
low bare bones expenses if necessary - - check
no dependants - - check
guaranteed health insurance - - check (though I guess everybody will have that soon)

W2R,

Sounds like you were very prepared.

But, maybe should have said, "guaranteed health insurance -- check -- sortof"

Some companies recently are thinking about cutting health benefits to active employees and retirees.

AT&T will take $1B non-cash charge for health care - Yahoo! News

Also, I know someone who worked for one of the auto companies and had guaranteed health insurance but not anymore.

Doesn't really apply to me anyhow as I didn't hang around for the health insurance guarantee and instead am trying the HSA route
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