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loosing sleep over the market!
Old 04-03-2008, 06:02 AM   #1
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loosing sleep over the market!

ok so im only a few weeks from "early retirement" and planning on using my Fidelity to fund it (well my share of the bills, for the time being DH is still working)
well with the way the market is going I havent been sleeping
im into a 72t for 9yrs
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Old 04-03-2008, 06:35 AM   #2
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When I can't sleep due to market volatility, I find that a great cure for the problem is tweaking my asset allocation a little bit so that it is more conservative.

Even though I am a worrier by nature, I am sleeping like a baby as far as the market goes (especially this week! ).
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Old 04-03-2008, 10:31 AM   #3
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We work, save, try to stay out of debt and learn about investing. At some point we become satisfied with our asset allocation. In other words, we do the best we can. If there is a need, we can go back to work doing something.

Events may cause us to worry, but I believe we will survive...and perhaps have a little fun along the way.
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Old 04-03-2008, 02:14 PM   #4
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DW retired 9 months ago and I retired almost 2 years ago. While I do not like the radical swings in the market, the 'cleansing' cycle we are in comes about every so often. In the long run run, things should even out. During times like this, besides minimizing our expenditures, we only dip into our MM funds and dividends - we do not sell equities when they are down.
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Old 04-03-2008, 02:19 PM   #5
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Tons of books out there on how to accumulate wealth. Very few good ones teaching how to live once you're there.
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Old 04-03-2008, 10:52 PM   #6
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I don't think anything is worth losing sleep. Not everybody has the constitution to be in the market, but more than likely you need to figure out how to learn enough to set yourself up to sleep peacefully, or just get an autopilot, like a life cycle fund. It almost sound like your ER was not planned in advance.
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Old 04-04-2008, 05:24 AM   #7
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ok so im only a few weeks from "early retirement" and planning on using my Fidelity to fund it (well my share of the bills, for the time being DH is still working)
well with the way the market is going I havent been sleeping
im into a 72t for 9yrs
I think it is perfectly natural to be concerned. Clearly FIRECALC and every other retirement study show that greatest risk is retiring at the start of Bear market. I think we are in one. How long it will last nobody knows, but history suggest that it won't be too long possibly less than year, unlikely to be more than 3 years.

Other than Want2Retire suggestion of adopting a more conservative allocation there is little you can on the income side. You can control your expense to some extent.

I retired a year before the tech bubble burst. In 1999, I made a fairly radical change to my investments to be more conservative. Still my net worth plummetted in 2000 and 2001. I came up with a contigency plan that said if my net worth drops below X, I'd cut my expenses by ~500/month and if drops below Y, I start looking for a job. It came within 50K of X..
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Old 04-04-2008, 05:42 AM   #8
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I came up with a contigency plan that said if my net worth drops below X, I'd cut my expenses by ~500/month and if drops below Y, I start looking for a job. It came within 50K of X..
I have been trying to do this. (same as all situations that come up in my life). Just not sure what all my options are. I'll be getting a full paycheck till mid July (leaving work earlier due to surgery and vacation time). Surgery recovery will take me till at least mid Aug. When DS returns to school I can look for something (even parttime) in the fall.

DH carries the health insurance at his job. I can always take a loss and pay off the house if Fidelity gets too low. That cuts our monthly bills in half and DH is planning to work till DS gets out of college.

I slept a little better last night
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Old 04-04-2008, 08:09 AM   #9
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I ignore the market most days because I am not a day trader. Think of your investments like your house. Do you ever lose sleep when your house declines in value? Most people say no. It is because you don't need to or plan to sell...
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Old 04-04-2008, 08:15 AM   #10
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It's not always easy to strip the emotion out of it. My plan is to not retire unless I can weather a sudden 25% drop in portfolio value. That's not bulletproof, but it gives some peace of mind against a market that decides to immediately head south.
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Old 04-04-2008, 09:40 AM   #11
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Perhaps you should "unretire". While you can't easily get out of the 72t, no one says you have to *spend* the money. Getting a job and saving all/part of the 72t income might give you peace of mind.

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Old 04-04-2008, 10:03 AM   #12
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I find most people are quite calm and logical when discussing someone else's retirement.
Every day I read someone worried about running out of money during retirement, and yet one of the few guaranteed answers is viewed with skepticism and disdain. I don't get it.
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Old 04-04-2008, 10:10 AM   #13
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I find most people are quite calm and logical when discussing someone else's retirement.
Every day I read someone worried about running out of money during retirement, and yet one of the few guaranteed answers is viewed with skepticism and disdain. I don't get it.
If you are discussing annuities, what happens when the insurance company goes belly up? I am not quite sure, but I also do not personally trust insurance companies very much so I don't really want to find out.

Or were you referring to something else?
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Old 04-04-2008, 10:25 AM   #14
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Market volatility had been very sedate in the 2003 to 2006 time period. I think a lot of people were spoiled and especially those planning to retire during this period. The current volatility is "normal" from what I've seen in my decades of investing based on percentage moves up and down.

I think that what has people that are living off their investments is that the market indexes have been significantly down since last October. The nominal 15 - 20% drop in most indexes is a normal correction. If you had a diversified portfolio for the last decade, you are much richer than you were. Unfortunately for us investors, the market doesn't go straight up.

What's a body to do? I suggest a reasonable market allocation. In my case I'm 40% fixed, 30% large cap, 20% foreign and 10% small cap. I have a small amount of "high yield" in my fixed portion but most is in CDs. If necessary, DW and I could live for over 7 years on just the fixed income portion. That should let me ride out any market swing.

For the year, I'm down slightly less than 3%. At the worst this year, I was down about 9%. I can live with this type of swing because I am up significantly over the last 5 years.

It's a shock to retirees to see their portfolio drop when that's their only significant means of support. I know one recent retiree that went back to work to shut his wife up. She had never paid any attention to their investments when he was working but she immediately became obsessed with every market swing after he retired (and the market started down). She wanted to stop this silly index investing and let one of the radio show investment advisors take over because he said he had kept his clients from being significantly hurt during the market drop.

My other suggestion is to address your concern by reducing expenses. We all have a reasonable amount in the budget for travel and entertainment. If your are really concerned, make some cuts here so you can at least tell your self that you won't need as much income from your portfolio.
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Old 04-04-2008, 10:38 AM   #15
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If you are discussing annuities, what happens when the insurance company goes belly up? I am not quite sure, but I also do not personally trust insurance companies very much so I don't really want to find out.

Or were you referring to something else?
Well you know I was. Even though I've gotten some nasty hate mail from posters around here, no one has yet come up with a decent argument as to why lifetime income for part of your money isn't a good idea.
To answer your very valid concern, this would be a very good reason to research the insurance company selected. IF the insurance company went belly up, there are safety features in effect to help pass along policies to other insurance companies, but the bottom line answer is, just like a bank or mutual fund going belly up, your assets are kept in a separate fund and you would get back whatever the value of your portfolio was at the time.
I think someone such as yourself follows the market closely enough that you would see the insurance company's share price dropping and you could move the money elsewhere or just take it out of the account.
I'd say if there's anything we are learning of late, is that the government steps in to save large corporations from disaster.
What happens if your bank where you buy your CD's goes belly up? Insurance companies are larger than banks.
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Old 04-04-2008, 10:44 AM   #16
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Well you know I was. Even though I've gotten some nasty hate mail from posters around here, no one has yet come up with a decent argument as to why lifetime income for part of your money isn't a good idea.
If someone wants to do that, they can buy term life, invest the difference as well as more into their 401K plans, and then roll part or all of the 401K into a single payment immediate annuity upon retirement. These can often be purchased for low fees, so it's rare for insurance companies to push them.

I'm not a big fan of annuities, but for the right situation, a low-fee SPIA can make sense for retirement income you can't outlive.
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Old 04-04-2008, 10:45 AM   #17
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want2....First off let me say that I really enjoy conversing with you. I find your posts to be well thought out and objective.
I guess the reason why this topic hits home with me so heavily is that my mother is currently in this boat. I think she has enough money to live the rest of her life on, but each and every day she calls me in a fit, worried that she's gonna run out of money. Her REITS and preferred stocks, which have done quite well for years, have taken a beating lately. Her rental property is half empty and the repairs she had to do last year caused her to have zero earnings last year, causing her to continually take money out of her investment account at the worst time possible. And yet she tells me that 7% guaranteed for life isn't enough income for her. My own mother doesn't see it. Believe me, I understand why people are hesitant, but it's also the reason I think people need to be educated.
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Old 04-04-2008, 10:48 AM   #18
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If someone wants to do that, they can buy term life, invest the difference as well as more into their 401K plans, and then roll part or all of the 401K into a single payment immediate annuity upon retirement. These can often be purchased for low fees, so it's rare for insurance companies to push them.

I'm not a big fan of annuities, but for the right situation, a low-fee SPIA can make sense for retirement income you can't outlive.
I can't imagine a senior buying a term policy, a joint life annuity would seem to make much more sense to me. However, I'm just not a fan of annuitizing, unless you are OJ Simpson or Ken Lay

BTW, an SPIA will never give you a raise in income. No need to do it anymore.
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Old 04-04-2008, 01:09 PM   #19
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I lose sleep b/c I have a 29 mo old who gets up at night to go potty, get a drink of milk, a little water.

Would there be any harm in delaying retirement a bit... or doing something however little income generating, to somewhat placate your fears, and allow you to sleep better at night?
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Old 04-04-2008, 01:11 PM   #20
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I lose sleep b/c I have a 29 mo old who gets up at night to go potty, get a drink of milk, a little water.
We lost sleep last night because our neurotic dog started pacing, panicking and whining during a thunderstorm at 3 AM. Jumping all over the bed, too. Damn dog. She's lucky she's a cutie.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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