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Old 03-06-2013, 11:37 AM   #61
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Hi REWahoo - could you do me a favor and send me a PM every day that says "Don't Worry - Be Happy! Make the jump, you've earned it and you need to stop working those calculators"
I sent you a PM including my rates for daily, weekly and monthly black paint removal services...
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Old 03-06-2013, 11:44 AM   #62
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Not safe to retire in a down market! Not safe to retire in an up market! Life and retirement are not without risks. If any degree of risk is unacceptable then perhaps you need to work forever. That should make it easier for me to get a weekday tee time.........if I ever take up golf.
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Old 03-06-2013, 12:11 PM   #63
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this thread is almost as bad as the whether to take ss early or not.

then i realised i was worrying about how much i would have at 95.

so i took at 62 and was done with it.
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Old 03-06-2013, 05:42 PM   #64
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I will know when it is time to retire. I guess you know when it is the right time. And I know that time is very close, in my case.

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So w*rk is bogus, and I'm itchy. Everything says I can retire today. Then I look at my net worth and realize between savings and market return, I've had 50% appreciation in the last 4 years.

That's good. And that's scary.
.
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Old 03-06-2013, 05:49 PM   #65
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I will know when it is time to retire. I guess you know when it is the right time. And I know that time is very close, in my case.
That is great. You can keep the parts of medicine that satisfy you the most and let go of the aspects that do not. The people to whom you donate your time, skills, and energy will be fortunate.
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Old 03-08-2013, 04:43 PM   #66
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I think 'harvesting' cash out of your equities the last few years before you retire, if the market is good is a great means to secure some gains and sleep better at night. One of my take-aways from Otar's book was how much better it could be to retire when the market wasn't doing well. Of course, to retire then, you'd really have to be in good shape and you'd be well suited for the - hopefully - soon to come equities rebound.
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Old 03-08-2013, 06:05 PM   #67
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I think this is kinda the third time the market has been around these levels: 2000, 2007, and now 2013. If the market tanks in 2013, then history (2000, 2007) says it will recover. The retirees of 2000 didn't have the history we are able to look back upon today.

So not a scary time to retire at all. Very easy to sleep well at night.
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Old 03-08-2013, 07:01 PM   #68
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I think 'harvesting' cash out of your equities the last few years before you retire, if the market is good is a great means to secure some gains and sleep better at night. One of my take-aways from Otar's book was how much better it could be to retire when the market wasn't doing well. Of course, to retire then, you'd really have to be in good shape and you'd be well suited for the - hopefully - soon to come equities rebound.
The one problem I have with the retire in a downturn vs a peak is that it's fairly obvious. If you have enough in a downturn you probably had much more prior to that point. Picking a point in time is all relative.
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Old 03-08-2013, 09:16 PM   #69
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I will know when it is time to retire. I guess you know when it is the right time. And I know that time is very close, in my case.
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Originally Posted by foxfirev5 View Post
If you have enough in a downturn you probably had much more prior to that point.
Seeing these two posts in the same thread got me to thinking. They put obgyn's investing strategy in a new light. Or at least I think it may.

CD rates: some history lessons has list of reasons why long term cd's were a bad investment at the end of 2010. (None of these factors have changed substantially.)

  1. CD rates really are as low as they seem.
  2. There is no spread over inflation. [We're actually negative now]
  3. Inflation isn't usually this kind.
  4. There is usually a greater reward for going long.
I'd add one more:

5. Recent Fed policy statements have all but guaranteed that interest rates on CD's will remain historically low for a year or more into the future.

I can't think of other potential headwinds for cd's, but if there are any they are probably present in 2013. We are in the depths of a horrible bear market by most any measure of obgyn's investment world.

So obgyn, if you haven't underestimated expenses, have accounted for interest being taxed at earned income rates, and your calculations of a "safe" 3.5% withdrawal rate are based on these "new normal" market conditions persisting for several years of ER before returning to historical averages (roughly a 2% real return on cd's), it may be a further sign you are financially ready to ER.

Just be double sure you haven't mixed up nominal and real interest rates, returns and cash flows in your spreadsheets....

http://www.afcpe.org/assets/pdf/vol1117.pdf
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Old 03-09-2013, 05:12 AM   #70
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agreed. I guess I am just waiting for a bad day to quit. Although I would like to go on a high note, it is not likely to happen.

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So obgyn, if you haven't underestimated expenses, have accounted for interest being taxed at earned income rates, and your calculations of a "safe" 3.5% withdrawal rate are based on these "new normal" market conditions persisting for several years of ER before returning to historical averages (roughly a 2% real return on cd's), it may be a further sign you are financially ready to ER.

Just be double sure you haven't mixed up nominal and real interest rates, returns and cash flows in your spreadsheets....

http://www.afcpe.org/assets/pdf/vol1117.pdf
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Old 03-09-2013, 05:20 AM   #71
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The one problem I have with the retire in a downturn vs a peak is that it's fairly obvious. If you have enough in a downturn you probably had much more prior to that point. Picking a point in time is all relative.
So I'm liking the idea of discounting the networth 20 or 25% and running those numbers through firecalc.

Should be good to go. I hear doomsdayers talking 50% down for the market, but I'm going to assume proper AA will keep the overall networth at a max risk of 25% or so.

My only concern about this strategy is it runs the risk of being way too conservative leading to more OMY.
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Old 03-09-2013, 08:25 AM   #72
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So I'm liking the idea of discounting the networth 20 or 25% and running those numbers through firecalc. <snip>
My only concern about this strategy is it runs the risk of being way too conservative leading to more OMY.
I use 10% but I have 5 years of cash/short term bonds in my portfolio. I'd love to use 20% but that would definitely lead to OMY - or 2. W*rk was so bad this past week that I'm lowering my contingencies (aka: making them more reasonable) and am getting ready to officially join the class of 2013. The only thing that is holding back that decision is HI (see tread: Expense analysis)
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Old 03-09-2013, 11:29 AM   #73
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My only concern about this strategy is it runs the risk of being way too conservative leading to more OMY.
I think it makes sense to discount equities (or lower future return projections) especially if the valuations are too high. But I agree that it could lead to being way to conservative especially with all of the other safety factors one might include (e.g., lowered withdrawal rate, fixed bucket for one-time emergencies, discounting SS, etc.)
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Old 03-09-2013, 03:43 PM   #74
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Ok, the market is hitting new highs....highs not seen since 2007. So for the last 4 or 5 years, the market has done almost nothing. I would say just pick your allocation and stick with it. Give yourself 2-3 years of cushion with cash or short term bonds.....and hope a big asteroid doesn't hit us.
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Old 03-09-2013, 03:48 PM   #75
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Ok, the market is hitting new highs....highs not seen since 2007. So for the last 4 or 5 years, the market has done almost nothing. I would say just pick your allocation and stick with it. Give yourself 2-3 years of cushion with cash or short term bonds.....and hope a big asteroid doesn't hit us.
We can look on the bright side --- for the market to return "average returns" the bull market will need to last a few more years. That would make 2013 a great year to retire !
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
31 Mondays to go - assuming I don't chicken out again !
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Old 03-09-2013, 04:03 PM   #76
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So I'm liking the idea of discounting the networth 20 or 25% and running those numbers through firecalc.

Should be good to go. I hear doomsdayers talking 50% down for the market, but I'm going to assume proper AA will keep the overall networth at a max risk of 25% or so.

My only concern about this strategy is it runs the risk of being way too conservative leading to more OMY.
As my time to RE gets closer I'm really grappling with the equity issue. I can't simply discount the value of my portfolio by the amount of my 45% equity allocation and retire comfortably. However I could survive a downturn of up to 50% and not suffer too much.
As time goes by I keep running the Firecalc numbers with a more conservative slant. Maybe the one more year syndrome has got me hooked.
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Old 03-10-2013, 05:03 PM   #77
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This is an interesting scenario to me due to close circumstances. Although about five years away I feel the same way especially as an employee of the financial services industry. This is what I can tell you. Timing and some luck play an important role. We bought a house in Canada in 20002 with the USD at 62 cents thus, after conversion, we wound up with enough extra money to put more down than expected (we moved from California). We built new for 230k cad. As luck would have it that was the start of a massive boom in oil and gas that sent all of Canada flocking to Calgary. Only five years later we sold the house in two days for 550k cad (it was fully paid off thanks to overtime mostly my wife's). When we sold and moved back to the US the USD had risen to almost 90 cents so converting back to USD meant not only did we buy low and sell high, we also had favorable currency rates for each conversion. Good planning? Nope; lucky timing

The Calgary market topped out not higher than we sold six months later and we all know what happened to house values after 2007 (although in Calgary they just leveled off).
So there we were back in California with lots of cash to invest but still nothing near the cash value of a suburban California house. We rented for a year and in 2008 and we decided to buy, not really knowing the full extent of the market crash yet and having the entire 550K almost all in the market. Not wanting a long mortgage we put 400k down for a 15 year mortgage and then we both started 401k plans a few months from the market bottom. We max out the 401ks and two Roth's.

Fast forward to now. We have just passed 100% gain in investment values since 2008 thanks to dollar cost averaging and the start of new investment accounts in the beginning of a new bull market. We have surpassed what we had after we sold the first house. So due to timing that I didn't really plan, we got almost all of our cash out of the market and into home equity and missed the wosrt of the 47% downfall. Timing . Lucky Again with a little bit of hopeful planning

So we are ahead of where I expected but would never push up our committed ER date of a 2017 at age 52 and 47. But we will be using the current house proceeds to buy an immediate annuity, move to Malysia and live on that until pensions and 401k/Roths are available. So what happens if the market drops 47% again? We still have five years but how would that affect it? Should we be scared of the market top? One big difference between now and 07 is there are no toxic assets waiting to kill global markets. But I can tell you that capitals markets worldwide have recovered mostly thanks to global interest rate reductions and liquidity infusions by central banks. Especially the Fed. I guarantee there will be another big drop: there always is. But I'd be more worried about interest rates rising and markets weaning off free credit and going baclk to fundamentals and supply/demand than the arbitrary number in an index. The Financial press loves to make everyone panic at market tops. It's part of the game.

Based on my knowledge I fully expect a hold on low interest rates thru the next election. So back to timing. I expect to retire at a time when rates finally begin to rise whcih should bode very negatively but we will be living on an annuity anyway (guaranteed income purchased with cash we don't otherwise need). Should the market plummet right at the start I would probably annuitize some more of our retirement cash but not that much. I don't ever obsess over market highs or lows but rather: I stay diversified; plan all scenarios including what I would do in a large drop and try to always stay fully invested. The new economy is never going to support 5% unemployment and maybe not even 6.5% like the fed is waiting for unless they fudge the numbers. So I would expect a pullback this year but not a disaster barring some political or unforeseen tragedy in the world that shatters markets. I remain in 55% equity with heavy weighing on developed Asia and emerging markets but stay very diversified with my fixed income because outside of another total meltdown ,not everything will go down at one time and the idea during a large pullback is capital preservation with some room for growth, my basic strategy for all scenarios. Hopefully we'll all be sipping pina coladas by that time.
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Old 03-10-2013, 07:56 PM   #78
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Any time you decide to retire there's reason not to retire. But wait until there's absolutely no doubt and leave. My limit was management. I decided on a Wednesday and retired that Friday. I was going to wait one more year then decided it was time to leave. That was in 2007. I have not been sorry. So I would suggest you sit on it and let it simmer awhile more. You will know when it's time.
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Old 03-11-2013, 12:55 PM   #79
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Having the 2 to 3 years worth of cushion will likely deal with any swings. Yes, the market will go down. Then it will go up. Then it will go down. Long term, it has always gone up, so if you can weather a few bad years, I wouldn't try to time the market.

At least that's what I'm telling myself with an April 1, 2013 quit date.
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Old 03-11-2013, 12:58 PM   #80
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Keep in mind that the Dow also broke 14,000 in 2000 and 2007. Both times these were followed by a "thud" but that won't always be the case. And the economy and overall corporate earnings are greater than they were in 2007 and considerably greater than in 2000, so in relative terms the valuation of this "all time high" is much saner than it has been in the past.
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