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Retire in the face of today's economy?
Old 07-30-2008, 11:48 PM   #1
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Retire in the face of today's economy?

Deleted, got to make my own decision.
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Old 07-31-2008, 02:47 AM   #2
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I was planning on next year myself - but in light of the way things are looking, I'm keeping my mind open to the possibility of remaining in "the job" a while longer if necessary.
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Old 07-31-2008, 03:52 AM   #3
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Deleted, got to make my own decision.
Good for you! You got the right stuff for retirement.

Ha
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Old 07-31-2008, 07:40 AM   #4
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There was a recent thread about the title to the OP's erstwhile post. IIRC, the reaction was mixed, varying from "if you planned right, it doesn't make any difference what today's market is doing" all the way to "if you can tolerate your job, I'd wait a bit until things have settled down."

My conclusion was that the right move fell somewhere in between.
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Old 07-31-2008, 07:51 AM   #5
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My conclusion was that the right move fell somewhere in between.
I retired last year in an "up year", so I did not have to "make a choice". What would I do if I were planning to retire this year? Can't say.

When you are wor*ing, you have a fear of retiring.

Whan you are retired, you have a fear of wor*ing (at least, some do) ...

However, looking back a bit over a year since I retired, I have to respond (for me), I've made the correct decision. As for you? Don't know. The OP had the correct statement...

- Ron
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Old 07-31-2008, 08:48 AM   #6
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I'd feel more comfortable starting to extract 3-4% a year with an 11,500 Dow than with a 14,000 Dow. IMO, the people contemplating retirement today have reason to fret a lot less than those who needed 4% from a portfolio starting at Dow 14K...
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Old 07-31-2008, 09:13 AM   #7
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If people waited to have children until the time was perfect, no one would ever have had children; probably the same is true for buying your first house. So I think retirement is like that too--the time will never be perfect but somehow it will work. At least I hope so!
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Old 07-31-2008, 10:00 AM   #8
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Welcome, deepc, "deep sea"?

My retirement date is in my signature line; the final date was chosen because of declining health although I could have been okay financially, maybe two years ago. Like many people here, I debated with myself endlessly about when to give notice, and kept going for a "three more months" goal. I take comfort in the idea that I'm better off now than if I had retired into the 14,000 era because I took the time to make dramatic defensive moves. My financial worry at the moment is that my portfolio has only 6% in equities but I'm buying back in in this market (with new money) and believe that as a retired person I can and will continue to buy equities until I reach a better allocation. (I had been in equities for 35 years and felt very uncomfortable being out of that game.)
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Old 07-31-2008, 10:07 AM   #9
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I'd feel more comfortable starting to extract 3-4% a year with an 11,500 Dow than with a 14,000 Dow. IMO, the people contemplating retirement today have reason to fret a lot less than those who needed 4% from a portfolio starting at Dow 14K...
BINGO!

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Old 07-31-2008, 10:37 AM   #10
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I agree 100% ziggy, if you have enough money now AFTER the big fall, you have room to go upward, and the worst part is possibly already behind us.
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Old 07-31-2008, 10:58 AM   #11
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I agree 100% ziggy, if you have enough money now AFTER the big fall, you have room to go upward, and the worst part is possibly already behind us.
Hoo, brave call
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Old 07-31-2008, 11:00 AM   #12
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Thank you.
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Old 07-31-2008, 11:05 AM   #13
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I've got about a year until I ER and I am glad the market sold off immediately before retirement rather than immediately after retirement.
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Old 07-31-2008, 11:17 AM   #14
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deepc... welcome!

I think you mentioned a military pension and decent nest egg. You should run your numbers through firecalc and decide.

A few things about the pension. First, it'll help smooth a lot of bumps in a down market. For planning purposes, I would treat it as part of your fixed income asset allocation. For consumption purposes, a general rule of thumb is that a 4% withdrawal rate will give you a 95% chance of having enough money over a 30 year period. So, using that pension to fund the majority of your expenses and then filling the rest from your other investments will mean that you're probably set. Plus, with that fixed income allocation already set, you can feel free to either be more aggressive (own less bonds because you already have bonds) or more conservative (don't need as much growth if more of your expenses are "guaranteed") as you see fit for your lifestyle and investment horizon.
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Old 07-31-2008, 11:43 AM   #15
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If people waited to have children until the time was perfect, no one would ever have had children; probably the same is true for buying your first house. So I think retirement is like that too--the time will never be perfect but somehow it will work. At least I hope so!
That's how the world works. You desire something strongly and keep dreaming about it. Then one day, your dream comes true and you find yourself with whatever you wanted. (This process of desire, visualization, and autosuggestion is described in the classic Think and Grow Rich and based on my experience, it works.)

But the grass only looks greener on the other side of the fence until you actually get there. Then you find out there are as many brown spots as there were on the side of the fence you left. But the brown spots are different, so you get to enjoy a whole new set of learning experiences. If you worried about yogurt when you were poor, for example, you will probably worry about yachts (or whatever) when you are wealthy. Your problems don't go away; they just change into new and different kinds of problems.

The good news is that you can cope in your new world. So if you retire early, it may not turn out to be what you think it will be, but you'll be able to figure out how to make it work. And the world is always changing, so whatever you have to do this year to make FIRE work may very well be different from what you have to do next year or a decade from now to make FIRE work. It's also a lot of fun because you become the pilot of your own destiny. Use common sense and you'll do OK.
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Old 07-31-2008, 11:56 AM   #16
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There was a recent thread about the title to the OP's erstwhile post. IIRC, the reaction was mixed, varying from "if you planned right, it doesn't make any difference what today's market is doing" all the way to "if you can tolerate your job, I'd wait a bit until things have settled down."

My conclusion was that the right move fell somewhere in between.
"if you planned right, it doesn't make any difference what today's market is doing" all the way to "

This is fine logic for those whose ER incomes are dependent mostly upon investments in the stock market.

I don't know about the OP, but in my case a sizeable portion of my retirement income will be pension based (w/CPI based COLA) based upon high-3 earning years. If we have a significant period of price inflation, I may be better off waiting for wages to catch up a bit, as they (the Feds) cheat us a little bit on the CPI COLA.

My personal concern with the current economy & ER is the possibility of a wild run of inflation over the next year or two with a certain lag-time before commensurate salary increases catch up. This has little to do with what the "market is doing".

I realize a similar situation could occur 5, 10 years down the road also after I'm retired from "the job", but why jump out right in the middle of (or just at the start of?) an inflationary period before wages have caught up?
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Old 07-31-2008, 12:20 PM   #17
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If there were many mathematicians on this board they would attempt to come up with an equation to determine the optimum time to retire. I don't know the exact equation but a simple one might be something like:
Love of life - fears > 0 (time to retire)
I think this can be expanded upon to include a calculation for health (where health equates to the enjoyment of physical activities) so the above equation is expanded - assume 40 years old = 100%
and it is decreased by 2 percentage points each year after 40. So if you are 55
.7 Health [100% - 30%]
I haven't thought it all out but it is an interesting concept - especially for this board to think about.
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Old 07-31-2008, 12:26 PM   #18
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Optimum time to retire: when your net worth (in this case not including house) hits 40x your yearly expenses.
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Old 07-31-2008, 12:48 PM   #19
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I'd feel more comfortable starting to extract 3-4% a year with an 11,500 Dow than with a 14,000 Dow.
But Firecalc says it's all OK, right? Right?

Which shows that, same as hanging tough in bear market and rebalance, meaning buying more stocks when they are down, theory and practice are quite different. I know myself, and I'll admit being scared sometimes.

I think it is like a soldier going into a battle. No matter how much training they give you in boot camp, how realistic they make it, there's nothing to prepare you for the fright when you hear explosions around you, and see your fellow soldiers falling down. It's tough, I admit it anytime.

BTW, has any forum member fallen down?

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Optimum time to retire: when your net worth (in this case not including house) hits 40x your yearly expenses.
I am there, if I exclude travel. For us, without travel retirement loses quite a bit of meaning. So, I might as well go back to work (if that offer is still outstanding).

Nah, just kidding. Next year, the market will rebound and I will make up for the trip I cancel this year. I use Firecalc as a guideline, but subscribe to Gerald Loeb philosophy. He said to cut back spending in tough years, and splurge in good years. Of course, that means you have to keep a bit of safety margin. As frugal as I am, I always have big margins.
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Old 07-31-2008, 01:11 PM   #20
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Optimum time to retire: when your net worth (in this case not including house) hits 40x your yearly expenses.
... so work til you're 80?
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