Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 01-03-2017, 04:11 PM   #81
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,401
Quote:
Originally Posted by Teacher Terry View Post
I don't understand why people stay in homes that they can't afford to maintain.
Human beings do not always make rational decisions.
Meadbh is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-03-2017, 04:17 PM   #82
Thinks s/he gets paid by the post
 
Join Date: Oct 2009
Posts: 1,190
I've always been partial to a quote attributed to Ernest Hemingway on his experience with bankruptcy: "It happened slowly at first; then all of a sudden."

Seems to me this applies equally to running out of money in retirement. It happens slowly at first; then all of a sudden. Thankfully I have been in the "slowly stage" for the last 20 years or so... :-)
LARS is offline   Reply With Quote
Old 01-03-2017, 04:58 PM   #83
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Teacher Terry's Avatar
 
Join Date: Jun 2014
Posts: 7,002
I know people make stupid decisions all the time as I spent a career working in human services ( I don't mean all my clients but some). However, I come from a very practical, planning family where you always look ahead and have a Plan B.
Teacher Terry is offline   Reply With Quote
Old 01-03-2017, 05:30 PM   #84
Thinks s/he gets paid by the post
 
Join Date: Jul 2015
Posts: 1,103
Quote:
Originally Posted by marko View Post
On second thought, we had an early retiree neighbor who blew through a $2MM inheritance on Keno/Scratch tickets. Ended up selling her house (and two other income properties) and now living on the other side of town in subsidized housing.
So, is she still buying lottery tickets
__________________
Living the dream...
FreeBear is offline   Reply With Quote
Old 01-03-2017, 06:25 PM   #85
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
athena53's Avatar
 
Join Date: May 2014
Posts: 7,326
Quote:
Originally Posted by Teacher Terry View Post
I don't understand why people stay in homes that they can't afford to maintain. I would sell and rent or buy a small condo. We have lots of discretionary spending that we could cut if we needed too.
Not everyone likes the idea of a condo; I think I'd find it hard to live without a bit of front and back yard, having to take groceries up in the elevator, sharing walls with neighbors, etc.

I think that people get very gradually to the stage where they can't maintain the house. At first you stop doing the preventative things like cleaning leaves out of the gutters, then you stop replacing broken sprinkler heads and then you put off replacing the roof and it gets leaks, etc. By the time you think about selling, there's not a lot of equity to be had after you factor in a realtor's commission, repair costs (or concessions on the price), the cost of moving, etc. DH and I saw a house listed for $270K in a neighborhood with houses in the $800-$900K range. We did a drive-by out of curiosity. The windows were boarded up and the roof was overgrown with moss and had leaks in it. Really sad. The listing price was probably the land value.
athena53 is online now   Reply With Quote
Old 01-03-2017, 06:37 PM   #86
Recycles dryer sheets
 
Join Date: May 2015
Location: Toledo
Posts: 52
Running out of money? Good post- if you retire when the market tanks, then you start out on the wrong foot or in the hole. Jane Bryant Quinn's book Make Your Money Last on p 218 states "the newest idea calls for gradually reducing your stock allocation 5 years before retirement . On retirement day you should just be 30% in stocks.That protects you from risk of a crash in the first few Critical years of retirement.Then gradually increase stocks 2 or 3 % per year for 10 years until you get to 50 or 60% stocks then stop. This prevents you from starting out in the hole like people who retired in 2008 did. Very interesting strategy that people retiring now may want to consider. I would appreciate others thoughts concerning this unique strategy.
Jpg1717 is offline   Reply With Quote
Old 01-03-2017, 06:38 PM   #87
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 8,363
Quote:
Originally Posted by FreeBear View Post
So, is she still buying lottery tickets
Yep!

I've known her since we were kids. I always said that I've owned dogs that were smarter than she was.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 01-03-2017, 07:10 PM   #88
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,203
Quote:
Originally Posted by Jpg1717 View Post
Running out of money? Good post- if you retire when the market tanks, then you start out on the wrong foot or in the hole. Jane Bryant Quinn's book Make Your Money Last on p 218 states "the newest idea calls for gradually reducing your stock allocation 5 years before retirement . On retirement day you should just be 30% in stocks.That protects you from risk of a crash in the first few Critical years of retirement.Then gradually increase stocks 2 or 3 % per year for 10 years until you get to 50 or 60% stocks then stop. This prevents you from starting out in the hole like people who retired in 2008 did. Very interesting strategy that people retiring now may want to consider. I would appreciate others thoughts concerning this unique strategy.
Sequence of returns, yes, it's been talked about here.

I have some doubts about it. Let's say we're both 50, and I retire at 50 but you keep working until 60. I do as you say, and the market is pretty normal in those next 10 years. At 60 you also retire and follow the strategy that I did, only I am back up at 50-60% because I've edged back in over those 10 years. Now the market tanks. Even though we followed the same strategy, and are the same age, you're a whole lot better off than I am.

My point is, sequence of returns may make sense for the traditional 15-25 year retirement, but for an extended retirement it's not an answer. Unless you can predict the direction of the market, history tells us the market generally goes up, so you're better off staying fully invested, with respect to your AA and relying on being able to recover if there's an early drop.
RunningBum is offline   Reply With Quote
Old 01-03-2017, 07:45 PM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
Quote:
Originally Posted by RunningBum View Post
Sequence of returns, yes, it's been talked about here.

I have some doubts about it. Let's say we're both 50, and I retire at 50 but you keep working until 60. I do as you say, and the market is pretty normal in those next 10 years. At 60 you also retire and follow the strategy that I did, only I am back up at 50-60% because I've edged back in over those 10 years. Now the market tanks. Even though we followed the same strategy, and are the same age, you're a whole lot better off than I am.

My point is, sequence of returns may make sense for the traditional 15-25 year retirement, but for an extended retirement it's not an answer. Unless you can predict the direction of the market, history tells us the market generally goes up, so you're better off staying fully invested, with respect to your AA and relying on being able to recover if there's an early drop.
I am pretty sure this isn't sequence risk in action. It's not a comparable, it is unique to one's own situation.
COcheesehead is offline   Reply With Quote
Running out of money ?
Old 01-03-2017, 08:47 PM   #90
Recycles dryer sheets
 
Join Date: May 2015
Location: Toledo
Posts: 52
Running out of money ?

I agree- it is not comparable.Why compare a 50 year old who retires today, to someone who waits 10 years and retires at 60 ? Sequence of returns - have a smaller equity allocation at time of retirement so you do not get wiped out at the beginning if there is a major crash. You can then gradually add stocks up to a 60% allocation, and enjoy your first ten years of retirement without worrying about getting crushed early on .This seems to be a valid theory. I would appreciate some thoughts on this from other retirees. Thanks
Jpg1717 is offline   Reply With Quote
Old 01-03-2017, 09:35 PM   #91
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,558
My dad passed away recently at the age of 61, having had a stroke, colon cancer, and what we figure was a heart attack at the end.

I'm 44.

Outliving my money is not high on my list of worries anymore.
Hamlet is offline   Reply With Quote
Old 01-04-2017, 12:33 AM   #92
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 5,307
Quote:
Originally Posted by NW-Bound View Post

Come to think of it, when one has a paid-for home and is on Medicare, has no car payments, just stays home to surf the Web and cooks own meals, what are the expenses? Food is darn cheap, and then old people do not eat that much. Wine bottles under $10 are plenty good. Heck, my favorite wine currently is a box wine.
This. My mother is 92 and lives in her paid for home. She doesn't surf the web -- she never really got the hang of computers. She doesn't spend money on things that many rely on. She doesn't have internet or cable TV. She has a cell phone that we provide her that she rarely uses, just when she needs to make long distance calls mostly. She still drives her long paid for car but mostly only to the grocery store. For doctor's visits (her main trips outside the house) she either uses a local transportation for elderly going to the doctor or a friend takes her. Sometimes a neighbor takes her to go some places and she gives him a few bucks.

She rarely eats out. She doesn't drink. She basically doesn't have hobbies that are expensive. She has no interest in travel. She visits us a couple of times a year (we go get her). She watches (free) TV and reads the paper. She is mentally fine (a little forgetful) but has chronic health problems.

The main thing she spends money on other than her part of prescriptions is mostly for services. She has someone who mows her yard. A few years ago she started hiring someone to come in periodically to clean her house (this is really low cost as it isn't regularly and she has a very small house). The house is old so the big expenses are periodic house repairs.

But, honestly, she doesn't need to spend much money at this point. Even the services she pays for aren't that expensive. I've encouraged her to actually take a cab as necessary since she could afford it, but she is reluctant to do it.
Katsmeow is offline   Reply With Quote
Old 01-04-2017, 01:35 AM   #93
Thinks s/he gets paid by the post
 
Join Date: Dec 2010
Location: Midwest
Posts: 1,789
Quote:
Originally Posted by Options View Post
+1
Well said.

Years ago a brilliant and very successful mentor told me money stays around people who respect it and take good care of it. It does the opposite to those who don't manage it well.
Love the mentor's advice. Thanks.
brucethebroker is offline   Reply With Quote
Old 01-04-2017, 04:10 AM   #94
Full time employment: Posting here.
 
Join Date: Apr 2016
Location: warren
Posts: 935
Quote:
Originally Posted by COcheesehead View Post
With all our discussion here about withdrawal strategies, returns, AA's and such, has anyone run out of money or known someone who has or nearly has? I am assuming people take action as they see the inevitable and ward off disaster. I wonder sometimes if we worry too much or if the threat is truly real.
Great question! I assume it's happened but I doubt the person would admit it, if they're still here.
It would be interesting to know their firecalc numbers, etc. I know many here have plenty of money, pensions, etc so there's no real chance of that happening barring completely irrational spending but it would be interesting to hear from people who chanced it with lower numbers and if not running out, got close.
garyt is offline   Reply With Quote
Old 01-04-2017, 04:18 AM   #95
Full time employment: Posting here.
 
Join Date: Apr 2016
Location: warren
Posts: 935
Quote:
Originally Posted by Jpg1717 View Post
I agree- it is not comparable.Why compare a 50 year old who retires today, to someone who waits 10 years and retires at 60 ? Sequence of returns - have a smaller equity allocation at time of retirement so you do not get wiped out at the beginning if there is a major crash. You can then gradually add stocks up to a 60% allocation, and enjoy your first ten years of retirement without worrying about getting crushed early on .This seems to be a valid theory. I would appreciate some thoughts on this from other retirees. Thanks
Yea it's not apples to apples. I too think this has merit. Look forward to more responses.
garyt is offline   Reply With Quote
Old 01-04-2017, 04:39 AM   #96
Gone but not forgotten
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 6,335
At age 80, concerns about money are way down on the worry list. With a five to eight year life expectancy, the hope is that income inequality won't move fast enough to affect the kinds of support that we've come to rely upon....

Social Security
Medicare and supplements
Pharmaceutical costs

The current change is most obvious in the exploding costs of medicine. In just two of the medications that I use, the price increases are out of control. Colchicine, which used to cost $.10/ tablet, is now $5.00/tablet. The infamous EpiPen which used to cost about $20.00 is now $600.00 (recently $300.00 for the generic).

Social Security is essentially an unfunded liability, with no solution in sight. Four DW and I, not a particular concern, as reason tells us this won't disappear overnight.

Medicare... not a major concern as we expect this will not disappear over our lifetime.
.................................................. .........................
The good:
Most of our limited assets are in IBonds, which we hope will partially keep up in the case of galloping inflation.
We do have limited long term care insurance for homecare or nursing home, but only at $100/day.
Our living expenses are very low.
We have no debt.

Our major worry is for the future of younger people, including our own children and grandchildren. As safety nets for catastrophic medical costs disappear, and student debt becomes unmanageable, the pay-as you-go way of life seems to be disappearing for the average citizen. There's a lingering fear of the lean years that we were growing out of as children in the 1930's and 1940's, and the much less serious economy dips in more recent years.

Uncertainty won't go away, but the majority of ER members have their heads on straight, and are realistic and prepared for changes as they occur. Hopefully the advances in knowledge and productivity will keep our nation strong, but optimism is not a substitute for reality checks.
__________________
If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
imoldernu is offline   Reply With Quote
Old 01-04-2017, 05:17 AM   #97
Thinks s/he gets paid by the post
 
Join Date: Oct 2014
Posts: 1,537
Quote:
Originally Posted by RunningBum View Post
Sequence of returns, yes, it's been talked about here.

I have some doubts about it. Let's say we're both 50, and I retire at 50 but you keep working until 60. I do as you say, and the market is pretty normal in those next 10 years. At 60 you also retire and follow the strategy that I did, only I am back up at 50-60% because I've edged back in over those 10 years. Now the market tanks. Even though we followed the same strategy, and are the same age, you're a whole lot better off than I am.

My point is, sequence of returns may make sense for the traditional 15-25 year retirement, but for an extended retirement it's not an answer. Unless you can predict the direction of the market, history tells us the market generally goes up, so you're better off staying fully invested, with respect to your AA and relying on being able to recover if there's an early drop.
Since we are making assumptions let's assume the guy at 50 with 30/70 exposure has 100% in FIREcalc. Let's also assume that the 10 year run up to 60 (when guy #2 retires) are normal returns. Let's say 7%. Let's also assume guy #1 is using a 4% or lower SWR. If the stock market lost 50% in year one for the 60 yr old (year 11 for the first guy), the guy who retired at 50 will be fine. His now 50/50 portfolio will only lose 25%. 50% of his 50% in equities. Lot's of other potential options for guy #1. HELOC, cash, reverse mortgage, cut back, consulting/part time job, SS at 62, IRA-401K at 59.5, etc...
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 01-04-2017, 05:23 AM   #98
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,203
Why is it safe for me to be 60% in stocks when I'm 60 if I retired 10 years ago, but not if I retired yesterday? I have the same lifespan left. A downturn would hurt just as badly. I suspect this is one of those strategies that seems to work with back testing of data, but I don't see a solid reason to believe it will work better in the future.
RunningBum is offline   Reply With Quote
Old 01-04-2017, 05:29 AM   #99
Recycles dryer sheets
 
Join Date: May 2015
Location: Toledo
Posts: 52
Quote:
Originally Posted by garyt View Post
Yea it's not apples to apples. I too think this has merit. Look forward to more responses.
GaryT: I agree that the smaller equity allocation at retirement plan has merit.It is impossible to time the market, and the most Important decision is asset allocation which is possible to control. I want to avoid getting crushed by a crash early in retirement. So If I only make 5% instead of 12% for a couple years- that is better than losing 35% the first year of retirement and starting out in the hole.I also would appreciate others thoughts on this important topic. Thanks
Jpg1717 is offline   Reply With Quote
Old 01-04-2017, 05:38 AM   #100
Recycles dryer sheets
 
Join Date: May 2015
Location: Toledo
Posts: 52
Quote:
Originally Posted by RunningBum View Post
Why is it safe for me to be 60% in stocks when I'm 60 if I retired 10 years ago, but not if I retired yesterday? I have the same lifespan left. A downturn would hurt just as badly. I suspect this is one of those strategies that seems to work with back testing of data, but I don't see a solid reason to believe it will work better in the future.
RunningBum: because you do not want to get wiped out your first year of retirement and then only have a small amount left to take advantage of the good market years that follow. This is a difficult ? to answer, and I believe there is more than one answer. I just thought Ms. Quinn had some interesting analysis on this topic. I learn something from everyone on this forum. Thanks
Jpg1717 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Running out of money vs. Too much money but couldn't enjoy it cyber888 FIRE and Money 94 12-12-2015 11:58 AM
Running from or running to? Unpaintedhuffhines Life after FIRE 25 04-23-2013 09:29 AM
Health Care Fund for ERs: Running out of money early samclem Health and Early Retirement 5 04-03-2011 09:21 AM
Worries of Running Out of Money in Retirement retire@40 FIRE and Money 13 05-20-2008 09:02 AM
Medicare running out of money joesxm3 FIRE and Money 23 04-25-2007 10:22 AM

» Quick Links

 
All times are GMT -6. The time now is 08:19 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.