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Old 11-30-2009, 03:03 PM   #21
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Home prices in our area never went up in the last 15 years, so they didn't come down either. Pretty darn stable around here.

It seems the consensus, once again, is that nobody lost any real money in the last year. Where do all these rumors start that there has been a financial crisis?
I'd sure hate to be a kid looking for my first job. But as far as a new retiree like me is concerned, life is looking pretty rosy.
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Old 11-30-2009, 03:12 PM   #22
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I got through this okay -- but don't want to sound like I know what's coming. My net worth dropped a great deal, but I bailed out to take tax losses, and then got back in at the lowest point in Feb 09. Now I am where I was in Oct. 07 -- minus the living expenses I withdrew from Oct. 07 to Nov. 09. I think I was helped a bit by taking a chunk of money out of stocks to buy a second home at a great price with cash in 07.

The lesson I might be learning is everything can be dealt with. I hope it's as true in my 70's and 80's as it seems in my 40's.
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Old 11-30-2009, 03:21 PM   #23
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I don't think my view of "how much is enough" has changed significantly. What has changed is my view of asset allocation (I found out I'm more of a 50/50 guy at this stage). I'm also more interested in the "buckets" approach of nest egg withdrawal. It must be much less stressful to have a good pile of safe money to draw from while the longer term stock holdings go through their market gyrations.

For those of you who had "buckets", did you feel more at ease during the downturn?
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Old 11-30-2009, 04:02 PM   #24
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Originally Posted by LOL! View Post
Home prices in our area never went up in the last 15 years, so they didn't come down either. Pretty darn stable around here.

It seems the consensus, once again, is that nobody lost any real money in the last year. Where do all these rumors start that there has been a financial crisis?

I live in Florida and home prices here are anything but stable . They have dropped like a lead baloon and still have not stablized . The tremendous amount of foreclosures have pulled the whole market down . Home sales have finally started to take off so hopefully prices will come up a little . I know a lot of people mostly young people who bought at the top of the market and are now trying to sell their homes for a lot less than they paid because of job cut backs . So it is any thing but stable here !
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Old 11-30-2009, 04:08 PM   #25
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For those of you who had "buckets", did you feel more at ease during the downturn?
Since you asked, absoutely ...

When I retired in early '07 (age 59), I set my "cash bucket" (kept in a deferred MM account) to my pre-retirement plan of 3-5 years in gross income (includes tax due on tax-deferred withdrawls) and a review at year end to replenish that bucket, if need be and the market had positive returns.

Last time I "topped it off" was in late '07, to bring it up to 4 years of budgeted expenses. Of course, I'm now down to two years (have not sold anything at all) and will replenish when I feel I need to harvest a bit.

That dosen't include my bond holdings, which represents many, many years of gross income. That will be reduced when I file my 50% spousal SS against my wife at her FRA (age 66 - we're the same age), and then take my SS at age 70.

The idea of the cash (bucket) reserve was one that I investigated well before my retirement. Glad I did it; the only thing I didn't like was I had to test my "theory" so early in retirement ...

BTW, my DW (still wo*ks) but we also filled her cash bucket back in '07, when she first considered retirement. It has not been touched, and remains there till retirement (which can be any day). She will be taking SS at age 62 (assuming she retires next year); that will mean that she will be overfunded in cash (vs. the 3-5 year target), but that's OK....
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Old 11-30-2009, 04:14 PM   #26
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Are most people still down 30%? Maybe if you were 100% equities, but I bet folks on this forum with diversified portfolios are only down 10 to 15% from 2007 peak. And that was from the peak!

Big difference.

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Old 11-30-2009, 04:21 PM   #27
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I have to say that I am surprised (and feeling a little insecure) at how many of you have responded that you've recovered from the market downturn already. I left megacorp in Sept '07 and, even with a reasonable asset allocation, had lost quite a bit at the worst point. Thankfully, my investments have recovered quite a bit, but I'm still down from the high - maybe 10-12%. Is this just me?

Anyway, as to the original question, I have found that I can live well on even less than I had budgeted for. I also decided that I will do whatever it takes to never go back to megacorp. I've probably been more conservative in my spending than I needed to be, but it lets me sleep at night. In the future, I may loosen up the purse strings a bit, but either way, I'm so happy to not be at my j*b anymore that I am now certain that I'd do whatever I had to to remain at least semi-retired.
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Old 11-30-2009, 04:30 PM   #28
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Thankfully, my investments have recovered quite a bit, but I'm still down from the high - maybe 10-12%. Is this just me?
As Audrey said above, that's probably a reasonable expectation. It matches my situation exactly as we are currently 11% off the peak.
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Old 11-30-2009, 04:31 PM   #29
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I have to say that I am surprised (and feeling a little insecure) at how many of you have responded that you've recovered from the market downturn already. I left megacorp in Sept '07 and, even with a reasonable asset allocation, had lost quite a bit at the worst point. Thankfully, my investments have recovered quite a bit, but I'm still down from the high - maybe 10-12%. Is this just me?
ksr, remember that some are still in the accumulation phase and adding to their portfolios rather than withdrawing. Also, some of us bought when the market was down. I am sure that your portfolio will continue to recover.
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Old 11-30-2009, 05:20 PM   #30
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I think there was a 3-month run-up of 10% just before the peak in Oct-Nov 2007. So if you are down 10% to 15% from the peak, you are likely where you were at in late summer of 2007.

Suppose for a brief 30 seconds tomorrow morning, the stock market was up 10-fold and returned back to today's levels before you could take action, would you go around talking about how you lost 90% of your portfolio value from "the peak"?
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Old 11-30-2009, 05:45 PM   #31
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I got the cr@ap kicked out of me in the bust and lost my job at the same time, but it does not change my view of how much is enough. Instead, the experience has made me rethink the value of a COLA'd pension and increased my intrest in having a fleshed out plan B/C/D (expat life at lower cost, full time RVer, move to cheaper area, etc.). As I am still in accumulation mode, it has also make me want to idiot-proof my financial situation. So I have slightly increased cash, lined up contingent liquidity, bumped up debt repayment schedule, and recently refinanced my mortgage in part to reduce the minimum monthly nut I have to cover (also bagged a great rate).

I actually did OK off the mess. Somewhere near the bottom I qudrupled down on the stuff I thought had the biggest return potential. I also borrowed a wad of cash on my HELOC and bought a bunch of investment grade bonds fro$ solid companies at double digit yields (since sold enough at par to pay off the debt). I am about back to where I was at the peak.

I also landed a job relatively quickly that leaves me somewhat underemployed, but I have very high job security and qualify for a COLAd pension and retiree healthcare as early as age 50 if I stay here.
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Old 11-30-2009, 05:53 PM   #32
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I don't think my view of "how much is enough" has changed significantly. What has changed is my view of asset allocation (I found out I'm more of a 50/50 guy at this stage). I'm also more interested in the "buckets" approach of nest egg withdrawal. It must be much less stressful to have a good pile of safe money to draw from while the longer term stock holdings go through their market gyrations.

For those of you who had "buckets", did you feel more at ease during the downturn?
Yes.

Since DH will have to wait four more years to draw from his IRAs, we sat aside five years of living expenses in cash. This happened before the mkt crashed. Even though I cringed at seeing the mkt go so low, I was relieved to have that much money available. It allowed to me to stay the course and not sell at the worst possible time. Since there has been some recovery, I've moved more money over to fixed income funds. I probably only have about 30% in net funds in stock.

I do have to add since we get a pension (that covers 25% of our yearly expenses) and low-cost medical retiree benefits, I feel we do not have to take as much risk.
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Old 11-30-2009, 06:31 PM   #33
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Are most people still down 30%? Maybe if you were 100% equities, but I bet folks on this forum with diversified portfolios are only down 10 to 15% from 2007 peak. And that was from the peak!

Big difference.

Audrey
My DW/me are diversified but generally have different holdings, along with personal risk levels. Me being the guy (and taking more risk) at an actual 73/27 equity/bond holdings, is still down -17.41% for the 11-month period of 1-1-2008 thru 11-30-2009. I'm retired and no longer contribute to my accounts. All dividends are reinvested in additional shares.

For my DW, who is a bit more conservative in her holdings is only down -6.53% for the same 23-month period. She does still contribute to her 401k/IRA, but these additions are not included with the stated returns.

Her actual holdings are at a 44/56 equity/bond ratio.

BTW, our combined holdings (which I use to measure against our target AA) are 59/41. Just a point off from our 60/40 ER target AA (and I didn't have to do any adjustments over the period ; how's that for planning?)

I would agree to several comments related to folks including their contributions during the period to determine their return, which makes them look “better”. Also, in our case while I look at our cash bucket MM holdings as part of the bond portion of the AA target, I don’t include them in my indivudial return calculation for the period since that would tend to overstate any loss, since that’s where I draw the majority of my current retirement income. For the same reason, my wife’s (who is still working) return does not include her current 4-year MM cash holdings which would tend to overstate her return for the period. If she would choose to retire tomorrow (her decision), she would also be drawing from that cash bucket for the majority of her current income…
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Old 11-30-2009, 07:03 PM   #34
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Are most people still down 30%? Maybe if you were 100% equities, but I bet folks on this forum with diversified portfolios are only down 10 to 15% from 2007 peak. And that was from the peak!

Big difference.

Audrey
100% equities here, down 10% from the 2007 peak, but up 5% from Oct 2006 retirement, dividends up 31% since retirement.
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Old 11-30-2009, 07:27 PM   #35
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We are still in the accumulation stage. I think that the recent unpleasantness was part of what caused us to really look at how much we need in retirement.

Going back in time 2 years ago, we hadn't focused that much on asset allocation or accumulation. DH knew that he had a fairly significant non-COLA pension (or lump sum) waiting for him. We had some 401(k) money and we had been increasing our contributions. We were at over 90% equities.

At that point, we were just looking at what we would need for retirement and frankly it was a number that I now see at too high. (At that time we didn't realize just how large the pension/lump sum would likely be).

When the dust cleared I was down 50% in my 401K and DH was down 40% (I was 100% equities, he was somewhat less).

This did cause us to look more closely at asset allocation and to actually think about what we were doing and realizing that, well time passes and retirement was not that far away so perhaps we had a bit too much in equities.

The good news is that our balances are now slightly more than they were two years ago. The bad news is that this is only partly due to the gains this year. Another big part of it is the contributions that have been made in the last 2 years. We are now at 60% equities where we will probably stay for a good, long while.

Ironically after looking at all of this and getting more information on DH's pension plan we realize that we don't really need to have as much saved as we had thought and are actually comfortable now with a lower number than what we thought two years ago (our number now is far more thoughtful than our guesstimate at that time).
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Old 11-30-2009, 07:45 PM   #36
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Here in the Midwest home prices never had the wild swings. We have never put our home value in with our "investments". We built our home five years ago, paid cash and have built it so we can live in it our entire lives. Our children will one day sell it for their inheritance, or at least that's the plan.
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Old 11-30-2009, 07:46 PM   #37
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The sharp decline in equity prices ended up being a wonderful opportunity for us. I'm still in the accumulation phase and got lucky when I decided to switch jobs and recieved two lump sums from my former employer in January and May this year - all of which went into emerging market equities. I had aready started putting my cash to work late in 2008.

Add the fact that the local real estate market only took a modest dip (around 20% in some areas, less in others) and has now largely recovered and our net worth is comfortably ahead of the old pre crisis peak.

Even with the shift from two incomes to one (starting today), I am still on track to hit my number by the end of 2011 and retire at the end of 2013.

Sometimes it's better to be lucky than good.
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Old 11-30-2009, 09:03 PM   #38
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Down 5.3% from end of year (not peak) 2007. I retired in March 08, DW retired 2 years earlier. Up 16% YTD, not bad for first year of full retirement. Some luck involved, switched DWs miserable 403b into VG Wellesley before the &%$ hit the fan in 08 and so minimized losses there. Sold one stock UST which was bought out by MO (Philip Morris) and that gain + our pensions covered us in 2008.
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Old 11-30-2009, 09:32 PM   #39
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I'm still working. NW is happily back to a decent number, but not where I had hoped at this stage. I still maintain the same target RE Number, which had significant padding, but I plan to be better prepared for future catastrophe, especially early in RE, with respect to asset allocation. I too would like to have 3-5 years of expenses in cash at RE. Given the events of the past 15 months I have resigned myself to not reaching the RE Number for a few more years. If I get there early, that will be a bonus. OTOH, hyperinflation could delay RE. But I still plan to get out in my 50s.
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Old 11-30-2009, 09:44 PM   #40
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Sometimes it's better to be lucky than good.
Not to be argumentative, but it is ALWAYS better to be lucky than good!
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