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Tough ER Enivronment?
Old 07-15-2014, 02:04 PM   #1
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Tough ER Enivronment?

http://finance.yahoo.com/news/third-...174055752.html

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Thatís right: According to Smithersís data, we are now in the third biggest bubble in U.S. history. (Oh, to jump ahead slightly, he also suspects it will go up even further before it comes back down.)
I'm trying to ignore these types of thoughts as I prepare to ER. But these are the things that have me wondering is 35x enough?

I'm not concerned with timing the market as with timing my retirement so that I'm in a market condition which doesn't seem so unfavorable to start retirement.

I buy the argument about asset inflation being correlated to the Fed's balance sheet. I feel they are playing musical chairs. Who wants to jump into the game when the music has been playing like it is and could stop at any time?

It's also the reason when I think of an initial ER allocation I think to start out with more bonds than equities.

On the other hand, whose to say I'm in the group that lives to 90+?

Now I understand OMY. For those of you who ER'd in the early 90's or early 2000's - did you agonize over such things? During that time was there a media push saying how overvalued things were?
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Old 07-15-2014, 02:23 PM   #2
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Now I understand OMY. For those of you who ER'd in the early 90's or early 2000's - did you agonize over such things? During that time was there a media push saying how overvalued things were?
There are always dueling articles on the bull case versus the bear case. It's generally just noise and nobody has shown a good record of actually calling the market tops and bottoms.

If you go by the Fed, the stock market should me much, much higher at current interest rates. People know that the low interest rates will eventually go up but the question is "when?" With this concern, there is enough concern to not run stock prices up too far above where people think interest rates may go.

The secret to retirement survivability is to be able to adjust. Have enough fixed income to let you weather any rational storm in equities. Don't have maturities so far in the future that you can't take advantage of rising rates. Finally, have a plan to reduce expenses.

I'm a chronic OMY-er. This is my last year. Yeah! I really, really mean it this time.
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Old 07-15-2014, 02:32 PM   #3
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Nah, do not worry too much about it. Set aside enough money to buy a used RV if needed, then you are set. If and when SHTF, jump in your RV and take off to see the country, have a blast.

Life's too short to keep worrying about money. If you wait too long, you will have something much more important to worry about: your health.
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Old 07-15-2014, 02:35 PM   #4
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For the foreseeable future, the stock market is the place to be. A few reasons why.

The market moves most, with the least people on board. The retail investor has largely avoided the market since the crash. They are returning as itís hard not to see a 30% gain from 2013.

There is no place else to put money. Real Estate is getting priced out of the investorís pocketbook, and prices will begin to stagnate as more housing inventory that was formally underwater comes above water and gets on the market.

As interest rates and taxes rise, housing prices will fall. Housing prices are a function of a monthly payment; all these expenses take away from the payment.

Average household wages are going down, not up. These also impact housing prices.

Interest rates are low today, and will continue to be low. The Government cannot afford higher rates any more than the housing market.

Companies are having trouble meeting earnings numbers, yet they have a lot of cash. There are a lot of stock buybacks going on. These buybacks increase earnings per share and keep stock prices high. Many CEOS and corporate board members will increase their wealth with a buyback. They are also the ones making the buyback decisions.

Of course, I could be wrongÖ
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Old 07-15-2014, 02:36 PM   #5
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I'm thinking that the 300% run up over the last 5 years is going to make the blow a little easier to take...
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Old 07-15-2014, 02:41 PM   #6
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Nah, do not worry too much about it. Set aside enough money to buy a used RV if needed, then you are set. If and when SHTF, jump in your RV and take off to see the country, have a blast.

Life's too short to keep worrying about money. If you wait too long, you will have something much more important to worry about: your health.
+1

I see a lot of posters who I fear are OMYing themselves into an abbreviated period of healthy retirement. Carpe diem.
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Old 07-15-2014, 02:57 PM   #7
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+1

I see a lot of posters who I fear are OMYing themselves into an abbreviated period of healthy retirement. Carpe diem.
Mia cuppa !
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Old 07-15-2014, 02:59 PM   #8
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I'm trying to ignore these types of thoughts as I prepare to ER. But these are the things that have me wondering is 35x enough?
I have 30x - stop scaring me !
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Old 07-15-2014, 03:02 PM   #9
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One problem I think is that as you reach each successive milestone, you automatically raise the bar on what is necessary. If you keep doing this your heirs will enjoy the party you should have had.
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Old 07-15-2014, 03:02 PM   #10
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Mia cuppa !
I'm of the opinion you're measuring in barrels, not cups...
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My budget is approx 100k / year. Of that... 28k is HI / OOP.
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Old 07-15-2014, 07:16 PM   #11
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Too many people are nervous about the market for it to be a top. Clerks at stores aren't talking about stocks and don't have any tips for me, my haircutter didn't mention how much he was making with his mutual funds, etc.

No my friends, we aren't anywhere near a top. Surf that climb of fear.

There, does that put this to rest??
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Old 07-15-2014, 07:24 PM   #12
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Nah, do not worry too much about it. Set aside enough money to buy a used RV if needed, then you are set. If and when SHTF, jump in your RV and take off to see the country, have a blast.

Life's too short to keep worrying about money. If you wait too long, you will have something much more important to worry about: your health.
That pretty much sums it up right there. Now, if I can just convince DW....
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Old 07-16-2014, 06:25 AM   #13
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Buy right.. Hold tight
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Old 07-16-2014, 07:23 AM   #14
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Nah, do not worry too much about it. Set aside enough money to buy a used RV if needed, then you are set. If and when SHTF, jump in your RV and take off to see the country, have a blast.

Life's too short to keep worrying about money. If you wait too long, you will have something much more important to worry about: your health.
I agree with you with planning for a scaled back retirement living if necessary. The problem with retirement is that there is, in many cases, more than one person involved. DW is more focused on being close to grandkids and having roots.


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+1

I see a lot of posters who I fear are OMYing themselves into an abbreviated period of healthy retirement. Carpe diem.
I definitely resemble that remark. I declared myself FI while still a lurker on this forum. This was a basic FI where every cost would have to be carefully scrutinized. When I joined in 2006, I'm pretty sure I acknowledged that or at least said I was about there. My original forum name was Soon2B. I was initially plotting an exit. Unfortunately, DW's parents went into a health debacle. MIL fell and broke her hip and FIL was diagnosed with Alzheimer's within a year. DW was toying with the idea of home health care for her father with us as the caregivers because they didn't have enough assets to hire the needed help. I knew if I was retired I wouldn't be as free as when I worked. About that same time, I was offerred a great paying job that has turned out to have no stress and lots of time off available.

Finally, and I attest I didn't kill either of them, my in-laws passed away with my FIL being the last about 2 1/2 years ago. We've moved to our retirement home and have gotten it fixed up out of cash flow. We've been traveling as much as I can drag DW away from the grandkids and her other activities.

In the years since joining, I've increased my assets nicely. FireCalc is the most conservative financial planner I've used and it has a withdrawl amount over my current income. This is safely more than our current spending with home improvements and multiple vacations a year. It's easily double what I consider our basic "stay in the house" budget. I even have a "sell the house" budget that would reduce expenses significantly more.

Yes. I've definitely worked well more than necessary for anything resembling retirement "needs." Some of this was to avoid other consequences and some was to feather the nest.


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One problem I think is that as you reach each successive milestone, you automatically raise the bar on what is necessary. If you keep doing this your heirs will enjoy the party you should have had.
You can always find a new "risk" that has to be addressed. At some point we all have to "buy our ticket and take our chances." There is ultimately no absolutely safe amount. There is always a risk that can't be seen lurking over the horizen.

I don't mind my heirs having a party when I'm gone. I'd like to help fund the grandkid's college and do things that my parents weren't able to do with us and our kids.
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Old 07-16-2014, 08:50 AM   #15
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I don't mind my heirs having a party when I'm gone. I'd like to help fund the grandkid's college and do things that my parents weren't able to do with us and our kids.

Nothing wrong with a good party, but hopefully they will have a little class and not be standing over you saying.... "Just hurry up and die would ya!"


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Old 07-16-2014, 10:03 AM   #16
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Speaking of inheritance, I am thinking that if/when my stash grows to beyond what we currently spend right now, I will start to divest it to fund the children's Roth IRA, and if I have any grandchildren, their college fund. I will pay for family vacation together like a cruise. I want my children to party with me while I am still alive.
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Old 07-16-2014, 10:24 AM   #17
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Nothing wrong with a good party, but hopefully they will have a little class and not be standing over you saying.... "Just hurry up and die would ya!"
That's what I said about my in laws.
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Old 07-16-2014, 10:28 AM   #18
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That's what I said about my in laws.
Wow! Does your better half read these forums??
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Old 07-16-2014, 10:55 AM   #19
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http://finance.yahoo.com/news/third-...174055752.html



I'm trying to ignore these types of thoughts as I prepare to ER. But these are the things that have me wondering is 35x enough?

I'm not concerned with timing the market as with timing my retirement so that I'm in a market condition which doesn't seem so unfavorable to start retirement.

I buy the argument about asset inflation being correlated to the Fed's balance sheet. I feel they are playing musical chairs. Who wants to jump into the game when the music has been playing like it is and could stop at any time?

It's also the reason when I think of an initial ER allocation I think to start out with more bonds than equities.

On the other hand, whose to say I'm in the group that lives to 90+?

Now I understand OMY. For those of you who ER'd in the early 90's or early 2000's - did you agonize over such things? During that time was there a media push saying how overvalued things were?
I do sympathize with what you are saying, and with your concerns about retiring at this time.

I retired at a better time, I suppose, in 2009. But you know, all the news media and everyone else were saying "This time is DIFFERENT", that we would at the very least have a double dip recession, that we would not pull out of it for 30 years, and so on.

I think that what I am trying to get across, is that no matter when you retire, it's pretty scary to be told this because you DON'T know what will happen (even now). Neither do they. No matter the conditions you will be told forcefully by nearly everyone in the universe that it is a bad time to retire.

Run your numbers over and over until you just can't see any flaw in them. Think about the SWR papers and consider whether or not their results are designed to work for you in the worst of market sequences as well as the best. LBYM and save until you just cannot see any reason not to retire. At some point, you have to be sure enough of your calculations that you can just close your eyes and do it anyway.

Skydiving from a perfectly good airplane must feel a lot like retiring from a perfectly good job.
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Old 07-16-2014, 11:20 AM   #20
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We based our retirement plan on 0 - 1% real and once we are done will college costs just plan on living off < ( 0-1% real returns + SS + pensions), and maybe continue the hobby job income, but that is not in the plan so that income is extra. We don't have a lot in stocks, so sequence of return interest shouldn't be much of an issue for us.

I suspect interest rates will not always be this low so the odds are we will have more money than is in the plan, but if not we can have a pleasant retirement on what we have planned. If we get in a bind we could start drawing down principal or work more as plan B.
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