Worst Possible Retirement Date?

[yakers]

Lets see,it looks like dm may have hit the 'bottom' (inverted for top of the market) in choosing (if there is a choice involved) in the worst time to retire. I retired in March 08 and it was nice for a while, but the market lately has made me a bit crazy. So when were/are the worst times to retire 2000? Oct 2007? How much off the top is necessary to not be hit by the worst of a recession/market decline?

Is there an all time worst time to retire? Is this it?

 

[dex]

Is there an all time worst time to retire? Is this it?

I don't think we will know for at least 15 months

 

[Midpack]

I had two employees retire this year, one in May and the other in July. I have not talked to them, I hope they are OK, but they are probably more than a little concerned...

 

[lazygood4nothinbum]

apparently the worst date to retire was when i did.

go ahead and quit. it's only a once in a 100-year event. how often could that happen?

 

[Disappointed]

Look at it this way, there is no way but up from here. Is it better to retire at the top of the market and see it drip down from there?

If you can survive the bottom of the market, it is all blue sky from here.

mP

 

[ziggy29]

So when were/are the worst times to retire 2000? Oct 2007?

Not even close between these two, at least if you were properly diversified (large cap, small cap, international, REITs, emerging markets and bonds).

Most people who entered 2000 properly diversified lost relatively little even if the headline indices got whacked hard.

Everyone who entered 2008 properly diversified got crushed.

I will say that if you can still live off of 4% of your portfolio today, it's probably not a bad time to start retirement. One year ago, on the other hand...

 

[audreyh1]

Ziggy is right.

Audrey

 

[mn54]

I've read more than once on this forum that when he/she retired they sold all their equities and went to an all fixed investment portfolio, i.e cd's, bond ladder, etc. If this were the case it would have been a good time to retire.

 

[ziggy29]

I've read more than once on this forum that when he/she retired they sold all their equities and went to an all fixed investment portfolio, i.e cd's, bond ladder, etc. If this were the case it would have been a good time to retire.

If you have such a large portfolio that you don't need the growth of stocks, sure -- but you'd probably be talking about no more than a 2% withdrawal rate or something like that. And you'd make depleting a serious portion of principal a virtual certainty.

If you need $40,000 a year from a $2M portfolio, that will probably work. But if you needed that same amount from a $1M portfolio, there's not enough growth to keep you safe.

 

[jIMOh]

Is there an all time worst time to retire? Is this it?

The all time worst time to retire would be the day after you die.

The best time to retire is always yesterday.

I hate w*rk.

 

[ladelfina]

If you need $40,000 a year from a $2M portfolio, that will probably work. But if you needed that same amount from a $1M portfolio, there's not enough growth to keep you safe.

that second one was me. so, err.. the 4% SWR has plotzed? I'm thinking so.

jIMOh.. I went to a friend of mine's.. she's English and owns a restaurant with her Italian spouse. In the kitchen working was her 80 y.o. MIL scrubbing pots 'n' pans: "one has to help out!" I think she also makes all the pasta for the joint. She looked young for 80.. I think if you have something -even something menial- that you find fulfilling even in a small way.. working is not so bad. It's a matter of attitude.

Maybe if the MIL passes, I can get the pot-washing/pasta-making job? I have an "in"!

 

[ziggy29]

that second one was me. so, err.. the 4% SWR has plotzed? I'm thinking so.

It didn't "plotz" in 1929 or 1966 or 1973. I know you're big on the "it's different this time" sentiment, and who knows? -- maybe it is. But it's way too early to declare it dead. And I think you'd have to think it will be worse than that period of the 1930s which must not be named to believe it's dead.

We may need another 10 years to know for sure.

 

[brewer12345]

Easy to say: until we see otherwise, the worst time to retire was 1966. The combination of galloping inflation and lousy asset price performance was devastating.

 

[kumquat]

I will say that if you can still live off of 4% of your portfolio today, it's probably not a bad time to start retirement. One year ago, on the other hand...

I'd go further and predict that if you can live as you want off 4%, you will have a rather good chance to have a wonderful retirement & leave some grateful heirs.

 

[W2R]

Easy to say: until we see otherwise, the worst time to retire was 1966. The combination of galloping inflation and lousy asset price performance was devastating.

That was the year my father retired. A year later, he was back at work.

 

[ziggy29]

Easy to say: until we see otherwise, the worst time to retire was 1966. The combination of galloping inflation and lousy asset price performance was devastating.

It appears so, but you just made me think about a different wrinkle to this question. More specifically, the worst time to need 4% of your portfolio to make retirement possible was in 1966 -- not necessarily the worst time for the typical person to retire.

There were a lot more private sector defined-benefit pensions in 1966 than today, and Social Security was strong and its ability to deliver not in question. Together that means the average retiree in 1966 probably needed to put away and invest a LOT less, adjusted for inflation, than the average retiree today (much less 20 years from now when almost no one retiring will get a pension and who knows about SS?). A lot of people in that era (and a few years following) received comfortable retirements without saving one cent of their own money for retirement. You'd get laughed out of a room to suggest that to most people today.

I say that because I look at reactions to the market drop of the last year compared to the reaction of 1973-74, which lost a similar amount. Yes, people noticed the decline in the stock market but few on "Main Street" panicked because that was still a time of job security and generous pensions, which insulated average folks from being gravely concerned about the market. If I had job security and a generous pension, I'd likely be shrugging this market off as just a bad hair day instead of the potential retirement-killer it seems to be.

 

[ziggy29]

double post, nothing to see...

 

[dex]

ziggy29
Good Points.
I would add that there were probably less people who were going to retire that were invested in the stock market.
Their defined pension might have not performed too well.

 

[retire@40]

That was the year my father retired. A year later, he was back at work.

It's not the "year after" retirement that would be a problem. It's the 10 years after that would be catastrophic if your investments didn't grow by the minimal amount necessary to avoid major erosion of principal.

 

[dm]

Well I retired last October and this is the first year that my net worth is going to be lower than the year before. But I'm also a year closer to death. Ive had a great year and it has been worth it.. Because I deceided to retire early I did make some changes in my investments which saved me some money. I changed my AA in order to hopefully weather down years in the market that are bound to come. I also paid off my home in order to reduce the amount I need to withdraw.

I of coarse am not happy about the fact that my investments are dropping while I am not in the position to add new money to offset the losses. But I also know that I put some cushion in my budget so I can cut back if need be.

We will have to see what happens with the stock market and economy to see if I picked a bad time to retire. I can go 7-8 years without ever having to sell a stock. I am hopefull that they will still have value at that time. I'm still more worried about inflation in the years to come than the stock market.

 

[Dawg52]

Like many here, I will be one to look back on this period and say...'yup, I'm one of the idiots that retired during the financial crisis of 2008.' Oh well, just gonna party till the money runs out. Got enough cd's to last me a good 15 to 18 years. Plus SS will start in 8 years and that will help stretch out my portfolio. And who knows, maybe this mess will get straighten out somewhere along the way and we all recoup our stock losses. Not counting on it though. After all......I'm the born loser.

 

[73ss454]

Hey Dawg, at least you were smart enough to have a bunch of CD's.
I on the other hand used bonds and everything I have is getting killed. I'm holding a 2 CD's but I wish I had more.

This environment is not for the weak who are living off their port as I am. I'm getting weaker by the day.

I think Dory may have to recalculate firecalc when this is over.

 

[youbet]

Easy to say: until we see otherwise, the worst time to retire was 1966. The combination of galloping inflation and lousy asset price performance was devastating.

I agree and Firecalc bears it out.

If the current crappy market stretches out for a few years and is joined by years of staggering inflation, then we'll have some reason to think this is the worse time to retire. But as of yet, no. Not that right now is exactly fun........

 

[cashbalancetrouble]

I have a question on retirement timing. I ER three years ago but DW continued to work. I did not take my pension yet as it continues to grow at 6% per year. Is now the time to take it and put it into equities?

FA has thought this would be good as he always wants more investments. 0.95% fee. DW can get another lump sum pension in two years. We are looking ahead at 10 years with no income before SS to start depleting all the pretax accounts converting to Roths starting in 2010. I expect market will not recover until 2011 and this tells me to stick with the 6 % per year until 2010.

 

[Walt34]

The all time worst time to retire would be the day after you die.

Talking with a fellow at work last week, also a retired police officer, he told me of a call that affected him the rest of his life. In his early 20s he got a call for a car stopped with the engine running. The car is stopped in front of the owner's house. Looking in, he sees an older guy, dead, with his face planted in his retirement cake on the front seat.

"Tomorrow is not guaranteed" is the lesson he learned.