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Uncertainty
Old 01-17-2013, 12:29 PM   #1
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Uncertainty

Last year, when I was still two years away from retirement I was confident that I was secure with my plan. I was confident the plan could survive a 2% average return (maybe even a 0%, if we spend less later in life as I think we will). I was confident the plan would last for 35+ years, longer than we intend to be alive.

Now that I'm less than a year away from retirement, uncertainty has crept in. If anything, we ended the year in a better position. We have a better handle on our expenses. Everything points to a successful retirement. Yet, the doubt is there. What if I have a formula error in my spreadsheet? What if the market tanks just after I retire? What if we spend more than planned?

With the doubt, comes some insane ideas. Well, I can work another year as a cushion (could have retired a year ago, except for health coverage). I can work two years and get early SS, thus not depleting the retirement fund (above still applies). I can work until full retirement age and be 100% certain we'll be set (really worth it to be above 98% certainty?).

So, my question is, how many of you doubted your plan just before you retired? Is this the norm or am I just getting nervous since we're talking months and days instead of years?
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Old 01-17-2013, 12:38 PM   #2
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Quote:
Originally Posted by akck View Post
Last year, when I was still two years away from retirement I was confident that I was secure with my plan. I was confident the plan could survive a 2% average return (maybe even a 0%, if we spend less later in life as I think we will). I was confident the plan would last for 35+ years, longer than we intend to be alive.

Now that I'm less than a year away from retirement, uncertainty has crept in. If anything, we ended the year in a better position. We have a better handle on our expenses. Everything points to a successful retirement. Yet, the doubt is there. What if I have a formula error in my spreadsheet? What if the market tanks just after I retire? What if we spend more than planned?

With the doubt, comes some insane ideas. Well, I can work another year as a cushion (could have retired a year ago, except for health coverage). I can work two years and get early SS, thus not depleting the retirement fund (above still applies). I can work until full retirement age and be 100% certain we'll be set (really worth it to be above 98% certainty?).

So, my question is, how many of you doubted your plan just before you retired? Is this the norm or am I just getting nervous since we're talking months and days instead of years?
Since it will not be known until sometime in the future whether your concerns are well founded or just nerves, there is no true answer to your question. Whether others have or have not had these feelings is not relevant to whether they reflect reality or fantasy. The answer is somewhre in the unknown future, and nowhere else.

Ha
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Old 01-17-2013, 12:39 PM   #3
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This is called "one more year syndrome" and is quite common.
Search on "one more year" on this site and you'll see lots of comments on how people have dealt with it.
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Old 01-17-2013, 12:50 PM   #4
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The first time I climbed on a bicycle when I was a kid, I didn't know if I'd crash into a parked car (later on, I did).

You do it when you're ready, I think, and you are the one who knows when that is.
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Old 01-17-2013, 01:50 PM   #5
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Work on Plans B, C, and D. Recognize that you have flexibility and a safety margin already in your plans. You have probably tried multiple retirement calculators, not just your spreadsheet, and they all say you're OK. You are stepping into something new, there are no guarantees, this is something you will have to let fade during retirement. Or wait another year...
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Old 01-17-2013, 02:06 PM   #6
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Quote:
Originally Posted by haha
Since it will not be known until sometime in the future whether your concerns are well founded or just nerves, there is no true answer to your question.
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Originally Posted by steelyman View Post
You do it when you're ready, I think, and you are the one who knows when that is.
These answers are as good as you're gonna get IMO.

All of us face the uncertainty, and come to conclusions we can live with, though unique for each of us.

What if I have a formula error in my spreadsheet? I have elaborate spreadsheets, but I wouldn't rely on them solely or any other single source. I ran just about every calculator I ran across, to double/triple check. Hopefully you have/will too. If they are all telling you about the same thing, you must be on the right track. If not, I'd figure out why before pulling the plug.

What if the market tanks just after I retire? They may, but if it's no worse than any starting in year from 1871 thru 1982 (assuming 30 years) which includes some pretty awful economic times with a depression, wars, numerous recessions, oil embargoes, etc. - if you've used one of the SWR methodologies the odds are much in your favor (95% success of so). There's a lot of potential upside too, at least if the past is any indication.

What if we spend more than planned? Many recommend that everyone actually live on their retirement spending budget for 1-2 years before retiring to be sure. I'd also recommend that your budget has at least two levels, basics/essentials and above and beyond, but plan on all of it. When/if you have to reduce spending, at least you have a viable game plan (IOW you know your real fixed costs). And I am assuming health care will be about twice what it appears to cost today. If I'm wrong and it's cheaper, I can live with that.

BTW, you left off what if I live too long?
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Old 01-17-2013, 02:37 PM   #7
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Having just retired a few months ago I know the feeling well. It can be pretty scary. There is only so much, that more money can help you with. A total economic crash would take you out no matter how much you have. Health can take you out. Many other things.

But one thing for sure you only have a limited number of years left. How much is the extra buffer really worth?

I have two friends that retired from the same company. They have an idea what I have. One thinks I will do fine. One doesn't think I have enough. I think both of them have more than me. The one that thinks I don't have enough lives much higher than I do. He looks at it from his own experience.
I decided to risk it. I have had 7 months retirement. That is more than some people get. If I have to get a part time job in the future or adjust my lifestyle then so be it. It's all a risk. Only you can decide.
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Old 01-17-2013, 03:13 PM   #8
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Quote:
Originally Posted by akck
Last year, when I was still two years away from retirement I was confident that I was secure with my plan. I was confident the plan could survive a 2% average return (maybe even a 0%, if we spend less later in life as I think we will). I was confident the plan would last for 35+ years, longer than we intend to be alive.

Now that I'm less than a year away from retirement, uncertainty has crept in. If anything, we ended the year in a better position. We have a better handle on our expenses. Everything points to a successful retirement. Yet, the doubt is there. What if I have a formula error in my spreadsheet? What if the market tanks just after I retire? What if we spend more than planned?

With the doubt, comes some insane ideas. Well, I can work another year as a cushion (could have retired a year ago, except for health coverage). I can work two years and get early SS, thus not depleting the retirement fund (above still applies). I can work until full retirement age and be 100% certain we'll be set (really worth it to be above 98% certainty?).

So, my question is, how many of you doubted your plan just before you retired? Is this the norm or am I just getting nervous since we're talking months and days instead of years?
Just keep in mind the obvious reason why working to full retirement ensures possible certainty... You have less time to live. Let's be a bit negative and assume you have 20 years left to live, and you would need to work 5 more years to reach certainty. Are you willing to give 25% of your life for the extra security, while keeping in mind the back 15 probably won't be as invigorating as the 5 you gave up. Now, if you are going to sit around and stress daily over the risk of your money running out, maybe work would provide more comfort and serenity in your life.
FWIW- I am more or less dependent on my pension. I still save and am still under 50. I worried way more the first few months AFTER I retired than before, as I was not used to money just showing up in my account and not working for it. Plus I had enough idle time to dream up a few more what if negative scenarios. So I decided to work PT these past 3 years. I have met my immediate goal of savings, but will continue. In a few more years, if my pension ever did get cut, I could supplement it and survive. If it was taking away completely from me (unlikely since the money is in a front loaded trust over 85% prefunded) well I would be screwed anyways as its too late in life for me to build up a massive portfolio to live off of. After 3 years of ER, I am finally coming to peace with it all, and the only work I plan on ever doing from here on out, come this summer is mow my grass, and clean the house.
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Old 01-17-2013, 04:18 PM   #9
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Work on Plans B, C, and D. Recognize that you have flexibility and a safety margin already in your plans. You have probably tried multiple retirement calculators, not just your spreadsheet, and they all say you're OK. You are stepping into something new, there are no guarantees, this is something you will have to let fade during retirement. Or wait another year...
Well, no Plans B, C, and D on paper but I do know the options I have to cut expenses and/or raise income. Yes, I've used other calculators and they show success. I'm thinking this is the same feeling I had every time I changed jobs. The only difference is the feeling will last for a longer period.
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Old 01-17-2013, 04:39 PM   #10
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Well, no Plans B, C, and D on paper but I do know the options I have to cut expenses and/or raise income. Yes, I've used other calculators and they show success. I'm thinking this is the same feeling I had every time I changed jobs. The only difference is the feeling will last for a longer period.
I've only been retired for 19 months, but I have a different take on your last sentence that maybe some of the more experienced here may comment on.

I don't think you'll really feel much uncertainty when or shortly after you retire. I really didn't FWIW. Whatever anxiety you feel after retiring will come when the market takes a real dive and you're wondering how far it will go with no way of knowing for sure (especially the first time) - that could be years after you leave the working world. That's when my/your resolve will be tested I expect...
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Old 01-17-2013, 05:03 PM   #11
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Thanks, everyone. It does help to know that others went through this too. Lazarus and Mulligan make a good point in that working longer just isn't worth giving up several good retirement years. And Midpack, I'm not worried about living too long as I probably won't be able to spend (or be in a position to care about), all the sources of income that won't run out at that age.
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Old 01-17-2013, 05:19 PM   #12
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I think many of us who retired early, used belt and suspenders and then another belt and another pair of suspenders - i.e. padded our investments well, to feel comfortable with diving off the high board into the scary world of living off our investments. It does take some getting used to - at first.
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Old 01-17-2013, 05:56 PM   #13
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Looks like your closing in on 60. The only slight issue I see is that you refer to waiting to collect full SS to be above 98% certainty of your portfolio survival. Being of a conservative nature I want 100% plus a cushion. However, you really need to assess your employment situation, establish priorities and move on. Best wishes going forward.
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Old 01-17-2013, 06:03 PM   #14
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I think it is perfectly normal to question yourself. I've now been "retired" for exactly one week. I found myself going through the same uncertain gyrations you describe for the 2 years prior to retirement - if anything, it actually got worse the closer I got.

You might want to consider this self-analysis as a positive - it shows you are not being one-sided in your considerations, thus you are exploring various options and possible occurrences and less likely to be blind-sided by something you failed to consider.

The thing that finally helped me is the realization that I can be flexible as I go forward. Your decision is not written in stone so you can adjust if needed.
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Old 01-17-2013, 07:05 PM   #15
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Before I ER'd in 2002 I had run a number of spreadsheets and retirement calculators (not as sophisticated then as they are now) and everything looked good. Just to be on the safe side I had a couple of independent FP advisers go over my plan and they both agreed that it looked good. It's been a great ten years of ER and surprisingly, my balances currently are higher than predicted both by my spreadsheets and the FPs. To me this is amazing considering what we have been thru the last decade or so. My suggestion is simply to have another set of qualified (hopefully) eyes look at your data and give you feedback.
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Old 01-17-2013, 08:44 PM   #16
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Even with plans B, C and D in place, I still got spooked into w#rking for "just one more year". Letting go can be hard, but once the numbers make sense (and DW is fully on board), it really comes down to this:


Quote:
Originally Posted by Mulligan View Post
Just keep in mind the obvious reason why working to full retirement ensures possible certainty... You have less time to live. Let's be a bit negative and assume you have 20 years left to live, and you would need to work 5 more years to reach certainty. Are you willing to give 25% of your life for the extra security, while keeping in mind the back 15 probably won't be as invigorating as the 5 you gave up.
I've only got so much time left and there are things I would like to do during that time more than I would like to spend it in the office....much more.
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Old 01-17-2013, 09:12 PM   #17
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From the song "No Time at All" from Pippin:

Before it's too late
Stop trying to wait
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The one thing to be sure of, mate
There's nothing to be sure of-
Oh, it's time to start livin'
Time to take a little of this world we're given.
Time to take time,
'cuz spring will turn to fall
In just no time at all.
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Old 01-17-2013, 09:33 PM   #18
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Misgivings are normal. In figuring out your starting point and Plan A, the best you can do is the best you can do. Remember that you won't implement your plan like winding a clock and letting it go with no more input. You will be constantly monitoring, updating and adjusting as time goes on...actually an interesting item among your things to do. You will make changes to adjust for the unknowns that are bothering you now. I retired about 7 months ago and spent the first few months working through various refinements to my original concept. The ability to set my own schedule, follow whatever activities are the most interesting and do so much more "family stuff" has been wonderful. Be excited. You have a great adventure ahead of you.
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Old 01-18-2013, 01:08 PM   #19
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Thanks all for your input. I feel better about it now, but I expect uncertainty will come in waves as I get closer to the date. One thing I do know is that any uncertainty will not change that date, so less than a year and counting!
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Old 01-18-2013, 01:17 PM   #20
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Thanks all for your input. I feel better about it now, but I expect uncertainty will come in waves as I get closer to the date. One thing I do know is that any uncertainty will not change that date, so less than a year and counting!
Uncertainty is a part of life. You've dealt with it up to this point, and you'll continue to as long as you live. Retiring doesn't change that. The best you can do is build a safety factor (how much is for each of us to decide) in your plan A, and have contingency plans B, C, D...and go on with life.

“If you wait to do everything until you're sure it's right, you'll probably never do much of anything.”
Win Borden
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