Early Retirement & Financial Independence Community

Early Retirement & Financial Independence Community (http://www.early-retirement.org/forums/)
-   FIRE and Money (http://www.early-retirement.org/forums/f28/)
-   -   Thankful for History... (http://www.early-retirement.org/forums/f28/thankful-for-history-95161.html)

macav933 12-10-2018 09:30 AM

Thankful for History...
 
Given all the talk that this might be a tough time for many to enter retirement....itís important to remember weíre currently in the longest expansion since World War 2...and just short of the longest since 1860!
If indeed this is the end, and a recession is around the corner.....I would rather enter retirement in this order than the other way around!

ERD50 12-10-2018 10:11 AM

Yes, people seem to ignore that when we have a big drop, it usually happens after a big run up!

It's not like your typical retiree put every dollar in at the peak, they accumulated over decades, and benefited from the run up.

-ERD50

Dtail 12-10-2018 10:16 AM

Quote:

Originally Posted by ERD50 (Post 2154729)
Yes, people seem to ignore that when we have a big drop, it usually happens after a big run up!

It's not like your typical retiree put every dollar in at the peak, they accumulated over decades, and benefited from the run up.

-ERD50

Big +1
It is stated one could have issues if there is a bear market 5 years before or within 5 years after retirement.
A 10 year cycle of a bull run is not typical irrespective of the current one, so one generally can't avoid a bear market in these 10 years mentioned above.
I could not have retired last year without the run up in the many years before it.

happy2bretired 12-10-2018 12:47 PM

Thankful for History...
 
Yes itís an exciting time with all the new technologies and advancements in science, itís mind boggling. Just think of how things have changed over time especially in the boomer generation. Iím excited to see what comes next.

RunningBum 12-10-2018 12:49 PM

I don't follow.

Suppose 10 years ago someone saw retirement a long way away. But with a lot of help of a 10 year bull market, they hit their goal in 10 years, and pull the trigger. Maybe they believe the 4% SWR story and as soon as they hit that, they retire.

Now retired, a bear market starts, setting them up for starting with a bad sequence of returns, and possible failure.

Isn't this a bad thing? How is it good?

COcheesehead 12-10-2018 02:12 PM

I am in agreement with the OP. I am retiring in 2 years, have planned a long time for it. I am in capital preservation mode. I don't need much growth from here to make my plan work. I don't need a 4% withdrawal rate either. I would rather know I have it, than hope for growth from here in order to make it all work.

W2R 12-10-2018 02:39 PM

When I retired, on 11/9/2009, quite honestly I wasn't sure if the recession was actually over or if it was just the pre-amble to something far, far worse.

However, I felt confident enough to retire anyway because my planning assumed the worst conditions anyone could ever imagine; this included a housing crash, market crash, double digit inflation, and anything else I could think of to throw in that cauldron of future misery. And look what happened! Ten years of a booming market and I'm hanging out on the "Blow that Dough" thread and the Amazon thread. I have been so amazed and surprised by this turn of events. I would never have guessed it in a million years.

I don't think that any retiree ever "gets it right" and ends up with exactly the income they expect, unless they are just plain lucky. But like in the working world, we adapt. Some of those who end up in more difficult financial situations than expected, might have to take a part time "fun job", downsize, learn to spend less, move to a state or country with an LCOL, or figure out some other way to cope.

But I believe in the retirees on this forum. Most of us have dealt with very tough situations at various times during life, and can and will do so again if necessary. Most of us also know that:


Red Badger 12-10-2018 03:14 PM

The run up after the Great Recession shaved ~3 years off of my working years. We've only been retired about 18 months, so we're fairly cautious. If the economy flies south for a few winters, we can go to 2% WR. Worst case, we could leave investments untouched. Prefer not to, but it's one of a few options. With zero WR, our travel and discretionary big ticket budget would take a broadside.

USGrant1962 12-10-2018 03:30 PM

Quote:

Originally Posted by RunningBum (Post 2154799)
I don't follow.

Suppose 10 years ago someone saw retirement a long way away. But with a lot of help of a 10 year bull market, they hit their goal in 10 years, and pull the trigger. Maybe they believe the 4% SWR story and as soon as they hit that, they retire.

Now retired, a bear market starts, setting them up for starting with a bad sequence of returns, and possible failure.

Isn't this a bad thing? How is it good?

Well, you've just described much of the ER-org Class of 2017 and Class of 2018, me included :mad:

But, on the other hand your premise seems flawed. The SWR studies show that generic "bear markets" did NOT cause failure of the 4% guideline, regardless of SORR. It took a Great Depression or Great Inflation for that to have happened [with appropriate caveats about past not future, studies were for 30-year retirements, no one actually withdraws like that, etc., etc.].

So while a huge run-up followed by a bear market is not ideal, it is better than a generic market followed by a bear market. Why? Because you get to ER earlier thanks to the run-up! ;D

RunningBum 12-10-2018 04:04 PM

Quote:

Originally Posted by USGrant1962 (Post 2154870)

So while a huge run-up followed by a bear market is not ideal, it is better than a generic market followed by a bear market. Why? Because you get to ER earlier thanks to the run-up! ;D

OK, that part wasn't clear to me, but if that's what's meant, I'll buy it.

Dtail 12-10-2018 05:19 PM

Quote:

Originally Posted by RunningBum (Post 2154887)
OK, that part wasn't clear to me, but if that's what's meant, I'll buy it.

Not sure the original quote was for me, but US Grant's explanation WAS my thinking, plus only using 3% WR to help protect against the effects of SORR.

RunningBum 12-10-2018 05:37 PM

Quote:

Originally Posted by Dtail (Post 2154924)
Not sure the original quote was for me, but US Grant's explanation WAS my thinking, plus only using 3% WR to help protect against the effects of SORR.

I intentionally didn't quote anyone in particular, because everyone was agreeing with the OP, which to me sounded like "I'd rather retire and then have a downturn than retire and then have an upturn." USG's explanation puts it in a different light.


All times are GMT -6. The time now is 10:10 AM.

Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.