With this Market, most likely moving FIRE from 2020 to 2022

cyber888 said:
Yes, it is padded. The variable is healthcare. After looking at Healthcare.gov and my projected withdrawal, I’ve padded healthcare expense by at least $500/month -$700/month more than the quotes.
I also have $6000-$6500/year budget for a European vacation, which we could cut. We already have 3-4 weeks timeshare/timeshare exchange for US vacations. I still have Cable, so we could cut the cord.
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cyber888 said:
I’m 54 .. my equities are 90% .. was thinking of shifting 10% more to bonds.
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Have you played with the Investigate tab and looked the most you can spend at a defined success level and/or how asset allocation impacts your results? Looks like you have $12-15k of padding in your spending.

95% success would be plenty good in my book.
 
njhowie said:
Many folks talk a big game about their sky high equity allocations and will continue to, seemingly wearing it as a badge of honor - no fear.

We've seen this before back in 2007/2008, as well as 1999/2000.

When the downturn comes, then we'll see the outpouring of mea culpas and articles about folks who had millions to their name and watched a significant portion of it disappear.

My belief is that many folks have become much too complacent during this bull market and have unrealistic growth expectations.

Some will point to Buffett's statement about 90/10, but Buffett is different. If you have a $1 billion portfolio (for example), having "only" $100 million in safer things is likely not going to hurt your lifestyle much, even if the $900 million went down in value significantly. However, for those who "only" have $1 million, should that $900,000 equity portion take a nice haircut, the effects can be enormous.

Back to the OP, with 90% equities - a 40% hair cut could push his FIRE date out another 10 years, 20 years, or potentially make retirement near impossible. For a 54 year old, again, considering sequence of returns risk, the remaining time may not be sufficient to recoup paper losses experienced in the years just prior to an intended retirement date.
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Same thinking here.

We have modest nest egg with a fairly heavy draw until SS. Moved my allocation from 80-90% equities to 50-60% equities in 2014 and 2015, when we FIRE'd. Never bothered to calculate how much $$ I "lost" trimming back equities and missing the rising market. Needed to sleep well at night. Still remember 2009, when I didn't look at my holdings for months...
 
2 years from retirement, I've been dialing back equites all year. I don't look at how much I've lost in the short term, because I think have actually made money going into fixed income and fixed income like assets.
I will dial it back up after the next big crater. Am I doing dirty timing or just adjusting my AA to my stage in life? You decide.
 
flintnational said:
Tariffs and short term market moves are just noise and there will always be noise. I do not think either add any real value to the FIRE decision. :)
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MarieIG said:
Nope, tariffs will be old news by 2020. There will be something else to worry about. But there will always be something to worry about.
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GR111 said:
There’s always stock market noise.
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OP, suggest that you reflect upon the above posts: trite but true.
 
I'm at 85% equities, but 21% of the 85% are in my company ESOP, which fluctuates much less than the markets on average. I consider it a diversified mid-cap mutual fund in equivalent (the company's business lines and clients are diverse). I have 6% in bonds, and 10% in a money market account. The 10% represents a 3-year spending amount. I WAS at 99-100% success rate before the recent downturn, but that success rate included 50% discretionary spending. So, while I might not be able to spend as freely as I'd predicted/wanted, I think ER, is pretty safe, even with my AA. Thoughts?
 
Why move the retirement out? Unless you drank the Kool Aid of the 95 % success rate with a 75% AA and no pension.
 
The pension kids have a big advantage in the ER game fur shur.
 
njhowie said:
Many folks talk a big game about their sky high equity allocations and will continue to, seemingly wearing it as a badge of honor - no fear.

We've seen this before back in 2007/2008, as well as 1999/2000.

When the downturn comes, then we'll see the outpouring of mea culpas and articles about folks who had millions to their name and watched a significant portion of it disappear.
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I was 100% in 2007/2008 and 1999/2000 as well. While I'm growing my money those are investing opportunities. After I retire with a 3% withdrawal rate, the downturns are already accounted for.
 
I don’t understand why folks take more risk than they need to. Things to ponder.
 
Have three buckets. Deferred comp went to 60/40 about six months ago. Second bucket managed and they've gone cash/short term with small plays in the market. Bucket three went 50/20/30 MLP's. MLP's will be taking a big hit due to crude price but I'm midstream so that bucket is more long play and the biggest of the three.

I was more exposed not that long ago. Will reallocate when the time comes. These are the times when I don't look at portfolio values. I just know what my budget is and will stick to that. Still have SS to fall back on.
 
Your dirty but in a good way. I even forgive you for being a cheesehead. We may have seen a SB preview last night.
 
Happy 2019

cyber888 said:
Was hoping to retire at the beginning of 2020. But I'm now aiming for 2022.

With the tariffs and trade war affecting supply chain and the Feds continuing to raise interest rates, the market's looks pretty spooked. Still hoping decision makers will change their policy soon.

Firecalc says I'm 97%-99% ok for 2020, but still don't feel comfy.

Anyone else changing their target dates?
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I am already happily retired, but am having a pretty rough ride in the market right now. I look for it to turn around after the first year. I look forward to a prosperous 2019. Things can turn around pretty quick.
 
COcheesehead said:
I don’t understand why folks take more risk than they need to. Things to ponder.
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agree, but the hard part is figuring out how much risk you need to expose yourself to. I overestimated my "risk tolerance " when I was younger, and didn't realize it until I got smacked around a bit. Fortunately I was young enough to recover.

I think many young investors are young enough so that all they really know is the upside. I remember those heady days in the '80s and '90s, penciling in 10% and 15% returns, as I "projected" my retirement kitty growing in leaps and bounds. Then 1999-2008 happened, and those projections turned out to be more than a bit optimistic.

So now I'm 65, seems like I can live my life just fine on 3% WR, how exposed do I need to be? My answer: not very. In fact when I do the various calculators, and pencil in different AAs, there is not much difference in success rates between a 20% exposure to equities, and a 60%. So why be more exposed than I need to be?
 
Wow, look at the market last couple days! It looks like there may be some good deals to be had as stocks go on sale. Black Friday! Christmas Deals! (That's my coping mechanism. I look at stocks I want to buy instead of how my stocks have slipped)
 
HadEnuff said:
agree, but the hard part is figuring out how much risk you need to expose yourself to. I overestimated my "risk tolerance " when I was younger, and didn't realize it until I got smacked around a bit. Fortunately I was young enough to recover.

I think many young investors are young enough so that all they really know is the upside. I remember those heady days in the '80s and '90s, penciling in 10% and 15% returns, as I "projected" my retirement kitty growing in leaps and bounds. Then 1999-2008 happened, and those projections turned out to be more than a bit optimistic.

So now I'm 65, seems like I can live my life just fine on 3% WR, how exposed do I need to be? My answer: not very. In fact when I do the various calculators, and pencil in different AAs, there is not much difference in success rates between a 20% exposure to equities, and a 60%. So why be more exposed than I need to be?
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I found Firecalc can help answer how much exposure do I need.
 
COcheesehead said:
I don’t understand why folks take more risk than they need to. Things to ponder.
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That is a good question. Greed might be one and some may not need the money to live on, ever.


If you had 2 million and would never need that money, what AA would you use for those funds?


Some might still go very conservative while others might keep a high AA.
 
Everyone knows the stock market goes up over time. And the message that was sent in 2008/09 was risk takers will be bailed out. Everyone knows inflation risk will cause losses if portfolio growth is stagnate. The system is managed in such a way thst risk is not always what it appears.
 
COcheesehead said:
I don’t understand why folks take more risk than they need to. Things to ponder.
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During accumulation phase, when more than a decade from retirement and a well paying job and well funded emergency fund, it makes sense to take on a lot of market risk. I was close to 100% equities during most of it.

Once retired, it depends on your various income streams. For folks with expenses covered by pensions, annuities, ultimately SS, they may choose to keep a high exposure to equities, especially if they are getting some income as a dividend stream.

We are living 100% off our investments. We chose our equity exposure based on portfolio survival statistics in Firecalc. There is a wide range of equity to fixed income that has similar survival characteristics. We chose to be about center, rather than either extreme - kind of a middling tradeoff between annual volatility and long-term inflation-adjusted returns. Given our relative youth as retirees, I didn’t want to go to the minimum equity exposure.

We may reduce equity exposure as we age. Then again, we my choose not to....
 
audreyh1 said:
During accumulation phase, when more than a decade from retirement and a well paying job and well funded emergency fund, it makes sense to take on a lot of market risk. I was close to 100% equities during most of it.

Once retired, it depends on your various income streams. For folks with expenses covered by pensions, annuities, ultimately SS, they may choose to keep a high exposure to equities, especially if they are getting some income as a dividend stream.

We are living 100% off our investments. We chose our equity exposure based on portfolio survival statistics in Firecalc. There is a wide range of equity to fixed income that has similar survival characteristics. We chose to be about center, rather than either extreme - kind of a middling tradeoff between annual volatility and long-term inflation-adjusted returns. Given our relative youth as retirees, I didn’t want to go to the minimum equity exposure.

We may reduce equity exposure as we age. Then again, we my choose not to....
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I agree. This is similar to what I have done. 100% when young. Dailing back with shorter horizon to recover.
 
Free bird said:
Everyone knows the stock market goes up over time. And the message that was sent in 2008/09 was risk takers will be bailed out. Everyone knows inflation risk will cause losses if portfolio growth is stagnate. The system is managed in such a way thst risk is not always what it appears.
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Risk is risk. Inflation risk, sequence of return risk, duration risk, reinvestment risk, credit risk.... You need to consider them all.
 
Ya know it good to see others on the forum waffling with the same things that the atom smasher household ponders.

After riding the bull 30+ years on nearly 100% equity, pulled back to 50% stocks/50% money markets (bonds suck right now) last June (I'm 57. So is Mrs. Atom). DMT that I am, glad it is in the past - but it enabled a FIRE date in 2020.

Then I lost my mind and wanted to work another year for a used RV and safety net, suspenders, blah blah blah. That OMY fever finally broke and we are back to 2020. (Early - to pick up the annual bonus).

Problem is, I am realizing that any more SS wages won't change the calculus (already have 35 years with nearly all hi pay), and next year the medical pension goes to max. Also lucky enough to have a cash pension for immediate use; however, it only increases $1,000 for each additional year worked.

Saving another $150k only becomes $6000 / year using the simplistic 4% rule. The realization that working another 12-18 months translates into only $588/mo extra for life has me wondering.

Fortunately, a bottle of spiced Rum has followed me home to help ponder the possibilities.

Atom
 
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Free bird said:
Everyone knows the stock market goes up over time. And the message that was sent in 2008/09 was risk takers will be bailed out. Everyone knows inflation risk will cause losses if portfolio growth is stagnate. The system is managed in such a way thst risk is not always what it appears.
Click to expand...


Well first of all, the question wasn't "why be exposed to risk at all?", the question was why expose yourself to more than you need to. Some market risk is probably a good thing, to try to offset the inflation risk.

Inflation risk increases with the number of years you need to live off your nut i.e. the younger you are when you retire the more you are exposed to inflation risk.

As far as being "bailed out", I don't think the Feds are going to look at you or me and consider us "too big to fail"...I wouldn't put too many of my eggs in that basket.
 
atmsmshr said:
Ya know it good to see others on the forum waffling with the same things that the atom smasher household ponders.

After riding the bull 30+ years on nearly 100% equity, pulled back to 50% stocks/50% money markets (bonds suck right now) last June (I'm 57. So is Mrs. Atom). DMT that I am, glad it is in the past - but it enabled a FIRE date in 2020.

Then I lost my mind and wanted to work another year for a used RV and safety net, suspenders, blah blah blah. That OMY fever finally broke and we are back to 2020. (Early - to pick up the annual bonus).

Problem is, I am realizing that any more SS wages won't change the calculus (already have 35 years with nearly all hi pay), and next year the medical pension goes to max. Also lucky enough to have a cash pension for immediate use; however, it only increases $1,000 for each additional year worked.

Saving another $150k only becomes $6000 / year using the simplistic 4% rule. The realization that working another 12-18 months translates into only $588/mo extra for life has me wondering.

Fortunately, a bottle of spiced Rum has followed me home to help ponder the possibilities.

Atom
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Stay with your 2020 goal. You will both be 59 yo and will most likely never be better off health wise than the present time, so go for it.
Plus on the east coast of FLA, you might have some good choices on the ACA exchange.
 
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