Is anyone brave enough to retire in Jan 2019 in this volatile market?

[Floridatennisplayer]

simple basics will answer your question:
How much are your annual expenses?
How much money do you have?
How much income will you have?

Now do the simple math. Subtract your expenses from your income. Now how long will that last from your next egg?

 

[COcheesehead]

What the OP is talking about is sequence of return risk, taking a big hit early in retirement.
There are ways to deal with it and if you have that covered, you should be able to retire in any market.

 

[Retch The Grate]

I'm waiting till 3% WR gives me the income I want. At that point it doesn't (much) matter what the market does since that rate has historically survived as long as the data ranges allow one to test from the really bad starting points.

 

[marko]

simple basics will answer your question:
How much are your annual expenses?
How much money do you have?
How much income will you have?

Now do the simple math. Subtract your expenses from your income. Now how long will that last from your next egg?

You must also factor in inflation!!

 

[jollystomper]

I'm waiting till 3% WR gives me the income I want. At that point it doesn't (much) matter what the market does since that rate has historically survived as long as the data ranges allow one to test from the really bad starting points.

Great point. I was a little more conservative and waited until my SWR was < 2.5% (based on both what we saved/invested, and what we planned to spend). I figured at that level I could deal with any volatility. It is just the ego that takes a hit ("Wee, I hit XXX level! Drat, I'm down to YYY level again..." ).

 

[24601NoMore]

What the OP is talking about is sequence of return risk, taking a big hit early in retirement.
There are ways to deal with it and if you have that covered, you should be able to retire in any market.

Even if you have sequence of returns risk covered (I do - don't need to sell stocks anytime soon) watching your net worth melt down 3-500 points on the Dow every single day for days on end can get REALLY disconcerting quickly.

Sure - it's psychological vs financial and won't impact my ability to pay the bills, but I feel a heck of a lot better at $X net worth than I do at $X minus $200K. It "may" go back up - or this may be the beginning of a long bear that repeats the pain of 2008.

Unfortunately, I was literally months away from reducing my equity exposure. Wanted to do it in early Jan 2019 for tax purposes. That'll teach me.

 

[copyright1997reloaded]

I retired at 51 in May of 2009 with a 7 year old child, with my portfolio down 38% from the 2007 high. This kind of market is an excellent gut check on your risk tolerance. If the market down 10%-15% makes you pull back from retiring, then perhaps your equity allocation is too high or you don't have enough cushion in your plan.

When I retired, I knew that given my income stream and cash/fixed, that I would have enough to get by on. Not enough to go crazy and things would be tight, but enough that if things continued to blow out, I wouldn't starve (at least not until the financial system completely collapsed).

 

[COcheesehead]

Even if you have sequence of returns risk covered (I do - don't need to sell stocks anytime soon) watching your net worth melt down 3-500 points on the Dow every single day for days on end can get REALLY disconcerting quickly.

Sure - it's psychological vs financial and won't impact my ability to pay the bills, but I feel a heck of a lot better at $X net worth than I do at $X minus $200K. It "may" go back up - or this may be the beginning of a long bear that repeats the pain of 2008.

Unfortunately, I was literally months away from reducing my equity exposure. Wanted to do it in early Jan 2019 for tax purposes. That'll teach me.

I agree. It is emotional. I have plenty of money, secure money, but I don't like seeing the market go down either this close to retirement. I just don't do anything as the result of the decline. I am not really buying or selling equities. I just keep adding bonds to my ladder. I can rebalance later, if I need to.

 

[Choices]

Knowing me, I would be hesitant. But we were belt and suspenders types. I just kinda squint at the day’s happenings...my monthly reports may make the heart race a bit.

 

[clifp]

The market is not really more volatile than in the past, but people have short memories. The current correction reminds them that stocks do not go up in a straight line.

About feeling secure retiring with $1M, it of course depends on the person's age, and how close he is to SS eligibility.

There is no perfect measure of market volatility but VIX (volatility index) is reasonable measure as of today is 24. Historically is been about 20, so the last few months have actually being closer to normal than say the last few years were the volatility has been far below average.

The good news is that 4% SWR has been ok in markets with far more crazy up and down swings then today.

I'd be perfectly comfortable retiring in Jan 19 with a $1 million or so.

The question of retiring EARLY with a million would depend on a bunch of factors, age, paid off house, cost of living etc.
But as others said if the last few months have made you nervous while you are still working, I guarantee you that they will make more concerned if you aren't working.

So I'd suggest that you need to decrease the amount of stock you are holding and/or get a bigger nest egg.

 

[joeea]

About feeling secure retiring with $1M, it of course depends on the person's age, and how close he is to SS eligibility.

At least as important would be the expected expenses in retirement.

 

[Dtail]

At least as important would be the expected expenses in retirement.

+1
plus do the calculators work or not after this loss?

 

[HI Bill]

I would suggest that the OP consider employing a bucket approach (having at least 3 years in expenses in cash/CDs). If the market does lose 30-50%, utilizing the cash first, while allowing the markets to stabilize offers some protection from sequece of returns risk. If the OP does not have enough assets to employ the bucket approach (e.g., a 100% equity allocation), retiring in this, or any market, is risky IMHO!

 

[tominboise]

I will be 59 in March of '19 (wife will be 57) and I am considering going. My net worth declined over the last month, but I haven't sold anything and so haven't booked any losses. I am using the time to move out my individual equities without killing my tax bill this fall. I may wait until June of 2020, as that is when my youngest graduates from high school.

 

[camfused]

I would suggest that the OP consider employing a bucket approach (having at least 3 years in expenses in cash/CDs). If the market does lose 30-50%, utilizing the cash first, while allowing the markets to stabilize offers some protection from sequece of returns risk. If the OP does not have enough assets to employ the bucket approach (e.g., a 100% equity allocation), retiring in this, or any market, is risky IMHO!

I'm retiring end of this year, and I will have several years in bucket 1 (cash, actually VMMXX), and put bucket 2 into stable value (making 2.9%) mid-summer this year, so I am not worried. Bucket 3 (all stocks) will be established starting next year via back-door Roth conversions from bucket 2.

Agree with others, that if you are properly configured, you should be able to retire regardless of market conditions.

 

[JustCurious]

Is anyone ready to FIRE in Jan. 2019 with less than $1 mil or $900k with no pension in this volatile market. thought it will be scary in this market, but there maybe some brave souls out there ready to FIRE at the beginning of next year with barebone funds.

The stock market has always been volatile. Always has, always will.

 

[travelover]

I retired in 2007 knowing full well we were headed for the biggest recession in many decades. I survived.

 

[Canoeboy]

Is anyone ready to FIRE in Jan. 2019 with less than $1 mil or $900k with no pension in this volatile market. thought it will be scary in this market, but there maybe some brave souls out there ready to FIRE at the beginning of next year with barebone funds.

Yep, my first day of retirement is January 2, 2019. ?. Has been planned since before the market turn. Not concerned about the downturn - I consider it a buying opportunity. FIRECalc still at 100%. Brave or stupid? Don’t really care as I’m fricken HAPPY!

 

[mtheulen]

Retired in September. I've never once considered a volatile market as a reason not to go.All of the calc's I did were more centered at my expenses, not at the ups and downs of the market

 

[pb4uski]

Is anyone ready to FIRE in Jan. 2019 with less than $1 mil or $900k with no pension in this volatile market. thought it will be scary in this market, but there maybe some brave souls out there ready to FIRE at the beginning of next year with barebone funds.

Just the fact that you view these markets as volatile and scary and requiring courage and that you have barebone funds tells me that you are probably not ready to retire.

 

[Midpack]

DW is retiring 1/31/2019, what the market is doing between now and then isn't even a remote factor in her decision. Asset allocation is important. But short term market fluctuations, no matter how severe, shouldn't be that significant over a 30-40 year retirement plan. FIRECALC includes every market correction since 1871 IIRC, so we know how those affect retirement portfolios historically - that's all we have to work with, no one has a crystal ball.

 

[COcheesehead]

When I pull the trigger at the end of 2020, I will have so much short term insulation from the market it can do whatever it wants.

 

[imoldernu]

The earlier one retires, the more time to go back and recover, if something goes wrong.

 

[ExFlyBoy5]

The VIX is currently at 17.28 and that is a VERY long way off of the 40-45 we saw back in '08 and '09, so the volatility is pretty darn low.

 

[Oakster]

Many many folks are brave enough. I think if someone is retiring in the next few months they probably have their asset allocation such that they have a few years of expenses in something a bit conservative so a volatile market can be ridden out.

It wouldn't stop me at all.

I like this response and it is similar to my thoughts. I would want to have a CD ladder available to cover market instability. The last think I would want to do is hit my nest egg while it was in a decreased state. Having living expenses in a 3 year CD ladder would prevent that and provide the cushion necessary to survive a market pull back rather well.