retiring into a crisis--how would you handle?

[tmitchell]

I was seriously considering a sabbatical or even retiring later this year, but with the current environment I'm not sure anymore.

In some ways this is a perfect moment to review my risk tolerance and model out how I would need to adjust for a challenging sequence of return!

Prior to Covid-crash, Firecalc had me at 98.6%--now I'm at 80%. It's got me wondering, if I had pulled the trigger in, say, January how would I need to proceed?

I'm curious how those of you currently retired are navigating now that we've had such a severe drop?

Also, do you take money annually, quarterly, or monthly? How would you manage 2020 as your first year of retirement?

 

[wmc1000]

After 3 years in our NW is about equal as of today as it was then. However we are fortunate that our SS and dividend income is greater than our expenses. So no panicking and are just staying home and taking each day as it comes.

 

[Live And Learn]

Ask yourself a couple of questions (which you can answer here also):

1. How would you feel if your portfolio declined another 20% ? Could you sleep at night ?

2. What was your withdrawal rate at the portfolio high ?

3. How much of your budget is discretionary and would you feel "cheated" if you had to cut all that spending from your life ?

 

[Toocold]

Stopped working 6 months ago. We have multiple passive incomes, including rentals, dividends and deferred compensation to cover our annual expenses many times over. Plus we have enough cash to cover 2 years of spend, including $25k budget in travel expenses. I am entering this with some sense of curiosity on how well the fortress holds -- outside of world wars (in which the US loses), dramatic uptick in death rates and/or hyperinflation, I don't see a need to worry.

Despite this, I know I'm going to sense some queasiness when I update my quarterly net worth statement next week.

 

[COcheesehead]

I am retiring in about 3 months. I have a lot of cash, pretty stable passive income streams and a realistic budget.
I also built a spreadsheet the calculates in real time the multiple we have in expenses. I run it everyday. It reassures me in scary times. Right now we still have over 30x our planned retirement budget - including travel and fun.

 

[jebmke]

I retired in December, 2007. Despite not having any insight into a possible downturn, I had previously put us on a glide path from ~70/30 equity to 40/60 equity. I wanted to make sure I didn't think about things too much in the early years and ruin the fun. It was going to be 10 years before my pension started so we were living off our own assets. Then as now, I sell whatever is going to put us closer to our target allocation. I more or less decided last year to never sell equity again since our tax losses ran out and our risk profile changed with the start of the pension and SS. I will re-balance on the downside but not on the upside. I have never held cash and only convert assets to cash to pay the next month's bills.

 

[Sunset]

I was seriously considering a sabbatical or even retiring later this year, but with the current environment I'm not sure anymore.

No kidding....

Prior to Covid-crash, Firecalc had me at 98.6%--now I'm at 80%. It's got me wondering, if I had pulled the trigger in, say, January how would I need to proceed?

Go back to work. Lucky you didn't pull the trigger. At 80% I'd keep working, and by making investment contributions (401K) you are going to make a killing when it goes back up..

I'm curious how those of you currently retired are navigating now that we've had such a severe drop?

Worry.... worry.....worry....
I'm not worried about the drop we had, we can survive it fine. even if it takes 5 years to come back.
What worries me, is what if this unprecedented event (I admit have not researched 1918 pandemic stock wise) is worse than the Great Depression and everything falls to less than 5% of value. Unemployment goes to 30%, and it takes 20 years or more to come back...

Also, do you take money annually, quarterly, or monthly? How would you manage 2020 as your first year of retirement?

I always take my $$$ out as a lump-sum, Thankfully did it last Dec, and then kicked myself as the market jumped up another 3%, little did I know... So glad I pulled out that cash before it all started, by selling a little stock.

 

[Dtail]

I was seriously considering a sabbatical or even retiring later this year, but with the current environment I'm not sure anymore.

In some ways this is a perfect moment to review my risk tolerance and model out how I would need to adjust for a challenging sequence of return!

Prior to Covid-crash, Firecalc had me at 98.6%--now I'm at 80%. It's got me wondering, if I had pulled the trigger in, say, January how would I need to proceed?

I'm curious how those of you currently retired are navigating now that we've had such a severe drop?

Also, do you take money annually, quarterly, or monthly? How would you manage 2020 as your first year of retirement?

Bolded by me - Our living expenses are supported by SS and Investments.
The investments are taken in lump sum from the TIRA (converted it to cash back in Dec 19 thinking about the high market then by chance) and then keep the cash in a high yield bank account and fund it to my checking account monthly.

 

[fh2000]

I learned a lot from this forum, so when we prepared for our retirement in Jan, 2019, we made sure we had 3 years of expense in cash, and also only pull the trigger when WR is 3.0%.

Today, after such dramatic drop, my WR is more like 3.7% now. If DOW goes down another 20%, we will still be fine.

 

[COcheesehead]

I learned a lot from this forum, so when we prepared for our retirement in Jan, 2019, we made sure we had 3 years of expense in cash, and also only pull the trigger when WR is 3.0%.

Today, after such dramatic drop, my WR is more like 3.7% now. If DOW goes down another 20%, we will still be fine.

Good job, grasshopper.

 

[Perryinva]

Only retired 10 months, at 61, but pensions and SS easily (will) pay for everything, so even in the absolute worst case scenario (total loss of invested portion of portfolio) we would still be just fine, so not really comparable to a portfolio dependent FIRE. Portfolio is still larger than it was 10 months ago. Now that it is no longer a joke that “this time it really is different “, portfolio FIRE dependency has to be studied a lot more carefully. I know I would postpone If at a younger age.

 

[DrRoy]

After 3 years in our NW is about equal as of today as it was then. However we are fortunate that our SS and dividend income is greater than our expenses. So no panicking and are just staying home and taking each day as it comes.

+1 if I adjust for what we have withdrawn for spending.

Ask yourself a couple of questions (which you can answer here also):

1. How would you feel if your portfolio declined another 20% ? Could you sleep at night ?

2. What was your withdrawal rate at the portfolio high ?

3. How much of your budget is discretionary and would you feel "cheated" if you had to cut all that spending from your life ?

1. Not happy but handling it better than 11 years ago. The absolute level is 4X higher, starting AA 58 instead of 82, and beta of the equities is 1 instead of ~1.2.

2. 2.7%, but about half was to fund remodeling projects and travel.

3. Not so bad, with the house fixed up and a new deck and gazebo.

 

[target2019]

I learned a lot from this forum, so when we prepared for our retirement in Jan, 2019, we made sure we had 3 years of expense in cash, and also only pull the trigger when WR is 3.0%.

Today, after such dramatic drop, my WR is more like 3.7% now. If DOW goes down another 20%, we will still be fine.

Thanks for bringing up the "3 years in cash" ideal. It may turn out to be the most valuable lesson learned here, no matter where you are on the retirement path.

 

[Dawg52]

I retired in early 2007 just a little before the turmoil. If it had happened before I retired I would have probably worked another year or two for peace of mind. But it all worked out as the markets bounced back fairly quick. How long will it take for the market to bounce back this time? Who knows.....

 

[REWahoo]

How long will it take for the market to bounce back this time? [-]who knows.....[/-] I hope to survive long enough to find out.....

fify

 

[freedomatlast]

I didn't retire until Firecalc results indicated that we could spend 2 to 3 times what our average spend was over the last three years. Now I'm glad we have that cushion.

 

[Fermion]

If we look like we are really running out of money, my wife has a foot in the door at SpaceX.

It would require moving though, but if we had to go back to work, SpaceX is the one place I would choose.

 

[Tiger8693]

Stopped working 6 months ago. We have multiple passive incomes, including rentals, dividends...

Dividends will likely change drastically

 

[Fermion]

Dividends will likely change drastically

As will rentals, unless they are to tech workers or something.

 

[gauss]

DW joined me a year in retirement early last year. She was age 53 at the time.

Our biggest concern about all this is if her former company makes it through without bankruptcy.

She has a DB pension from them that is fairly generous to ER's (yet not inflation adjusted) that pays most of our expenses. If the company were to go bankrupt and jettison the DB pension plan to PBGC, we would take quite a haircut -- between PBGC maximums that are scaled down based on age and the PBGC rule that nothing beyond what you would have gotten at age 65 is guaranteed (DW currently has an early retirement supplement until age 62).

-gauss

 

[irishgal]

I’m trying to decide what to do at this point. FIRE calc had me fine unless a 50% market drop so I fully expect to be “not fine”. Thinking of going ahead and selling 3 years worth of cash and parking it maybe in CDs. Oh and finding a damn job.

 

[ugeauxgirl]

I don't think I'd sell 3 years of cash now.

 

[irishgal]

I don't think I'd sell 3 years of cash now.

Yeah, after I took a deep breath I decided more like 8 months would be good.

 

[Dawg52]

fify

True dat.

 

[HawkeyeNFO]

I was looking at FIRE'ing this summer, but now I'll stay put. Besides, one reason to RE was to spend more time at the new house fixing things up how I'd like. With the new policies due to the [mod edit] COVID-19 virus, I'm now telecommuting half the time anyways, so I look at it as getting paid to stay home. In addition, traveling is less of an option for 2020, which means I'm spending less than I thought I would. Instead, I'll be adding to the cash pile with the 2 paychecks each month, and buying funds on the cheap.