ERed and Edgy

[returnofbabyape]

Just thought I would check in after leaving 3 months ago and tell you that I have ERed. It is much more an emotional issue for me than I imagined. I'm looking forward to reading Bob C's book because i definitely still want to work -- but live more.

I was always able to deal with the volatility in the market when I was working because I always added new cash to the kitty each month. Now I'm wondering if I picked the wrong year to start . In any case I am sticking to my investment plan. I still can't relax or get used to the idea that I don't have to look for work. At the same time I think I am worrying about the nestegg way too much.


It's like I am going through a detoxification or withdrawal of some sort and eventually once all the poison is out of me I will be able to focus on the next chapter of my life.

 

[AltaRed]

I can identify with the uncertainty part having retired end of Apr 06, just in time for a market correction and market volatility. A bit unnerving to say the least.

The best way I find for coping with that is to trust the FIRECALC outputs that say this cycle too will pass, and to stick with your SWR plan. Another good thing is NOT to look at the markets each day and do a portfolio update to check on net worth each evening.

 

[frayne]

It has taken me a little over a year to decompress from the work treadmill. I am a recovering workaholic, still taking it one day at a time. About once a week I play golf with some of my old work buddies. After listening to thier conversations about how things are going, I have no regrets about taking ER and enjoying life.

 

[Kitty]

I retired Dec '05', it has taken a while to adjust to not being employed. I attacked every issue as though I were still working. Blah, I was still holding on to my work persona. Slowly I have been letting go of the past at least I hope I am. I have been disappointed to find that the folks I worked for and with have not kept in touch. Looking back I know why, they are in such a stressful situation they have no time for such touchy feely things.

For some of us this retirement takes a while to get used to, we have to let go of some behaviors and learn some new ones. Hopefully the new behaviors will serve us better than the previous behaviors.

I too was a workaholic and it is not a good way to live. Living that way for a long time usually means it will be hard to give up those feelings, as I have found out.

One just has to give this new way of living time to become your ordinary way of living. The old way will not work as well.

Now, I could not see myself going back to work in the traditional sense and I am happy with that thought .

Best wishes,
Kitty

 

[Rich_by_the_Bay]

There's a good lesson here.

Many FIRE strategies include a cash and near-cash bucket to cover anywhere from 2-7 years anticipated income. Without thinking about it until now (still 3 years from FIRE), I guess I was just going to gradually carve that out of my nest egg during the first couple years of retirement as kind of an allocation thing.

But from this thread, I can see that starting to build this buffer long before FIRE may be wiser. Sure it takes money off the table sooner, but you can take your time and build it by selling off winners at your leisure (and/or start DCAing into it 3-5 years in advance).

That pretty much eliminates the risk of the dreaded big bear market right after you retire, and probably can reduce the anxiety described by the OP. It would be nice to know on day 1 of retirement that you don't have to even think about how the market is doing for years.

 

[SteveR]

There's a good lesson here.

Many FIRE strategies include a cash and near-cash bucket to cover anywhere from 2-7 years anticipated income. Without thinking about it until now (still 3 years from FIRE), I guess I was just going to gradually carve that out of my nest egg during the first couple years of retirement as kind of an allocation thing.

But from this thread, I can see that starting to build this buffer long before FIRE may be wiser. Sure it takes money off the table sooner, but you can take your time and build it by selling off winners at your leisure (and/or start DCAing into it 3-5 years in advance).

That pretty much eliminates the risk of the dreaded big bear market right after you retire, and probably can reduce the anxiety described by the OP. It would be nice to know on day 1 of retirement that you don't have to even think about how the market is doing for years.

It would seem the prudent approach in times like these.

We have about 3 years basic living expenses (no frills) in cash-like accounts (MM, CD, funds). We could squeek out another year if we were really frugal or if we sold off an other fund. That would give us 4 years of basic living expenses and would not have to do too much damage to our other investments in a down market period.

If the market continues to go down the tube we would need to do some major life changes to keep from eating through our investments too fast.

 

[REWahoo]

There's a good lesson here.

Many FIRE strategies include a cash and near-cash bucket to cover anywhere from 2-7 years anticipated income....

But from this thread, I can see that starting to build this buffer long before FIRE may be wiser....

Absolutely. When I retired a year ago I had a little more than 3 years living expenses in cash, mostly in after tax $. I didn't give much thought to the wisdom of my decision until the recent market gyrations. Having that buffer has allowed me to sleep peacefully knowing I don't have to concern myself about selling mutual fund shares for at least two more years, probably longer if necessary.

 

[AltaRed]

I agree. The one thing I did not mention in my first post on this thread is that DW and I started off retirement with a cash (ING, T-bills) position that will keep us whole for at least 2 years without having to touch capital (and perhaps even longer). But notwithstanding that, it is still somewhat unnerving to see a market correction immediately upon retirement. I think it would be pure hell for me to not have been in that cash position when I walked out the door.

 

[spideyrdpd]

Hi
Is the consencus to have the money in cash or money in something thats fixed and throws off a certain % of what you would need in a fixed type account?
Although with MM's paying 5-6 % maybe its the same thing ?

 

[AltaRed]

Hi
  Is the consencus to have the money in cash or money in something thats fixed and throws off a certain % of what you would need in a fixed type account?
Although with MM's paying 5-6 % maybe its the same thing ?

My definition of cash is that it is liquid enough to crystallize without capital loss when needed on a rolling forward 12 month basis. So that can be a combination of an ISA (available on 24 hr basis), MMF (similar), T-bills of varying durations (months) and CDs of varying durations (months). Return on investment is not relevant for definition of cash, but it certainly can be managed to optimize return.

I define Fixed Income as of longer than 1 year duration and which can (but not necessarily) have risk of capital loss. A ST bond fund has risk of capital loss and is therefore fixed income.

 

[returnofbabyape]

...another dive in the markets. I'm going to stick to my SWR plan but it is really interesting to me that my risk tolerance is much lower in ER as opposed to all those years prior when I thought I was learning how much pain I can take. I am just going to close my eyes and come back in the Fall. The valuations are actually looking pretty good to me so I think it will come back but who knows. By the way, i also have plenty of cash and it stills bugs me to see the market gyrations. That's the price I pay for being in the market I suppose.

 

[haha]

...another dive in the markets. I'm going to stick to my SWR plan but it is really interesting to me that my risk tolerance is much lower in ER as opposed to all those years prior when I thought I was learning how much pain I can take.

This makes sense to me. The larger your annual savings plus cash relative to your assets at risk, the less annoying or frightening a bear market should be.

However, if you are retired and dis-saving, it is rational to be wary of bear markets.

There is a real world switch that is thrown the day you retire- unless of course you have a good DB pension. It is prudent to be aware of this switch, both intellectually and on a feeling level

Ha

 

[unclemick]

Yep

Lead sled dog(Lifestrategy mod) was down at point -16.5% or so in the last little 2000-2003 dip. I had my pucker factor pre-estimated at -22% based of a swag of a 73-74 repeat - and so did nothing.

Twinges yes - but avoided the pucker.

heh heh heh heh - have faith - Mr Market will test you from time to time.

 

[returnofbabyape]

....and it just keeps going down. Triple digit losses on every continent except antartica and that's undergoing its own meltdown. Looks like the oil and middle east situation is just going to keep getting worse until it gets better.

 

[AltaRed]

And this is the year of mid-term elections which I understand is typically not good for the markets through the end of this year. But should be good buying ops for all you disciplined asset allocators and re-balancers.