With stock market crash, can you still retire?

JohnC12 said:
You stated that your portfolio has dropped 20% and that you’ve lost $500k? So you had $2.5M sitting on one egg through your 401k? Is that correct? Just want to make sure I understand correctly.
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I would still be able to retire with that... And get a 2X bigger check than I do now...
 
I was retired in 2008 and had too much in risky investments. I lost sleep and thought I was going to have to go back to work but I did not, I just tightened my belt, and held on. It all recovered over time. Once my assets recovered I diversified and now hold a big chunk of cash in CDs etc. and sleep fine. My advice to the OP would be to hold until things recover and then reassess risk and diversify.
 
harllee said:
I was retired in 2008 and had too much in risky investments. I lost sleep and thought I was going to have to go back to work but I did not, I just tightened my belt, and held on. It all recovered over time. Once my assets recovered I diversified and now hold a big chunk of cash in CDs etc. and sleep fine. My advice to the OP would be to hold until things recover and then reassess risk and diversify.
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Lots of talk around here about "diversify until you sleep well." And I don't disagree. But that implies that a person's tolerance for volatility is fixed and can't be changed. I don't believe that is true. As @harlee observes: "It all recovered over time." As people begin to understand this, IMO their volatility tolerance can and should increase, at least to the point where they aren't cowering in fear every time the market takes a bounce.
 
OldShooter said:
Lots of talk around here about "diversify until you sleep well." And I don't disagree. But that implies that a person's tolerance for volatility is fixed and can't be changed. I don't believe that is true. As @harlee observes: "It all recovered over time." As people begin to understand this, IMO their volatility tolerance can and should increase, at least to the point where they aren't cowering in fear every time the market takes a bounce.
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Well it did all recover over time. But I never want to do that again--lose a bunch of sleep over my investments. So now I am much more conservative and hold a bunch of cash. Sure I miss out on some gains when the market is up but I sleep so much better when the market is down. I have learned what I can tolerate and invest accordingly.
 
harllee said:
Well it did all recover over time. But I never want to do that again--lose a bunch of sleep over my investments. So now I am much more conservative and hold a bunch of cash. Sure I miss out on some gains when the market is up but I sleep so much better when the market is down. I have learned what I can tolerate and invest accordingly.
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Of course. But I'll bet that from what you've learned you are at least a little bit more tolerant of volatility. DW and I have been riding the waves since the '87 excitement and each time a wave comes around it is easier to ignore it.
 
Look back at treasury interest rates. In August 1981, treasury interest rates were 14.63%. We seem to focus on the stock bear markets. June 2007 they were 5%.

If you bought a 5-year treasury in August 1981 for 5 years for $500K, after 5 years you'd have $991k. Hindsight is 20/20. Who knew the stock market would go up as it did from 2008-2021?

Everyone complains about the stock market from 1970-1990. Look at the treasury interest rates from 1970-1990. Thus, diversity matters. Although over the past 10 years, our bond fund hedge plan did not work out so well. The average over 10 years brought us < 3%, and we reinvested our dividends.
 
One reason I chose to take SS at 70 was to be able to ride out a big market crash that went on for years. The extra money - indexed for inflation - is nice at such a time. YMMV.
 
I retired in 2019. Back then they were calling for crash of the bull market. I ran multiple scenarios and concluded that it would take a crash of 47% before it would affect me. Run your numbers.
 
harllee said:
Well it did all recover over time. But I never want to do that again--lose a bunch of sleep over my investments. So now I am much more conservative and hold a bunch of cash. Sure I miss out on some gains when the market is up but I sleep so much better when the market is down. I have learned what I can tolerate and invest accordingly.
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Good for you!
 
Man oh man, the Dow is still dropping further today! Down 372 points more, so far today.

:eek:

I am SO GLAD that I have SS and my mini-pension and a paid off house and car, so I don't have to sell my mutual funds for living expenses right now. Hang on, you all, don't sell low.

"I'll think about that tomorrow. After all, tomorrow is another day."

-Scarlett O'Hara in 'Gone With The Wind', by Margaret Mitchell​
 
Gumby said:
The 2008 Great Recession pushed back my retirement plans by five years. Life happens, and we do what we must to deal with it.
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Same story here. I semi-retired (to 60% part time) in 2007 planning to fully retire at 49-50 in 2010. We all know what happened next. Though quite unpleasant at the time, I now regard the crash of 2008 and the Great Recession that followed as a gift. They forced me to get my financial house in order. When I finally did retire in 2015 I was on much more solid footing and mini-crashes like the current one (or even not-so-mini crashes) won't really affect me.
 
Chuckanut said:
One reason I chose to take SS at 70 was to be able to ride out a big market crash that went on for years. The extra money - indexed for inflation - is nice at such a time. YMMV.
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Me too--took SS at age 70 and between DH and I we have enough SS to live on for the rest of our lives if we watch our spending. I think taking SS at age 70 was on of the smartest moves I ever made.
 
harllee said:
Me too--took SS at age 70 and between DH and I we have enough SS to live on for the rest of our lives if we watch our spending. I think taking SS at age 70 was on of the smartest moves I ever made.
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Just a question harlee. Wouldn't taking SS at an earlier age work the same way?
 
harllee said:
Me too--took SS at age 70 and between DH and I we have enough SS to live on for the rest of our lives if we watch our spending. I think taking SS at age 70 was on of the smartest moves I ever made.
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That is still our plan. I'm 63. DW is 66 soon to be 67. So far so good:)
 
street said:
Just a question harlee. Wouldn't taking SS at an earlier age work the same way?
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My SS payment at age 70 is substantially more than what I would have gotten at age 62 or 66. The amounts at age 62 or 66 would not have been enough for me to live on. I guess I could have taken the SS payment I got at age 62 or 66 and invested it but if I had invested it in the stock or bond market a big chunk of it would be gone now. It may be psychological but it is a large comfort to me to know I can live off my SS no matter what happens in the markets.
 
street said:
Just a question harlee. Wouldn't taking SS at an earlier age work the same way?
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We took pensions at 55 and SS at 62 and they cover most of our expenses. SS is designed to be actuarially neutral. If we had waited until 70, we would have to spend down the portfolio in the mean time and have less portfolio income. It is best to run the number for your individual situation and see what works best. For us there wasn't much difference between the various claiming ages.
 
harllee said:
My SS payment at age 70 is substantially more than what I would have gotten at age 62 or 66. The amounts at age 62 or 66 would not have been enough for me to live on. I guess I could have taken the SS payment I got at age 62 or 66 and invested it but if I had invested it in the stock or bond market a big chunk of it would be gone now. It may be psychological but it is a large comfort to me to know I can live off my SS no matter what happens in the markets.
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I tend to think the same way. The big issue for me is uncertainty. If I knew this bear market would last two years, I could coast through it. Heck, I could make a pile of money! But, it could be two years or ten years. Who knows? After the bear market of the 70's and 80's, it took over a decade for the market to return to breakeven in real terms. :eek:

So, yes, having a secure source of income - COLA'd by Uncle Sam - to help put food on the table, keep me clothed and housed, and even allow for some frivolity at times, that is a good feeling.
 
Chuckanut said:
I tend to think the same way. The big issue for me is uncertainty. If I knew this bear market would last two years, I could coast through it. Heck, I could make a pile of money! But, it could be two years or ten years. Who knows? After the bear market of the 70's and 80's, it took over a decade for the market to return to breakeven in real terms. :eek:
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And then we can look at Japan and see what happened with their bear market....30 years and still not fully recovered.
 
W2R said:
Man oh man, the Dow is still dropping further today! Down 372 points more, so far today.

:eek:

I am SO GLAD that I have SS and my mini-pension and a paid off house and car, so I don't have to sell my mutual funds for living expenses right now. Hang on, you all, don't sell low.
"I'll think about that tomorrow. After all, tomorrow is another day."

-Scarlett O'Hara in 'Gone With The Wind', by Margaret Mitchell​
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Easier said than done for those of us who don't have pension, SS and so on. At least my house is paid off. :)

I put what I thought was way too much in cash when I retired in order to get us to SS time. It is coming in handy, and is kind of fun to buy my T-Bill of the week.

When we both retired in '18, I expected a 30% drop in market and felt we could handle a 50% drop. What I didn't see coming was a moribund bond market (as part of 401k index funds) and raging inflation.

Still think we can handle it, and look forward to SS going up with inflation, but man, this is a test.
 
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JoeWras said:
Easier said than done for those of us who don't have pension, SS and so on. At least my house is paid off. :)

I put what I thought was way too much in cash when I retired in order to get us to SS time. It is coming in handy, and is kind of fun to buy my T-Bill of the week.

When we both retired in '18, I expected a 30% drop in market and felt we could handle a 50% drop. What I didn't see coming was a moribund bond market (as part of 401k index funds) and raging inflation.

Still think we can handle it, and look forward to SS going up with inflation, but man, this is a test.
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Good! Glad your house is paid off, that you have a good sized stash of cash if needed, and that are thinking that you can probably handle it. I'm guessing that if this doesn't turn around pretty soon, it's going to be a challenge for many. I think I can handle it too, for a few years, but so much depends on how severe the effects of inflation become and how long this continues.

On the other hand, brainstorming and ingenuity have got many of us through a lot of other types of challenging situations in the past.
 
W2R said:
Good! Glad your house is paid off, that you have a good sized stash of cash if needed, and that are thinking that you can probably handle it. I'm guessing that if this doesn't turn around pretty soon, it's going to be a challenge for many. I think I can handle it too, for a few years, but so much depends on how severe the effects of inflation become and how long this continues.

On the other hand, brainstorming and ingenuity have got many of us through a lot of other types of challenging situations in the past.
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We have no pensions and only SS plus savings to get us along. With a paid off house, we should have no trouble as long as we don't live too much longer. :)

I did move out of our one bond fund and *most* of the equities early this year and have moved those funds into fixed income (CDs, T Bills, I bonds, Corporate bonds, municipal bonds, etc.) and these will provide ongoing funds.

It's just a matter of dealing with ongoing inflation which will persist for the next couple of years.
 
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harllee said:
My SS payment at age 70 is substantially more than what I would have gotten at age 62 or 66. The amounts at age 62 or 66 would not have been enough for me to live on. I guess I could have taken the SS payment I got at age 62 or 66 and invested it but if I had invested it in the stock or bond market a big chunk of it would be gone now. It may be psychological but it is a large comfort to me to know I can live off my SS no matter what happens in the markets.
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Thanks, Harllee.

If SS would have covered your expenses except for some unexpected events, you might have taken it sooner I'm guessing.

It really does come down to each person how they want to do it.
 
daylatedollarshort said:
We took pensions at 55 and SS at 62 and they cover most of our expenses. SS is designed to be actuarially neutral. If we had waited until 70, we would have to spend down the portfolio in the mean time and have less portfolio income. It is best to run the number for your individual situation and see what works best. For us there wasn't much difference between the various claiming ages.
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For us we took it at 62 haven't had to touch any investments and don't see we will ever have to.

There again my plan was to have enough in CD's and savings account to never have to touch investments as long as I live. So, taking SS at 62 was a no brainer for us and I don't need a larger SS check when I get older. I will have way more than we could ever spend just from RMD and will just reinvest all those funds.

Everyone has a different way of think about it and no right way or wrong way IMO.
 
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