With stock market crash, can you still retire?

[BackHometown]

Hi, I have planned to retire in the next 5 years until the crash of stock market this year.



Because I was greedy or too eager to grow the asset, I have invested all the 401k/IRA in QQQ, which dropped a lot (20% or around $500k)



It seems that I can't meet the financial goal. Have to work a few years more.


Have learned the hard lesson. S&P500 should be the best choice with bonds.

 

[W2R]

Sorry to read that you are having to delay your retirement due to the stock market.

This is my 13th year of retirement, and I'm 74 years old, so I suppose I am firmly committed to staying retired at this point.

I have social security and mini-pension, and a few hundred/month regularly from the TSP, so I haven't had the need or desire to touch my (mostly taxable) nest egg in several years.

It helps that I paid off my house and entered retirement completely debt free. But others say they prefer to have a mortgage so that's a frequent bone of contention on this forum. I also have no dependents and that helps too.

 

[audreyh1]

By the way, this year wasn’t a crash. That was simply a bear market which are not that unusual. A crash is a stock market drop of 30% or more over a relatively short period of time like a few months.

Most recently we had a stock market crash in 2008 due to the financial crisis, and a brief crash in 2020 due to the coronavirus pandemic.

 

[Aerides]

Well, 2 years ago you were targeting 7-10 years. Now that's still 5-8, which is still a long time in terms of how your portfolio can perform. The best thing you can do is focus on your asset allocation going forward, and target a date when you are a little closer. A lot can happen over 2 years, as you've seen, but a lot more can happen in 5.

 

[aaronc879]

Hi, I have planned to retire in the next 5 years until the crash of stock market this year.



Because I was greedy or too eager to grow the asset, I have invested all the 401k/IRA in QQQ, which dropped a lot (20% or around $500k)



It seems that I can't meet the financial goal. Have to work a few years more.


Have learned the hard lesson. S&P500 should be the best choice with bonds.

How long have you been invested in QQQ? QQQ has done better than SPY over the last 5 years. QQQ is not a good place to be if you are afraid of volatility but should be good long term.

 

[BackHometown]

I was mainly on SP 500 before 2021 and gradually moved all the portfolio to QQQ due to greedy. So I did lose a lot of money.



I had very little asset back to 2008 so this is the first time I feel the tough lesson. Always should remember to diversify the investment.


With current inflation and high interest rate, it seems that QQQ may not recover within a few years.

 

[aaronc879]

I was mainly on SP 500 before 2021 and gradually moved all the portfolio to QQQ due to greedy. So I did lose a lot of money.



I had very little asset back to 2008 so this is the first time I feel the tough lesson. Always should remember to diversify the investment.


With current inflation and high interest rate, it seems that QQQ may not recover within a few years.

Yeah I can imagine times are going to be difficult for people who never really had any investments before around 2010. They may thing the market only goes up when in reality it goes down fairly often historically speaking. You have to be willing in ride the downs as well as the ups. Long term, stocks should still be the best option. Remember that $500K you "lost" was just a loss on paper. You don't actually lose it until you sell then you only lose the relatively small amount you sell for that year. The next year it may be back up.

 

[BackHometown]

My husband and I are still working with decent income to handle the current bad stock market. With high inflation that may persist for a while we don't know where to invest. During 1970s high inflation period, inflation adjusted stock price was down, and CPI adjusted housing price was flat/down as well. Inflation will make it more difficult to be ready for early retirement. We are scared to invest in stock market and we can't buy investment properties because of the high rate.

 

[foxfirev5]

First, I agree that there was no crash. Second, evaluate your plan. It's not that tough. Personally I use an LMP that first establishes my needs. TIPS/STRIPS/ Series I Bonds and T Bills for the next 17 + years. I almost went to bonds mutual funds earlier this year but am grateful I stuck to my ladders. It's simple for me and gives me more control over future income. The rest stays in equities. Whatever percentage that may be. However there are many paths.

 

[OldShooter]

Yes. No crash. Just a burble and the market will recover. There is a crash in the future though. There always is. And historically the market has always recovered. Sometimes quickly, sometimes not so quickly. Hence, sufficient allocation to non-equities aka fixed income. We haven't sold any equities in over a year despite building a new house and paying cash.

I suggest that you ditch QQQ however. History says that sector bets are risky and total market investment is the winning strategy. Any quilt chart will show you that betting on sectors can be hazardous to your wealth. https://www.callan.com/periodic-table/

 

[RunningBum]

I was close to retiring in 2000 when the dotcom bubble burst. I don't recall my asset mix, but it was heavy in individual tech stocks. It delayed my retirement by years, but it taught me about diversification and broad index funds. It hurt at the time but I was already telecommuting, and after a few years I did OMY for a few years of part-time hours and pay. It gave me a lot of cushion and I sleep without worry about finances. I regret having to work extra years, but it was good to learn my lessons while I was still employed.

 

[MC Rider]

Yes, we are on the way out the door.
Cash in those real estate chips and buy for cash in a lower cost area.
We should be in good shape.
I see my last job tomorrow.

 

[Montecfo]

If this downturn killed your retirement plans, it is a blessing in disguise. Market declines of 10-15 percent are pretty common usually, though less so in what I call the "Fed Era", since 2008. So it just says you are not ready yet. Good to find out early.

Three words: Stay fully invested.

 

[daylatedollarshort]

We learned we had more in stocks than we were comfortable with in 2008, and have been paring down since. We use an asset matching strategy now and have a high allocation to TIPS, which lets us sleep better. We also really worked on optimizing our expenses, too, like cable bills, insurance deductibles, making our own cleaning supplies, etc. Hundreds of small expenses like that really added up. We ended up needing a lot less in retirement funds than we originally thought we would need.

 

[DrRoy]

Have learned the hard lesson. S&P500 should be the best choice with bonds.

Just FYI, long term bonds are down 10+% due to the rise in interest rates. If you hold bonds outright, you hold them to maturity, and they do not default, then they will still provide the expected return from the time of purchase.

 

[Time2]

You shouldn't feel to bad, the S&P is still down 13% from it's peak, you say you are down 20%. Beta of the S&P is 1, QQQ is 1.09. Theoretically, QQQ should do better than the S&P, if the market rises.
I've recently become interested in the QQQ, or Nasdaq 100, because of it's out performance in better times.
Anyone know what fund tracks QQQ or Nasdaq 100 at Vanguard?

 

[ShokWaveRider]

By the way, this year wasn’t a crash. That was simply a bear market which are not that unusual. A crash is a stock market drop of 30% or more over a relatively short period of time like a few months.

+10 Exactly. I would hardly call ~3100 and 3900 a crash. 20k and 2000 would be a crash. We are still looking forward to that.

 

[BackHometown]

The stress is pretty high when 100% of portfolio is in QQQ and has 20% down. I can't even imagine about 30%+ down. It is too late to sell it and switch to Bond or SP500. I have to hold it and hope the market will be back next year.



This is very tough lesson for me and will not do same in the future.

 

[OldShooter]

The stress is pretty high when 100% of portfolio is in QQQ and has 20% down. I can't even imagine about 30%+ down. It is too late to sell it and switch to Bond or SP500. I have to hold it and hope the market will be back next year.

This is very tough lesson for me and will not do same in the future.

Yes. Life is like school except that you get the test first and then the lesson.

You don't "have to hold it" though. The behavioral economists* have shown us that we humans have evolved to be risk averse. This translates into bad ideas like "I'll hold it until it gets back to where I bought it, then I will sell." and the sunk cost fallacy. Subject to tax considerations, now is as good a time as any to switch to a broad US market fund seasoned to taste with a broad international fund. (We just hold VTWAX and own the world.)

*A good read for any investor: "Misbehaving" by Richard Thaler

 

[single2019]

Anyone know what fund tracks QQQ or Nasdaq 100 at Vanguard?

VUG comes close; but has >200 stocks

 

[pacergal]

OP--perhaps some reading/learning may help? bogleheads forum has a wiki that has several books on investing which may help.
If you are unable to tolerate the volatility of 100% stock, then it is time to look at your desired asset allocation for the future.
Investments will always go up or down! You have to find the allocation that allows you to "sleep at night" no matter what happens.

What are your investment goals?
What income do you need for your retirement budget?

Take a deep breath, Read up on some books and feel free to come back and ask questions of the many fine folks here.
There are some very savvy investors on the site who are willing to help. They have for me.

 

[Gumby]

The 2008 Great Recession pushed back my retirement plans by five years. Life happens, and we do what we must to deal with it.

 

[cyber888]

How old are you ? If you're still young, you've got a lot of time to catch up.
Me, I'm retiring next year, but have cash for more than 6 years to weather this market and will take SS in 3 years.

Hi, I have planned to retire in the next 5 years until the crash of stock market this year.



Because I was greedy or too eager to grow the asset, I have invested all the 401k/IRA in QQQ, which dropped a lot (20% or around $500k)



It seems that I can't meet the financial goal. Have to work a few years more.


Have learned the hard lesson. S&P500 should be the best choice with bonds.

 

[COcheesehead]

If a bear market derails your plans, you need a better plan.

 

[JohnC12]

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.