Affluent Americans rush to retire - Article

[Oz investor]

Yes, they assumed that retirees would liquidate their portfolios directly upon retiring. Quite weird assumption, actually, and it didn't happen that way. You would expect retirees to draw on their investments over a long period of time.

But I remember dire warnings of massive selling ahead.

some fund managers worked on that assumption ( and maybe still do ) down here there can be a BIG focus on ( clients ) assets under management and 'total returns ' , which last year MOSTLY translated to capital gains ( or losses ) as dividend payouts were often slashed savagely ( or withheld completely )

i am HOPING to never draw-down on the actual portfolio but to use the dividend/interest revenue to fund my later years , so far that dividend income is in excess of my needs , so am reinvesting it where i sensibly can , but i can't expect that to happen if inflation explodes

BTW fund managers get fees for money coming in AND OUT ( but i never hear much about static accounts . aka no new money coming in .

so those 'warnings' may have been fund manager projections , assuming the clients would cash out and spend recklessly that nest egg at the end of their working life

 

[Closet_Gamer]

This is positive, in a sense, that one can have such direct communication with one’s boss. At the same time, isn’t it strange that two adults ever need to go at it “hammer and tongs” at all? The higher I rose in the organization, the more I had to confront people on behalf of my team, whether HR bureaucrats, underhanded or oblivious program managers who did something toxic to me or us, or my bosses. Or, I was increasingly the recipient of incoming harshness from others for one thing or another that my team or I didn’t do, in their siloed opinions, not caring about our team’s larger obligations to the organization. Or maybe one of my team members or I did something that offended someone and had to be worked out over awkward “coffee” off site.

I took my work responsibilities seriously but, a few years ago, I started looking around and realized, “Is this really how adults have to behave? I go through the rest of my daily life without ever having to close the door, hoping to calmly resolve something, only to end up in a shouting match with someone who didn’t attend the “Dealing with Conflict” seminar and generally got their way by presenting as a bully. Do I really need to spend days in emotional turmoil before and after, and losing sleep? Maybe there’s a better way, and I can eliminate 100% of the problem altogether, at its very source.”

So I did. It’s been 10 months with no such confrontations with anyone, and a massive relief. With the major irritant of my life eliminated, I’m more balanced and centered. Of course, in marriage, two people have to try to work out little things constantly so that they don’t become big things, but DW and I are better able to disagree without being disagreeable without the background of my intense work stress. She eliminated her own 3 years ago this month.

This is why I'm looking forward to hanging it up...I actually still really like the industry and the kind of work I do.

I came home and told DW that we were not extending my contract unless we decided that once Covid cleared up we wanted another 6-12 months of living in London. Even then, we have enough dough to just decide to spend 6 months in Europe.

I know that I'm on the succession list for at least one more senior role in the company -- those things are never certain but I would legitimately be in the running. I'm actively considering taking my name off that list, though the knock on effects on my near term ability to do my job would be pretty high.

We'll see if my sentiment changes on this in the coming months...though I think budget season will be the final nail in the coffin when I deal with people who made decisions in March that come home to roost in September and then wonder why the multi-year plan needs to change.

 

[deserat]

Interesting article and posts. I'm similar to Closet_gamer. I have a 3 year contract that got extended to five years and I'm at year two this summer. I had two reasons for going back to Germany, one professional with regard to a specific set of experiences and one personal with regard to some travel goals. Well, as we all know the travel goals have been put on hold. The professional experience has been quasi-interesting but not what was advertised and the environment is a very anxious one. I am a supervisor/leader and have a duty to buffer my team from the insanity above. That is exhausting sometimes, especially if you have been at higher levels before, so know what should be done and how above.

I've made a decision that if I am unable to do some travel by this fall, I am resigning/ retiring, although I will keep the small consulting side hustle as that is virtual, intellectually stimulating and well paid.

My stress right now is the anticipation of a large move back to the USA to an area that I like to visit but do not particularly see as my long term home. I have a duty to my elderly father (which I don't mind as I love him) to be with him in his later years.

 

[FI_RElater]

Well, obviously I am happy for my MD to be able to retire. Finding one that matched her abilities/bed side manner/etc is going to be tough, though. But I understand that it's a tough business these days and I am happy I am not an MD.

I was similarly dissatisfied when our vet in ATL sold his practice about a year before we left. He was/is a family friend and had been seeing the all the family's critters since 1982. We still haven't found a find a vet that was anywhere close to being as great as he was.

it could have been worse... we had our vet (before we left for retirement) pass due to cancer (it had recurred)... and she was probably the most knowledgeable we'd ever had
she never got to enjoy retirement at all

 

[brett]

Our bottom line was simple. We could not buy more years of retirement good health that would enable us to do what we want to do.

We can not even approximate with any certainty how many years, or even good years we have ahead of us.

We were able to do the financial calculations. But once all the financial models point to a secure financial position early or late, the decision comes back to years of good health vs more money.

We picked time. What surprised us....9 years post retirement our equity has doubled. So perhaps we have been able to get a bit of both.

 

[Jerseytunahunter]

Good article thx for posting. I'm surprised it didn't mention the massive tax increases coming our way. I would think that a lot of people are making strategic moves to avoid the inevitable. I had planned on selling my company in '22 or '23 but now am going to fast track it and get it done this year. Who nows if there will be any retroactive or claw back taxes but sticking to the original plan will cost me a ton.

 

[Markola]

Good article thx for posting. I'm surprised it didn't mention the massive tax increases coming our way. I would think that a lot of people are making strategic moves to avoid the inevitable. I had planned on selling my company in '22 or '23 but now am going to fast track it and get it done this year. Who nows if there will be any retroactive or claw back taxes but sticking to the original plan will cost me a ton.

Yes, if you’re making more than $400K/year, according to what the president said in his speech to Congress on Wednesday, which should make his proposal formal enough to discuss on the ER Forum, as I understand the rules.

 

[MichaelB]

How about we wait until there’s actual legislation under consideration in congress before getting into taxes. Speeches and campaign rhetoric are, at best, wish lists.

 

[braumeister]

How about we wait until there’s actual legislation under consideration in congress before getting into taxes. Speeches and campaign rhetoric are, at best, wish lists.

This is a common concern here, so here is a simple guide:

We feel that discussion is only useful here when a bill has been assigned to a committee for their consideration and possible further action. Even then, nothing may come of it, since every committee receives far more bills than they can deal with in any detail.

 

[pb4uski]

What is it about

How about we wait until there’s actual legislation under consideration in congress before getting into taxes. Speeches and campaign rhetoric are, at best, wish lists.

that is so hard for some people to understand?

 

[Exchme]

Good article thx for posting. I'm surprised it didn't mention the massive tax increases coming our way. I would think that a lot of people are making strategic moves to avoid the inevitable. I had planned on selling my company in '22 or '23 but now am going to fast track it and get it done this year. Who nows if there will be any retroactive or claw back taxes but sticking to the original plan will cost me a ton.

That was one factor for me. I remember in '93, they passed a tax increase in August that applied retroactively to include what had already happened that year, so I pulled the plug in Feb and am not doing Roth conversions or anything else to generate taxable income until we see what's what.

 

[Montecfo]

After the financial crisis, retirement age people continued to be employed at higher than historical rates. That had to begin turning around at some point. So to the point of the article, it seems like reversion to the mean after years of above trend employment rates.

 

[Time2]

So I wonder what happens when all these "newly affluent" retirees start to sell off investments to fund their early retirements? If the numbers are large enough, I could see it throwing a wrench in the gears of FIREcalc.

Dare I say, that's 4% coming out of the market going into the economy.

 

[Markola]

After the financial crisis, retirement age people continued to be employed at higher than historical rates. That had to begin turning around at some point. So to the point of the article, it seems like reversion to the mean after years of above trend employment rates.

That’s an excellent point. Plus, the whole FIRE Movement has happened and seeped into mainstream consciousness, like this article.

 

[Amethyst]

Tax increases scare people (including me), and many people don't know or care about legislative processes.

re: ignorance, I think of the dopey memes some of my age-cohort (and older) love to send around, about how "Congress should have to live on minimum wage," or shouldn't get retirement benefits, etc. etc. As if.

What is it about

that is so hard for some people to understand?

 

[MichaelB]

Tax increases scare people (including me), and many people don't know or care about legislative processes.

According to this Roll Call report (here, h/t Gumby) the number of legislative proposals that become law has fallen to 1.5%. The rest fail.

No one knows how many campaign proposals and political speeches become legislative proposals but given the bluster and hyperbole, it must be a likewise small number.

We are all interested in potential tax increases. This is why we choose to wait until there is actual legislation and committee action, which is what makes a discussion here meaningful and potentially actionable.

 

[Winemaker]

I know how the legislative process works. But I'd rather cut the politician off at the knees before any of their goofy talk actually grows roots.