To drop back to the title... Contingency Planning...
and to this lead in -
Quote:
A starting point for discussion...
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Before the thread dies a natural death:
1. A quote from the quote...
"In interwar Germany, for example, much private and corporate debt was effectively wiped out; certainly for those holding fixed interest rate loans."
2. A reminder of the market loss in 2008 and 2009... and the losses incurred... even in balanced portfolios
3. Will a future market drop, or correction be short term? Would a ten year recovery suit retirement needs as well as the last recovery?
4. The Federal Reserve has absorbed debt allowing for continuation of the US dollar as the world's base currency. Likely to recur in January of 2014.
With the same results?
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So back to contingency:
Hyperinflation would likely be the latter part of any problem, though probably the worst. As previously mentioned by jebmke, the precursor would probably be deflation. In this case, though, economists are far apart in estimating the timing.
The planning that we logically make is... The cash reserve... and the plan to spend less. After that, the plans may get a little fuzzy:
As in the past several market "drops"... most people who are still solvent, rode it out... Reallocating assets, moving into cash, or doing things like paying off mortgages and loans.
Those who stayed with their advisors and funds managed reaonably well, as up until now, the recovery has been quick and, if anything, very positive.
Forgotten are events of 1929, 1937-38, and the long periods of recovery through to the mid 1950's.
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Without going to the extremes...
Survivalist.info : Popular Survivalist Websites (and Survival Websites)
...am thinking there are a number of options open to those of us who are already retired, or have accumulated sufficient wealth to be able to be self sufficient, apart from employment. Options to protect wealth, or to change our lives to adapt. In short... ways to insure the years we have left, as apart from relying on a management fund to ride out a storm.
So... some thoughts...
... Timing... recognizing the
IF's and What's of a direction rather than a blip... when to make a change
... Where to keep money safe? Gold? Land? Commodities? Cash? Properties? Spend down? Buy goods?
...Stay or go... either moving to another location... house, town, state or country.
... How long to plan for? 6 months? 10 years?
... Calculating an Austerity Budget in advance.
Michael mentioned an "asteroid impact" as a matter of odds against. .. and we all hope he's right... but some thought to possibilities doesn't take a long time, and the upside, is... like hitting your head against the wall.... It feels so good when it stops.
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On personal note, with a short timeline (perhaps 10 years)... the center of my own plan is to set aside the assets that I project will carry me through in our CCRC. A relatively easy decision, because it doesn't require investment or major change. Given a 20 or 30+ year period of retirement window, my plans would be quite different.