I'm 8 months away from retirement. I've been playing with FireCalc and it says I don't have anything to worry about. This post is not based in fear, I'm actually genuinely curious if people think this is going to be one of those rare 5% failure rate years that has happened in the past. If you are not a "PermaBear" but you think we are headed for doom I would love to hear what you have to say.
Do you think 2023 is 1929, 1966, 2000, etc?
- Thread starter rmcelwee
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ER Eddie
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The world will end in 2023! Prepare yourselves! Repent!
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aja8888
Moderator Emeritus
Since I'm not a market timer and my investment plan calls for rebalancing to my preferred asset allocation on both down markets and up markets... It's all good. Not going to sell on a prediction that the market may crash. Not going to buy on a prediction the market may boom... Just rebalance as needed.
And I'm finally reaching the point where I'm less worried about sequence of returns risk (SORR). I would probably be more nervous if I was just approaching retirement or very recently retired.
And I'm finally reaching the point where I'm less worried about sequence of returns risk (SORR). I would probably be more nervous if I was just approaching retirement or very recently retired.
Ready
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Ask me again in 30 years and I’ll give you a definitive answer.
Major Tom
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I feel much the same as rodi. It's easy for those of us who have been retired for a while, to be fairly sanguine about current and potential future market conditions - especially if we have a cushion built in to our withdrawal plans. If I were within a year or two of retirement, I'd be feeling much more confident if there was plenty of latitude for adjustment in my numbers than if I were playing things close to the edge.
For instance, if my entire retirement income were coming from an investment portfolio, and Firecalc was giving me a 95% success rate, I'd be wondering how much my portfolio could drop were I to retire just before a significant correction or crash. Even if the portfolio were to survive such an event, I'd be wondering how much the market drops would be likely to make my stomach churn, and cause sleepless nights. The trouble is, when you're new at retirement, you don't actually know how you'd react to such an event.
After about 12 years of retirement, I still don't know how I'd react to a major market event. However, I now have a significant cushion built into my portfolio, and am just 5 years from early SS, if I need it.
For instance, if my entire retirement income were coming from an investment portfolio, and Firecalc was giving me a 95% success rate, I'd be wondering how much my portfolio could drop were I to retire just before a significant correction or crash. Even if the portfolio were to survive such an event, I'd be wondering how much the market drops would be likely to make my stomach churn, and cause sleepless nights. The trouble is, when you're new at retirement, you don't actually know how you'd react to such an event.
After about 12 years of retirement, I still don't know how I'd react to a major market event. However, I now have a significant cushion built into my portfolio, and am just 5 years from early SS, if I need it.
PhrugalPhan
Recycles dryer sheets
As someone retiring in 2023, why that year? Why not 2022 or 2024? I guess I am not worried about it, but then again I have a solid pension awaiting me in 2023 so I feel fairly solid no matter what happens.
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Seems like a contradiction.
FIRECalc history says you have nothing to worry about, but you are worried about the 5%? If you are running with a 95% success rate, then that 5% is something to worry about (in historical context).
If you are worried about the historical 5% failures, cut your spending a bit to reach historical 100%, it won't be that much less. And you can use the "retire again and again"plan to raise your spending if the market does well.
-ERD50
W2R
Moderator Emeritus
This time is different....
That's what my (normally) brilliant big brother told me about the market in 2008! Thank goodness I couldn't figure out what to do about it, so in the depths of my confusion I did nothing.
That worked for me pretty well! So, that's my plan now. My crystal ball just isn't working like it should.
No contradiction here. I have 75x yearly living expenses not including pension or SS. As I said, I am merely curious as to what other people think. I happen to think there will be a big crash in 2023 but I'm most probably wrong. If there is, it will be a great buying opportunity.
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Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If you are at 75x expenses not including Pension or SS, then by default you must be at 100% success rate in Firecalc with a lot of room to spare.
Yes I am. Let me quote my original post:
"This post is not based in fear, I'm actually genuinely curious if people think this is going to be one of those rare 5% failure rate years that has happened in the past."
How did you react in March / April 2020 ?
Andre1969
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This time it's different...just like every other time!
Andre1969
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Everybody's experience is going to be different, but for me, the COVID crash came so fast, I didn't have time to react. I had hit a new financial high on February 19, but by March 23 was down about 35%. For the year, I was down about 30.5%.
The recovery was quick, though. I finished out March "only" down about 21.5% for the year. By April, I was down about 13.3%. By August I was up about 3% for the year, and I finished 2020 with a return of around 13.2%.
I'll admit, when I first took the hit, my initial thought was "oh crap, this might get bad!" But I didn't make any rash decisions. I did a little rebalancing here and there if some of my asset allocations got too far out of whack, but I didn't do any major selloffs or anything.
I can't speak for Major Tom, but I'd imagine if he's been retired for 12 years and doing fine, he doesn't have to worry about a bad string of sequence of returns. That usually only factors in, if you retire during a peak year, and then the economy crashes and stays down for awhile.
Still, I imagine that, no matter how far along you might be, when there's some kind of bad economic event, it's hard to shake the feeling that, "This time it WILL be different!"
Probably this. I won't swear to 2023 but when it's time for the next correction/bear market crash-boom-bam. The economy in general and the stock market in particular have become a gordion knot, of sorts, ever since the democratization of stock owning. It's one thing to let a handful of jillionairs (Don Ameche and Ralph Bellamy) lose a bunch of money because of "how businesses operate" but unacceptable to let a jillion Joe & Josephine Averages lose their 401k's. That's what they always say at CNBC. Can't let the stock market fall. Everybody will lose their 401k's.
Geld ist Freiheit
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Since that’s the year I’d like to hang it up...yep. Sounds about right.
marko
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In April 2020, I moved $100K from one 'dog' of a fund to another fund that had had a sudden 36% drop. It is now up 69.4% from April 2020, so a nice gain; while not a market timer, I saw a bargain opportunity and took it.
The 2008 fiasco emboldened me. It was supposed to be the end of life as we know it and instead the relatively rapid recovery gave me a lot of confidence in market drops as opportunities vs calamities. It's your chance to go back in time and find bargains.
I often mention my "smarter than you" neighbor who proudly announced on the last Friday of Feb, 2008 that she had just "sold everything"; the following week, well......
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ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
OK, I kinda missed that.
So sure, 2023, (or any recent or future year) could be the start of something similar to the 5% worst in history, or even worse.
-ERD50
Andre1969
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Well, if she was smart enough to buy it all back around Thanksgiving 2008, or March 9, 2009, I'd say she was a market timing genius. But, somehow, I have a feeling she didn't do that?
