Investment loss greater than Withdrawals

[DawgMan]

If you have "a lot" in the market you have to expect up and down years. Stay the course!

Here are our results since 1/1/11 when I FIREd. You'll see this is the second down year. We feel pretty blessed to be up 66% since I retired - even after all our spending. Note we track our financial assets - excluding the house we live in. No Pension, no SS for many years to come.

Older thread, but I thought this particular response and chart was somewhat reassuring for those of us who retired this year and are reliant on their portfolios to cover their spend. Personally, despite having a plan that anticipated a high probability of a down market this year, it still psychologically messes with you (at least me) when I see my portfolio balance drop multiple times relative to my planned spend. I find I am having a harder time giving myself permission on some "extra spend" despite having a WR around 2.5% based on today's current balance. Funny, if I re-retire today, everything feels hunky-dory. Interesting how we can interpret our numbers to either pull in the reigns or loosen them up.

 

[perez99]

In the same boat... retired in January 2022 with 70/30 allocation..
Never was concerned with market volatility during accumulation (was 100% stock until ~ 3 years before retiring. But its a completely different perspective when living from the portfolio and one wonder if this is a short blip or the start of a long period of bad returns / inflation.

 

[COcheesehead]

Sequence of Return Risk - SORR. It’s real and it’s real hard to recover from. Early years of retirement should put capital preservation at or near the top of priorities.

 

[OldShooter]

Sequence of Return Risk - SORR. It’s real and it’s real hard to recover from. Early years of retirement should put capital preservation at or near the top of priorities.

... which can be done by a sensible asset allocation that reduces or eliminates the need to sell equities into a down market. That's true "early years" or not.

 

[FREE866]

Sequence of Return Risk - SORR. It’s real and it’s real hard to recover from. Early years of retirement should put capital preservation at or near the top of priorities.

Hmmm.....not sure I agree that capital preservation should be at the top of priorities. I retired 5 and a half years ago and despite 2 bear markets my portfolio is up 50%. If I dragged my portfolio down with a high cash or bond allocation I'd have nowhere close to that growth.

 

[COcheesehead]

Hmmm.....not sure I agree that capital preservation should be at the top of priorities. I retired 5 and a half years ago and despite 2 bear markets my portfolio is up 50%. If I dragged my portfolio down with a high cash or bond allocation I'd have nowhere close to that growth.

I am up more than 50% in the last five years with capital preservation as a priority. One does not have to give up returns in order to protect your next egg from the downside.

 

[FREE866]

I am up more than 50% in the last five years with capital preservation as a priority. One does not have to give up returns in order to protect your next egg from the downside.

What asset allocation allowed you to do that?


I'm essentially all stock.

 

[COcheesehead]

What asset allocation allowed you to do that?


I'm essentially all stock.

The biggie was real estate.

 

[FREE866]

The biggie was real estate.

OK...I'm referring to liquid assets. When I hear terms like "preservation of assets" I think more of fixed income. A goal of "growth and preservation" is kind of an oxymoron.

 

[RobLJ]

We semi-retired to Reno in 2015 and our portfolio is up despite a quite conservative allocation (reduced from 68% to 55%) before 2018, when the big withdrawals would begin. My portfolio is down only about 10% despite making withdrawals between 6-9%, which I did not model (I asssume DW's would go up while mine might go down quite a bit).

I was OK with treading water or a slow reduction until FWA for me in 2025 (DW in 2029) when SS essentially will pay for all necessary expenses.


I'm happy for all of you with 80-100% allocations since you should have weathered the 2020 and the 2022 bears quite well, but I would mildly note that this quick of a recovery is rather unusual, so I wouldn't declare victory, particularly since it isn't yet clear whether the 2022 bear is over. On SORR, you don't know the market you are going to get the first 5-10 years, so you might plan prudently particularly if your margin is not a large one . I'm hoping I still have 30 years to go, although it's probably more like 20-24 (I hope).

I'm aware that many here have a huge margin of safety, so in that circumstance, an 80-100% stock allocation probably won't make much of a difference.

 

[TheWizard]

Hmmm.....not sure I agree that capital preservation should be at the top of priorities. I retired 5 and a half years ago and despite 2 bear markets my portfolio is up 50%. If I dragged my portfolio down with a high cash or bond allocation I'd have nowhere close to that growth.

Agree.
Better to have (more than) sufficient retirement income from pension/annuities and eventually, age 70 SS.

I'm fortunate to have excess retirement income from those sources, so I've been putting a few thousand dollars into stock index funds each month for the past few years...

 

[COcheesehead]

OK...I'm referring to liquid assets. When I hear terms like "preservation of assets" I think more of fixed income. A goal of "growth and preservation" is kind of an oxymoron.

Well when I sold, it was pretty liquid. LOL

As someone else mentioned, if you have income that also acts as a preserver of capital because you don’t have to touch anything when the market drops. That’s where my muni ladder has been a big help. It throws off more than we need to live and I hold individual bonds to maturity for the most part which means no loss of capital.

All together, we are up 64% since the start of 2017 and that includes the recent haircut and taking out living expenses.

 

[Dash man]

We’ve been living mostly off of maturing CDs this year. Our stocks dropped quite a bit, but we still have more than two years ago and a lot more than when we retired in 2013 and 2016.