re-think end date due to market ??

[albireo13]

Hi,
I am 64yo and have been planning to retire by June. I haven't given notice yet. My wife is still working and planning to go another 3 yrs.
My plan was to put off SS for 2 yrs to at least get to FRA.

Now, the market correction has me nervous.
…. Pull SS early?
… keep working a bit longer?

Firecalc has been giving me 100% before March.
My AA is currently at 60/40.

Intellectually, I feel we are still ok but .. makes me nervous.

Anyone else in the same boat?

Rob
__________________

 

[MBAustin]

Not in the same boat, but if you are still good in FIREcalc and are at 60/40, you seem good to go. Even better since your DW plans to continue working, which probably means you will not need a lot of cash from your investments for the next couple of years.

 

[pb4uski]

+1 I don't see any reason to change plans if you are 60/40 and FIRECalc is 100%.... nervousness is natural... this will pass. With the Investigate tab you can back into the portfolio balance today needed to fund a defined level of spending various success rates.

Worst case, the world will go to hell in a handbasket but those with wealth will still be better off than those without.

 

[albireo13]

Yes, plus she has an awesome health insurance plan.
I will do a few more Firecalc runs with pessimistic numbers. What Ifs …

 

[Dtail]

Yes, plus she has an awesome health insurance plan.
I will do a few more Firecalc runs with pessimistic numbers. What Ifs …

Exactly. We have had our gains mostly evaporated, but still 100%+ in Firecalc.
Run the numbers and it will most likely make you feel better.

 

[Sunset]

On the other hand, should the market continue to fall week by week, it would be prime opportunity for OP to aggressively invest purely in stocks with 100% of the "extra" income from continuing to work.

Wonder how OP will feel if the market dives to 50% value ?

At a minimum, I would not give more than 2 weeks notice, so still some months to watch the fun.

 

[bobandsherry]

If this drop causes your outlook to change then you probably weren't in a position to retire to begin with.

 

[Finance Dave]

If FIRECALC says you're ok, then I would not be nervous. I do think though, that if this downturn has made you nervous, then when it recovers to within a few percent of the peak...I would lower your equity position so that next time you don't get nervous.

IMO the proper AA is one where you don't get nervous when the market turns down.

 

[jollystomper]

A key question is, how does the market impact what you will need for your expenses once you retire? Say, for the next 2-3 years?

 

[rodi]

On the other hand, should the market continue to fall week by week, it would be prime opportunity for OP to aggressively invest purely in stocks with 100% of the "extra" income from continuing to work.

This is kind of what I was thinking.... Max out the 401k and other investments during this down cycle.... Take advantage of still having the income to invest aggressively.

As a rule, I'm all for retiring when you reach your comfortable nest egg.... after all this is the 'early retirement' forum.... not the 'keep working till death' forum. But it seems like there is an opportunity here to sock away more nest egg that could pay off big in the future.

 

[RetireBy90]

What I did before pulling the cord was to put about 3 years of projected draws from the pile into cash, CDs and MM, so any time we are in down market I have the required funds in cash and don’t need to pull any from my pile. Turns out to be rather handy for paying estimated taxes for Roth conversions also. I don’t need the cash even with the down market but sure made me feel more at ease.

 

[albireo13]

Only have a few months left to up my 401k

 

[Sunset]

Only have a few months left to up my 401k

At one job I allocated 80% of pay to the 401K to boost it up before I left.
Now I wasn't going to retire, so didn't need a pile of cash to last 2 yrs though the upcoming recession, which you might.

 

[Sunset]

Only have a few months left to up my 401k

Depending upon your income level, since you may stop getting income this year, your income will drop.

This will be a great opportunity for you and your spouse to stuff $$ into Roth accounts as contributions.

Can transfer shares from brokerage account to Roth, does not need to be cash from bank account. This way you keep your same allocation, the money will grow tax free, you keep your cash in the bank for groceries.
Of course if the stock in the brokerage is a loss (unlikely if owned for long time) then sell it and move the cash, so you get tax loss benefit as well.

 

[GravitySucks]

Seemed like a dramatic title.
I'm not speeding up my end date just over money! I want to live as long as it's enjoyable.
Try not to worry, but if you are worried go ahead and work OMY. We'll be happy to get that extra SS money paid in.

 

[tmm99]

I would give myself a 30% haircut, and see if the numbers still look good. Obviously, you can't spend as much money if you have 30% less money, that was the extra calculation I had Firecalc do, to make sure I could easily survive a big market downturn. YYMV

 

[lem1955]

If you have a few years expenses in liquid cash and still see 100% in Firecalc I say go for it too. It would relieve angst to know you don’t have to withdraw funds from investments for living expenses for the next year or two.

 

[Jeffman52]

What I did before pulling the cord was to put about 3 years of projected draws from the pile into cash, CDs and MM, so any time we are in down market I have the required funds in cash and don’t need to pull any from my pile. Turns out to be rather handy for paying estimated taxes for Roth conversions also. I don’t need the cash even with the down market but sure made me feel more at ease.

That is something I have been thinking about doing as I get closer to ER. I need, however, to make it a reality over the next two years. The down market right now makes that more real.

 

[COcheesehead]

I started thinking about my end date three years ago. Built a bond ladder, started to really understand what my spending needs would be (called a health insurance broker and he laughed at me for being too far ahead of the game), but I wanted to be prepared.

In 4 months I will get my last paycheck. I feel ready. I set up a spreadsheet with my fear gauges. I have little formulas that show me what a 20%, 30%, etc haircut would do to my portfolio and how many years of expenses I would still have as a result. I run the updates every few days now just to make myself feel good. The market would have to drop another 37% (!) for me to drop down to having 30X my expenses.

These are the little games I play with myself just to keep me thinking positive.

For anyone considering retiring in the next 5 years, start your prep now!

 

[albireo13]

Think instead of maxing 401k I will concentrate
on clearing off non-mortgage debt and built up more cash reserves.

 

[Mountain skier]

I am retiring in May. Did add to Roth last week, but also pulled several years of living expenses out of taxable equity account. Have set up 5 yr in CD's to cover expenses, plus cash $ for a more expensive home (if we want). We both have a pension to help. Our AA is now 33/67. Truth is we may never need the equity portion of portfolio, but who knows. I am very glad we have so much in cash at this point.

 

[Ronstar]

Not in the same boat. But if I was still working and thinking of retiring soon, and I would need to withdraw funds from ira equity funds within the next 5 years, then I would keep working.

 

[Sunset]

Think instead of maxing 401k I will concentrate
on clearing off non-mortgage debt and built up more cash reserves.

I would NOT retire with non-mortgage debt, which sounds like a fancy name for CC debt, or car loan.

It must have an interest rate.