Retiring in a bear or Recession Market

[jkern]

I was laid off and decided to retire the summer of 09 at age 51. I started with $400K in retirement accounts and $500K cash. It worked out quite well.

 

[Graysand]

Well, I have enough cash to ride it out, but to meet ACA minimum income rules I will be required to sell some equities. Fortunately won't have to do that again until 2021, so maybe it'll all be looking a bit better by then.

 

[Perryinva]

A good example of “do you use 4% of todays amount or Feb12 amount ?” and does it make a difference.

 

[Big_Hitter]

I was laid off and decided to retire the summer of 09 at age 51. I started with $400K in retirement accounts and $500K cash. It worked out quite well.

I'm 50/50 and part of the second 50 is cash/mm - my FA chides me for it but it's the way i'm wired

 

[COcheesehead]

I like the bucket approach. It’s a really clear way to see what I have for the next 1-5 years, 6-10 and 10+. With what I have in buckets 1 and 2, I can go a long time without touching equities. So I am using the bear market to fill more of my 10+ year bucket. I also found some good muni bond deals on Friday after the sell-off to put a little more into bucket 2.

Don’t over think your portfolio, but don’t ignore it either.

 

[braumeister]

Retired a month after 9/11, over 18 years ago. So far, so good.

 

[DRC726]

We ER'd on May 1st, 2008. It has worked out for us, but we (especially me) had a few misgivings especially in September '08 when Lehman collapsed.

If you've got the time, you can read a lot of our journey by following the link below:
https://www.early-retirement.org/forums/f29/10-years-91820.html

Thanks for sharing this info! Lots of great "food for thought". That's what I love about this forum - the sharing of ideas and opinions to help us all better chart our own courses. Thanks again.

 

[bubba]

Retired 12/31/19. Have to say all the issues around the Covid-19 and zero interest rates are making us question the decision. Fortunately we have enough cash reserves to get by for a while; maybe a couple of years. Will tighten the belt a bit just because we are frugal and nervous.

 

[Rainbowdash]

Retired July 2019, going through the whole sequence of return thing now, got enough cash for 2-3 years. Heavy on equities by choice. Will see how this one turns out. Staying the course.

 

[grayv]

part of the second 50 is cash/mm

well, cash/mm is fixed income.

 

[madsquopper]

Retired one year ago and at the time estimated that even with a 50% market drop I still would not quite be at a 4% withdrawal rate (not including SS, yet to be taken). Never thought I'd actually have to live it, but here we are with it being a distinct possibility. Like others, I have a cash/fixed income cushion for 3-4 years.

 

[MikeyMarks]

I retired at 39 in January 09 two months before the floor in the Dow. It was scary and unnerving but I never touched my portfolio beyond annual rebalancing and ten years later I had doubled my wealth. 60% bonds and dividends for cash flow kept me from having a nervous breakdown. This time I am almost eerily calm about all this. My advisor (who is also one of my best friends) called me last week and asked if I was doing okay and I was like “yup, it’s rocky but it will come back soon.”

 

[MikeyMarks]

Having a few years of spending money is the thing that helps me the most to stay calm, but second is that I see this as an event, not a systemic breakdown like the great financial crisis of 2008.

Excellent point on the event-driven vs system-driven distinction. Huge difference.

 

[cnocmmz]

That's encouraging for me to hear. I've been looking forward to retiring on 3/31/2020 for so long that I'm pretty much committed to that date. Fortunately, I've got a significant cash bucket so I will not need to sell stocks for 5-7 years at the earliest. However, with no pension and SS still 7 years away, DW and I will have to watch our budget.

I figure that you should jut be cautious and you will be fine.

 

[cnocmmz]

MikeyMarks that was indeed impressive. I started this post to get a sense of relieve of how others did during these trying times. Also, because this is an interesting and scary time for most Americans.
Since my DW is 6 years older at 66 now and myself at 60 (July), she can get her full SS and that will start in April. With my Military retirement and civil service pensions that will give us over 100k annually and we spend about 72K on just living expenses. The rest is just fluff. Prior to this Virus panic, we had 1M in investments (down 25 percent) although we do have a good cash Nest Egg to carry us over to supplement for years if need be. This is why 2020 will be our year; however, we just wanted to walk away on a high market, either way it will happen this year sometime.

 

[DrRoy]

I RE'd in 2017 but it looks like I'll be able to answer this over the course of the year. I had the year's spending cash raised in Dec, to fund some remodeling projects and extensive travel, but even that was 2.8% WR. The travel will be cut for the next 6 months. After that we'll see. If we had no travel and no projects, we could probably get by on the small pension plus investment income with no assets sold, at about 1/2 of the spending. Vs the '08-09 bear, I am starting out at 2.75X the peak NW, initial 58% AA vs 82% then, and equities at 1.0 beta vs ~1.2 then. The hit is bigger in absolute dollars, but rather less in %.

 

[JoeWras]

I retired Aug 2018, the last market peak before this year's. I watched the market go down significantly to the correction+ level in December 2018.

We are 50% in equities. Looking at our NW today, it nearly matches December 2018. So, we're good, and can still absorb some more down, although it will take a stiff upper lip.

Good suggestion ya'll have here to do Roth conversions at this time! Something to do during these next socially distant weeks.

 

[Aerides]

Regardless of the timing, this thread is probably another good reminder on only giving the minimum required notice.

I would imagine there are a lot of folks who started the year thinking they'd retire by the end of March or April, and now want to rethink that and stay on a few more months, but if they'd given early notice they might not have that option.

 

[cnocmmz]

Great time to convert Traditional to Roth!!!

Thanks and yes concur. Just got to figure out how to do it!

 

[brett]

Agree that inflation can be the biggest risk.

OTOH.....sequence of returns can be the biggest opportunity post recession.

 

[Aerides]

Necro bump alert, this thread is 10 months old.