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Retiring in a bear or Recession Market
03-12-2020, 03:19 AM
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#1
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Recycles dryer sheets
Join Date: Jan 2015
Location: Boerne
Posts: 421
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Retiring in a bear or Recession Market
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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03-12-2020, 06:30 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Jul 2003
Location: Pasadena CA
Posts: 3,346
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Retired March 08, doing fine, COLAd pension covers basic expenses
__________________
T.S. Eliot:
Old men ought to be explorers
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03-12-2020, 07:04 AM
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#3
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Recycles dryer sheets
Join Date: Jul 2018
Location: in transit
Posts: 318
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Quote:
Originally Posted by cnocmmz
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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Oh My, it is a tough time! Glad you asked the question because I am sure we have some folk who weathered this decline a few times over. Personally, I did my first retirement as a 52 y/o in 2008 (great recession). Most of my assets were tied up in the market and I saw my worth drop considerably making FI impossible. So, at 52 I went back to work for another 10 years and became FI once again. Today at 64 I don't plan to suit up again!. I keep enough cash available to cover 3 years of expenses (my first defense bucket). After that (let's hope we don't need it) I'll tap after tax funds that are in Bonds. Just make sure you have enough cash available to weather this shock.
__________________
A persons wealth is measured by what they can afford to do without.
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03-12-2020, 07:10 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,350
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Always keep a couple years worth of expenses in cash. The market going down only matters if you have to sell equities. If you deplete your cash reserves then life on a bare bones budget if needed until the market recovers so you sell the least amount possible at a low.
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03-12-2020, 07:33 AM
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#5
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Moderator
Join Date: Nov 2015
Posts: 13,916
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Quote:
Originally Posted by aaronc879
Always keep a couple years worth of expenses in cash. The market going down only matters if you have to sell equities. If you deplete your cash reserves then life on a bare bones budget if needed until the market recovers so you sell the least amount possible at a low.
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In addition to cash reserves (which I very much use and support):
Low interest credit cards can bridge a short gap
Secure a HELOC (assuming house is paid) before you retire
Be aware of specific chunks of your budget that are truly discretionary and can be deferred (travel, new car, non-emergency home repairs, etc.) before you take across-the-board cuts
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03-12-2020, 07:49 AM
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#6
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Full time employment: Posting here.
Join Date: Jan 2008
Posts: 847
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Retired in 2008, been living off my savings entirely ever since. The first year or two was a little scary with all of the bad news happening, but the long bull market after that more than made up for the scary start. My investment portfolio is now about 2x what it was when I FIREd - something I never expected! How did I handle it? Nothing special, I just continued my normal LBYM lifestyle, withdrew $$ as needed and stuck to my chosen asset allocation.
Edit: I should add that I think I had way too much in cash around that time, since I wasn't too smart about investing, but that worked out to my advantage.
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03-12-2020, 07:55 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2008
Posts: 13,143
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I FIRE'd in early 2008. Was too busy (ignorance is bliss) to pay much attention to the sinking market at that time so really didn't notice that much til later in 2008 or 2009.
For this time around, I'm watching at the start of the movie .
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
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03-12-2020, 08:21 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Posts: 1,600
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January 2007: I went from a 6-figure mega-corp paycheck to zip. Haven't had any W2 income since. The 2008 financial crisis was a low-stress event for me because I had enough income to cover my (low) living expenses.
When the stock market is booming, the SWR mental framework for retirement planning seems obvious: why not create a virtual income stream from unrealized capital gains, since those unrealized capital gains can only get larger? During a bust, though, those disappearing unrealized capital gains seem like a less reliable place to hang your hat.
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03-12-2020, 08:29 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,633
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The danger to retirees has not been retiring before/during a bear market or recession.
It has been retiring before a period of high inflation (e.g. late 1960s retirees)
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03-12-2020, 08:30 AM
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#10
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Recycles dryer sheets
Join Date: Oct 2011
Location: Upstate Ruralia
Posts: 356
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Great time to convert Traditional to Roth!!!
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03-12-2020, 08:32 AM
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#11
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,708
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Quote:
Originally Posted by Lcountz
Great time to convert Traditional to Roth!!!
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Yes indeed.
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03-12-2020, 08:36 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Apr 2005
Location: Midwest
Posts: 2,969
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Quote:
Originally Posted by ncbill
The danger to retirees has not been retiring before/during a bear market or recession.
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A large, or repeated crashes followed by inordinately long recoveries would make it happen. Also, in all prior crashes stocks paid higher dividends. Nowadays, they're something like half or less than half than what they used to be. Also, prior to WWII these panics, as they were called, usually came with at least some DEflation. There's nothing like having The Devil meet you half way
Altho, overall I agree with you. I am more afraid of inflation I can't stay out in front of than just having to belt-tighten
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03-12-2020, 08:49 AM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by cnocmmz
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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My own business was going under in the 2001-2003 market rout. In the 2007-2009 Great Recession, my part-time contracting work was suspended for a time. It means during both times, I did not have regular income.
On top of that, the 1st time, my stash was down to 56c on the dollar, and the 2nd time, 63c on the dollar. Obviously, I survived, and now have more money to boot.
Every time the market takes a big drop, there are some posters who say they "yawn", to indicate that they are bored I guess. I am not so arrogant. I have been through enough to not be scared anymore, but I do pay attention. At some point, it will be time to buy. I watch the market and my own stash very attentively, and have been doing this for more than 20 years.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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03-12-2020, 08:53 AM
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#14
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Recycles dryer sheets
Join Date: Oct 2018
Location: Grand Rapids
Posts: 466
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Quote:
Originally Posted by yakers
Retired March 08, doing fine, COLAd pension covers basic expenses
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+1; I retired this past December. Of course no one likes watching the IRAs shrink, but Lord willing we'll be just fine.
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03-12-2020, 08:55 AM
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#15
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Moderator
Join Date: Nov 2014
Posts: 9,171
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The thing that gives me hope is that the enemy seems to be known. People and markets are reacting to the current situation that I believe will pass rather soon. Of course real damage has been done. The world is going to produce and consume less as we react to this. But, when we see the light, there’s no reason we won’t come back with full force. If I was a traveler and I don’t get to travel this year, I’m going to travel once the all clear is sounded, maybe a bit more. If I’ve been staying home, once I feel comfortable going out again, I’m going to hit some restaurants I’ve missed . . .
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.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
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03-12-2020, 09:14 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by cnocmmz
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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I retired at the end of October, 2008. This fortunate bit of timing gave me an added boost, a boost I have enjoyed every month for the last 11 years. This was due to my selling all the shares of the company stock I owned (I was required to) and buy deeply discounted shares of a bond fund, about 25% more shares than I had planned to, based on the bond fund's NAV earlier in the year. Having all of those extra shares gives me an extra ~$400 a month in dividends.
I remember in the 2 months leading up to my ER, seeing the price of that bond fund drop and drop and drop...…….and being very happy about that because it meant I would be able to buy more of those shares later. The company stock, meanwhile, saw only a tiny price drop, as its price was re-evaluated only once every 3 months (at the time, it was a privately held ESOP). This was a large, classic case of "sell high, buy low!"
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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03-12-2020, 10:10 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Location: North
Posts: 4,043
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Quote:
Originally Posted by Jerry1
The thing that gives me hope is that the enemy seems to be known. People and markets are reacting to the current situation that I believe will pass rather soon. Of course real damage has been done. The world is going to produce and consume less as we react to this. But, when we see the light, there’s no reason we won’t come back with full force. If I was a traveler and I don’t get to travel this year, I’m going to travel once the all clear is sounded, maybe a bit more. If I’ve been staying home, once I feel comfortable going out again, I’m going to hit some restaurants I’ve missed . . .
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.
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I feel very similar. Eventually this will all unwind, sure there will be a loss in market cap because of market timers and real revenue lost...but not like the panic and fear have predicted here today.
__________________
Time > $$$ ~ 100% equities ~ FIRE @2031
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03-12-2020, 11:10 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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Quote:
Originally Posted by cnocmmz
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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i retired 1/3 but am about 50/50, which means I've only lost half my ass so far lol - not worried though
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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03-12-2020, 11:51 AM
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#19
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Dryer sheet aficionado
Join Date: Jan 2019
Location: Near the beach
Posts: 46
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Quote:
Originally Posted by cnocmmz
How many folks on this ER site ER’d during a recession like 2008 or a prior one?
-How did you handle it?
Thanks
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I was planning on retiring 3/31/2020. Might have to rethink this for a couple of months...
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03-12-2020, 01:47 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,691
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I would not retire in this environment, I would maximize my savings and buy all equities....they are on sale.
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