Retiring in a bear or Recession Market

[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

[yakers]

Retired March 08, doing fine, COLAd pension covers basic expenses

[Franklin]

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

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.

[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.

[Aerides]

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.

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

[DayDreaming]

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.

[easysurfer]

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 .

[socca]

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.

[ncbill]

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)

[Lcountz]

Great time to convert Traditional to Roth!!!

[MichaelB]

Quote:

Originally Posted by Lcountz Great time to convert Traditional to Roth!!!

Yes indeed.

[razztazz]

Quote:

Originally Posted by ncbill The danger to retirees has not been retiring before/during a bear market or recession.

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

[NW-Bound]

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

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.

[Timeisprecious]

Quote:

Originally Posted by yakers Retired March 08, doing fine, COLAd pension covers basic expenses

+1; I retired this past December. Of course no one likes watching the IRAs shrink, but Lord willing we'll be just fine.

[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.

[scrabbler1]

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

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!"

[kgtest]

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.

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.

[Big_Hitter]

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

i retired 1/3 but am about 50/50, which means I've only lost half my ass so far lol - not worried though

[DRC726]

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

I was planning on retiring 3/31/2020. Might have to rethink this for a couple of months...

[teejayevans]

I would not retire in this environment, I would maximize my savings and buy all equities....they are on sale.