So given the recent financial turmoil and uncertain future...

[LARS]

... has your answer to "how much is enough" changed?

Clearly losses in equities and real estate have impacted current and future views on attainable net worth.

Do you think you need less given the average Joe's net worth is down 30% (don't ask me to substantiate that number, just a WAG)?

Or do you need more given the uncertain future?

Would have made a poll, but I couldn't figure how to post one

 

[W2R]

... has your answer to "how much is enough" changed?

Clearly losses in equities and real estate have impacted current and future views on attainable net worth.

Do you think you need less given the average Joe's net worth is down 30% (don't ask me to substantiate that number, just a WAG)?

Or do you need more given the uncertain future?

Would have made a poll, but I couldn't figure how to post one

When you are starting the thread, the option to make it a poll is way down near the bottom. If you want to change this into a poll, just PM any of the mods or admins and include what you want each option of the poll to be.

 

[LOL!]

I think we substantiated that no one lost any money in the last year, so my WAG is that everyone is up 5%.

In essence, nothing has changed.

 

[W2R]

For me, the answer to "how much is enough" hasn't changed.

I haven't really had to think of belt-tightening. The market recovery has been wonderful for me, especially since I still haven't withdrawn anything yet. So, with unspent dividends my portfolio is larger than ever before, and very close to my pre-crash projections.

Although some things are less expensive, others are more expensive. I don't really think about what the net worth of the "Average Joe" is when thinking of my own retirement. Even though my retirement home will be less expensive, I will get less for my present home so that is a wash.

There is always the possibility that my SS might be less than I expect or taxed heavily, and/or that I might end up spending more for medical than I presently expect, and/or that hyperinflation might eat up my net worth a little. I have always had these problems in mind, though, so nothing has changed there either.

 

[FIREd]

No, I still need the same amount to retire than I did 2 years ago. My original plan had a lot of padding in it - basic living expenses would be covered with a SWR of 1.5% or less in the original plan.

It looks like such a plan would have allowed us to weather 2008/2009 just fine, so I do not see the need to make any changes to our FIRE target yet.

The crisis has not damaged our NW at all. After some set back in 2008, the market rally has erased all traces of the crisis in our finances and we are right back on track. We have however reduced our allocation to stocks, so we are expecting our portfolio to grow at a slightly slower pace than originally anticipated. It's OK though because our savings rate has gone up and it should more than make up for it.

 

[walkinwood]

... has your answer to "how much is enough" changed?

It hasn't change for me.

Before I ER'd, I knew I'd need to be flexible. Now, I know I can be!

 

[Zathras]

No change here to "How much is enough".
Same plan, same 'diversification' is good ideaology.
The 'crash' from Dow 14000 hurt, but the recovery from 7k-10k has more than made up for it in terms of my income stream from investments.
I do feel fortunate that I was in a position to continue buying when the market was around 7-8k.

 

[Bestwifeever]

Not really. How about your plans, Lars? Any changes?

 

[LARS]

I am surprised that the decline in real estate values isn't more of a drag on people's observations, given home prices are off anywhere from 30 to 60% depending on where you live and how expensive a home you own.

I suppose another way to have asked the question is do you feel better or worse off given the recent "mess" and is that impacting your "plans" for the future (either reduced spending, pushing back ER date, etc.)?

In our own case, we are better off given a decision to exit residential real estate and rent. A combination of smarts and luck as a change in location coincided with the meltdown.

 

[Bestwifeever]

Our house's value has fallen like everyone else's (but I also imagine it is worth a little more than we paid for it three decades ago ). We choose not to include its value in our planning and we are not anticipating selling it anytime soon, so it's a non-factor. We never really did consider our house as an asset; I'm thinking its value today might add another 15% to our net worth? But we wouldn't increase our withdrawal by 15% as a result, so meh.

We also haven't reduced our spending since re'ing on 8/8/08. About a year before that date we started tightening up in anticipation. I am happy to report that peanut butter sandwiches are not our primary meal, and we have traveled more this past year than the previous five years' all together.

 

[W2R]

I am surprised that the decline in real estate values isn't more of a drag on people's observations, given home prices are off anywhere from 30 to 60% depending on where you live and how expensive a home you own.

I would imagine that that WOULD really affect people living in multimillion dollar homes in areas that suffered the worst real estate slumps. This would be especially relevant if they were planning on financing retirement by selling the house, buying a $60K house in the Midwest, and pocketing the difference. I don't think that too many on this board have that plan of action in mind, but then I have been wrong before.

I suppose another way to have asked the question is do you feel better or worse off given the recent "mess" and is that impacting your "plans" for the future (either reduced spending, pushing back ER date, etc.)?

Neither better nor worse at this point. That may not hold in the future (who knows?). I am not looking forward to putting my home on the market, I admit, and it might take longer to sell and move.

Edited to add: No, I feel better at this point because now I *know* that even at the bottom of the worst crash since the Great Depression, I would not have had the slightest hesitation to retire and I would have been just fine. My computations said this previously but computations can be wrong - - and the crash actually showed me that I would not sell low, and that I would not regret having retired.

In our own case, we are better off given a decision to exit residential real estate and rent. A combination of smarts and luck as a change in location coincided with the meltdown.

Good move!

 

[LARS]

I am happy to report that peanut butter sandwiches are not our primary meal...

Hey, don't knock PB&J sandwiches. Whenever I have one (which isn't often enough) it brings back memories of my youth.

 

[RunningBum]

I'd say it's made me more aware that hitting your "number" on a run-up probably isn't sufficient since the market can correct to well below that. So while it hasn't changed my "how much is enough" number, I do want to make sure it's going to stay very near or above that number.

 

[LARS]

No, I feel better at this point because now I *know* that even at the bottom of the worst crash since the Great Depression, I would not have had the slightest hesitation to retire and I would have been just fine. My computations said this previously but computations can be wrong - - and the crash actually showed me that I would not sell low, and that I would not regret having retired.

What an excellent "the glass is half full" answer and you make a very good point.

If you have been successful in managing the current financial landscape with out harm, you are most likely able to weather the future storms that will surely be coming.

 

[Zathras]

As Bestwife commented, we also never counted our house as an asset or included it in retirement planning. It is a non-factor for us.
Our house is a bit more expensive, and our area was especially hit hard, our house is probably worth about half of what is was 3 years ago.
Howver, as we are not selling it, it doesn't matter to us.

As for if I feel better or worse off? I feel better as the downturn gave us great 'bang for our buck' in buying more stocks at sale prices

 

[samclem]

Nope, no changes as far as the pot needed to retire. And the house value doesn't affect us in any way (heck, if it decreased, on paper our property taxes might go down. In reality, we know the county would just find a way to keep their "take" the same).

But, I did re-look at my equity/bond/cash mix and have slightly increased the cash, and plan to increase the bonds. Not a lot of change, but enough to give us one more year of "cushion" in the cash bucket. And much of the cash will be going into a small CD ladder rather than sitting in a MM account.

 

[bbbamI]

... has your answer to "how much is enough" changed?

No. DH retired at the end of February. We planned on taking 3% SWR and that is what we are doing. Our net worth is going to fluctuate over the years. We'll do what we have to do....cut down on expenses or get a part-time job if absolutely necessary. We planned for the 'what ifs' until we were purple. It's now time to enjoy our lives.

Clearly losses in equities and real estate have impacted current and future views on attainable net worth.

I never figured 8 to 10 percent growth per year on equities. In regards to real estate, our home has never been factored into our net funds. I have two totals...net worth (includes everything I own) and net funds (money).

Do you think you need less given the average Joe's net worth is down 30% (don't ask me to substantiate that number, just a WAG)?

I'm not the average Joe...I was never that far down.

Or do you need more given the uncertain future?

Who knows? I know I've done the best I can. I'm content for now.

 

[Moemg]

My house dropped in value but it was always a good chunk above the price I paid for it and it's not included in my retirement planning so it did not really affect me . The market dropping so swiftly and hard bothered me more especially since it was my first year in retirement . I had to mentally fight with myself not to sell and except for a small amount I did not sell . Even with the losses I was still 100% safe according to Firecalc so what I have is enough . I am one of those do what is required type of people so If I had to return to work I would . Unlike Khan I am not selling my kidneys you never know when you might need one .

 

[FIREd]

I am surprised that the decline in real estate values isn't more of a drag on people's observations, given home prices are off anywhere from 30 to 60% depending on where you live and how expensive a home you own.

I suppose another way to have asked the question is do you feel better or worse off given the recent "mess" and is that impacting your "plans" for the future (either reduced spending, pushing back ER date, etc.)?

In our own case, we are better off given a decision to exit residential real estate and rent. A combination of smarts and luck as a change in location coincided with the meltdown.

Our local real estate market is barely down. Based on recent comps in our neighborhood, I'd be surprised if our home value went down more than 5-10%. But our home represents such a small portion of out net worth anyways that even if it went down 50% it would not have a huge impact on our future at all. Quite frankly, 2009 has been our best year ever, financially speaking. Our portfolio has doubled since last Thanksgiving and we feel much more secure than we did a year ago. A few more years like that and we could reach FI way ahead of schedule...

 

[LOL!]

Home prices in our area never went up in the last 15 years, so they didn't come down either. Pretty darn stable around here.

It seems the consensus, once again, is that nobody lost any real money in the last year. Where do all these rumors start that there has been a financial crisis?

 

[W2R]

Home prices in our area never went up in the last 15 years, so they didn't come down either. Pretty darn stable around here.

It seems the consensus, once again, is that nobody lost any real money in the last year. Where do all these rumors start that there has been a financial crisis?

I'd sure hate to be a kid looking for my first job. But as far as a new retiree like me is concerned, life is looking pretty rosy.

 

[kat]

I got through this okay -- but don't want to sound like I know what's coming. My net worth dropped a great deal, but I bailed out to take tax losses, and then got back in at the lowest point in Feb 09. Now I am where I was in Oct. 07 -- minus the living expenses I withdrew from Oct. 07 to Nov. 09. I think I was helped a bit by taking a chunk of money out of stocks to buy a second home at a great price with cash in 07.

The lesson I might be learning is everything can be dealt with. I hope it's as true in my 70's and 80's as it seems in my 40's.

 

[hankster]

I don't think my view of "how much is enough" has changed significantly. What has changed is my view of asset allocation (I found out I'm more of a 50/50 guy at this stage). I'm also more interested in the "buckets" approach of nest egg withdrawal. It must be much less stressful to have a good pile of safe money to draw from while the longer term stock holdings go through their market gyrations.

For those of you who had "buckets", did you feel more at ease during the downturn?

 

[Moemg]

Home prices in our area never went up in the last 15 years, so they didn't come down either. Pretty darn stable around here.

It seems the consensus, once again, is that nobody lost any real money in the last year. Where do all these rumors start that there has been a financial crisis?

I live in Florida and home prices here are anything but stable . They have dropped like a lead baloon and still have not stablized . The tremendous amount of foreclosures have pulled the whole market down . Home sales have finally started to take off so hopefully prices will come up a little . I know a lot of people mostly young people who bought at the top of the market and are now trying to sell their homes for a lot less than they paid because of job cut backs . So it is any thing but stable here !

 

[rescueme]

For those of you who had "buckets", did you feel more at ease during the downturn?

Since you asked, absoutely ...

When I retired in early '07 (age 59), I set my "cash bucket" (kept in a deferred MM account) to my pre-retirement plan of 3-5 years in gross income (includes tax due on tax-deferred withdrawls) and a review at year end to replenish that bucket, if need be and the market had positive returns.

Last time I "topped it off" was in late '07, to bring it up to 4 years of budgeted expenses. Of course, I'm now down to two years (have not sold anything at all) and will replenish when I feel I need to harvest a bit.

That dosen't include my bond holdings, which represents many, many years of gross income. That will be reduced when I file my 50% spousal SS against my wife at her FRA (age 66 - we're the same age), and then take my SS at age 70.

The idea of the cash (bucket) reserve was one that I investigated well before my retirement. Glad I did it; the only thing I didn't like was I had to test my "theory" so early in retirement ...

BTW, my DW (still wo*ks) but we also filled her cash bucket back in '07, when she first considered retirement. It has not been touched, and remains there till retirement (which can be any day). She will be taking SS at age 62 (assuming she retires next year); that will mean that she will be overfunded in cash (vs. the 3-5 year target), but that's OK....