Spoiled by 2017

[Mdlerth]

2017 was a banner year financially. Promotion at w*rk, last kid done with college, and markets were silly good. With money pouring in like rain, it felt like it would be a quick, easy slide to retirement.

It was going so well DW and I jumped on an opportunity to buy our retirement house, even while still owning the regular one close to w*rk. When we clock out for good, we'll move permanently to the lake house, so we have been blowing a chunk of dough on improvements there to make it suitable for aging in place. That has temporarily distorted our spending picture, throwing some confusion into our expected budget.

But markets peaked in Jan 2018 and since then have bounced about a lot but gone nowhere. My 401k, firmly entrenched in indexes, keeps hitting a glass ceiling. The maxed annual contributions plus matches are too minor to make much difference now. And our regular accounts have been ravaged by the jump in spending on the second home.

It's hardly that I'm headed for skid row, but FIRE feels no closer now than two years ago. Net worth-wise, we're still progressing since we have a lot more $$ in real estate. However, I've concluded that my own sense of financial security is a much stronger function of liquid resources and cash flow than anything else.

Anybody else find the same thing?

 

[cooch96]

Yes. Especially since I’m almost two decades from 59.5 and getting full access to 60% of my nest egg.

 

[Dtail]

Already retired. Different but related version, in that we keep getting close to our all time high hit in Aug 2018, then it falls back.
Currently 0.38% away, we shall see.

 

[RunningBum]

To the OP, you have your retirement home bought now, so when you do retire, you can sell your current home and get a cash infusion. The spending you are doing now is presumably an expense that you would've had later, even if you didn't really realize it. Or maybe it was a mistake to buy retirement real estate that needed so much work.

For the 401K, there is not really a glass ceiling. Just because your contributions and matches are less noticeable don't mean they aren't adding to your nest egg. Certainly the sideways market last year didn't help but this year should be looking better.

I don't know how else to help. You shouldn't be surprised if a bigger downturn is coming, and you lose more progress toward retirement. It's a bit dangerous to look at the possible top of a bull market and think you are well set for retirement, if a 20% drop would prevent it.

 

[Red Badger]

I retired on 6-30-17. To me, the run up was icing on the cake. But the cake was already done (layered with equities, assets, and cash). A further run up is welcome, but I also know there is a downturn bear lurking out there, ready to claw a hole in our cake.

 

[Winemaker]

2017 was a spectacular vintage for California Reds.

 

[Dtail]

I retired on 6-30-17. To me, the run up was icing on the cake. But the cake was already done (layered with equities, assets, and cash). A further run up is welcome, but I also know there is a downturn bear lurking out there, ready to claw a hole in our cake.

Yes, you can still have your cake and eat it.

 

[ckelly78z]

2017 for me was 18.9% returns, while most of 2018 was good, the last two months brought me down to a 2.9% YTD.
2019 so far has been much better at 23.2% (90% equities) so far, but I do understand your plight, the last 3 months have bounced around going no where for me.

 

[Perryinva]

Many of us were just too used to only one direction, on average, up, so everyone that made the major gains in the last 10 years is feeling the same. It’s also why I feel my pensions and future SS carried more weight in my decision to ER, vs portfolio size, and why I went to 61 vs 58, when the portfolio numbers hit. I REALLY pity the people (and I have plenty of relatives in this boat) that didn’t/weren’t able (but were they really?) to take advantage of the last 10 years and think that if they start now, they should be fine in 8-10 years!! I am SO grateful for the timing of the last 10 years, that wiped away so many stupid costly decisions I made pre 2000.

 

[Mdlerth]

The money junkie, searching for an ever higher high

To the OP, you have your retirement home bought now, so when you do retire, you can sell your current home and get a cash infusion. The spending you are doing now is presumably an expense that you would've had later, even if you didn't really realize it. Or maybe it was a mistake to buy retirement real estate that needed so much work.

For the 401K, there is not really a glass ceiling. Just because your contributions and matches are less noticeable don't mean they aren't adding to your nest egg. Certainly the sideways market last year didn't help but this year should be looking better.

I don't know how else to help. You shouldn't be surprised if a bigger downturn is coming, and you lose more progress toward retirement. It's a bit dangerous to look at the possible top of a bull market and think you are well set for retirement, if a 20% drop would prevent it.

I don't think I'm in any danger. I compute I could withstand a 70% drop before having to alter any retirement plans, but I was really, really, REALLY enjoying that volatility-free climb! It was a financial Creme Brulet, so sweet and rich that now it's finished I want to order another and another after that one.

Mary Poppins said, "Enough is as good as a feast." Even without another rocket-like spike, I have enough. But just because I don't absolutely need seconds on either desserts or stock market rampages doesn't mean I don't want them.

 

[Sunset]

I am glad we are back to where we were a year or two ago, depending upon what I'm looking at.

I've also decided next week to help you all out, and cash in about $30K of my IRA stocks for spending next year. If my history is any indicator the market should rocket up afterwards

 

[Andre1969]

Yeah, I'm in sort of the same boat. I feel like I've been mostly treading water since that high point in January 2018. In my spreadsheet, I only keep track of the last trading day of the month, and I seem to recall that I gained close to 4% by the end of January 2018. But, during the actual peak of that month, I think I was up close to 6%? Even with that bit of cooling off, it seemed like a great start to the year.

But then, Feb/March knocked it down. Still, I clawed back, and I think I peaked in September, with a return of around 8.4% for the year. October and December took care of that though...I think by 12/31/18 I was down about 7-8% for the year. That's my return. Actually dollar amount was down by more, because I bought a house, and put about $175,000 down.

I ran my numbers over the weekend, and have a positive return of around 20% so far this year. And if I was to add that $175,000 back in, my total investible assets would really be looking pretty sweet right now.

But, percentage-wise, I'd say I've seen a return of around 4.3% overall, since that high last September. So for all of 2018 and roughly the first 10 months of 2019, my return is around 13%. Still, not horrible, but a letdown compared to 2017.

I think I saw about a 17-18% return in 2017. It would have been better, but I received a fairly large inheritance, much of it invested later in the year, and I think that skewed my percentage down a bit.

 

[karen1972]

Maybe this is a good experience for you in testing the waters of withdrawal phase. At some point your assets may start declining and not just going up and up so mentally you have to get use to it. Taking out a chunk of money now to pay for the retirement home or having to take out a chunk later to renovate, replace things, etc.. it can put a dip in the funds especially if it just happens to correlate with a market downturn. I'm not sure people get use to it, but you have to figure out a way to deal with it as it is sure to happen at some point unless you save beyond what you could ever possibly spend. I took out 10% of my portfolio to upgrade the house the month before we dropped 20% last year, we didnt' hit my low water mark so I didn't stress but we didn't splurge this year either allowing us to make that back up.

 

[Golden sunsets]

I'm a little confused by your numbers. I no longer have our month end total assets for 1/31/18, and I know that 1/18 was s good month, but our 10/28/19 numbers are several hundred thousand dollars higher than 12/31/17, 9% higher to be exact, and we no longer contribute to our assets, as we are in the decumulation phase. We are 50/50(Equity/FI) AA index investors, so a 9% gain over that time period seems good to us.

 

[NW-Bound]

If I add back what I withdrew for living expenses, then I have barely exceeded my old high watermark back in Jan 2018. Not as good as setting a higher watermark in the face of spending, but a guy has to take a consolation prize sometimes.

I have told myself not to expect this bull to run forever. I do not fear running out of money, as my WR which is already low can go to 1% once I start my SS. Being already retired, I am already marching on the down slope, and I suspect I have less time than money.

I just want more money because I am scroogy, and like to see the total on my Quicken screen goes up and up.

 

[NW-Bound]

I'm a little confused by your numbers. I no longer have our month end total assets for 1/31/18, and I know that 1/18 was s good month, but our 10/28/19 numbers are several hundred thousand dollars higher than 12/31/17, 9% higher to be exact, and we no longer contribute to our assets, as we are in the decumulation phase. We are 50/50(Equity/FI) AA index investors, so a 9% gain over that time period seems good to us.

Not all posters here are indexers, and some sectors did not do well in 2018 compared to the S&P.

Additionally, if you have some international stocks, they really stink after Jan 2018.

 

[Palmtree]

Same here. I retired five years ago. At retirement we quit contributing to our accounts, just reinvesting gains. At a 60/40 investment, even with withdrawels, we are several 100 thousand up from when we retired.

 

[NW-Bound]

I last had earned income on May 18, 2012. The S&P was at 1295 that day. It is now 3039. The ratio is 2.35x, and that does not even count the dividend over the past 7 years.

So, of course retirees have all been doing well with the rising tide lifting all boats, even leaky boats if the leak is not too severe.

Did I get that 2.35x gain? Heck no, not after withdrawing money to spend. And I was not in the market at 100% stock AA. And I had the aforementioned stinky international stocks.

Still had a decent gain, so I am not going to complain. Just hoping I can hang on to it in the coming years.


PS. Early 2013, I was diagnosed with a life-threatening disease, and I could be pushing daisy easily. Modern medicine saved me. That is a much better blessing than the portfolio growth, which I would not see if they could not save me.

 

[Golden sunsets]

We do have a healthy % of our AA(13.67% ) in international equities, but are still up 9% over 12/31/17. Nothing exotic, straight vanilla 50/50 in index funds.

 

[jollystomper]

My investments are still up over 100K from the end of 2017, and that does not include contributions I made 1st half of 2018 and about 35K I have withdrawn this year just for grins. At the worst of last year investments were down 18K compared to the end of 2017.

While I wish it did not happen, retiring last year with all the market volatility helped me feel more comfortable that my retirement would go well, and glad that I used the strategy of having several years in cash to not be forced to touch my investments during volatile times.

 

[NW-Bound]

I am up relative to 12/31/2017 too, and that's even after withdrawal.

However, the month of Jan 2018 gave me a big boost, which unfortunately did not last.

 

[Dtail]

I am one small up day away from hitting my all time high from 08/18 after withdrawals.
Perhaps tomorrow, coz Wed Fed rate announcement usually doesn't bode well.

 

[Mdlerth]

Them crazy furriners didn't pay off too good

Additionally, if you have some international stocks, they really stink after Jan 2018.

That would include me. Foreign exposure did poorly this time around.

 

[audreyh1]

My taxable retirement fund, which I withdraw from annually, peaked in late Dec 2017. This month it finally exceeded that peak. So it has made up for two years of withdrawals on top of recovering from late 2018 correction.

My net worth, which peaked in Jan 2018, finally exceeded that level last month. It is now even higher.

 

[The Cosmic Avenger]

I also feel like 2017 was a banner year, and then 2018-19 have been up and down. We just recently surpassed our all-time high NW and investable assets earlier this month, and I keep reminding myself that, since we're not yet retired, this has been a buying opportunity that will help us later on. But the multiple five-figure emergency vet expenses we had earlier this year didn't help us feel any more flush. At least that situation worked out well, everyone is fine and healthy (for now).