What happens if the unthinkable happens?

My DW always complained in the past about how conservative (read miserly) I was about financial planning. I chose a federal gov't career partly for the pension and health care benefits. We lived below our means and saved at least 20% of our incomes. We own our home outright and have no other debt. When DW questioned whether we could both really afford to retire at 55 I explained that, even if the stock market went to zero, our COLA'd pensions and her social security would cover 100% of our regular living expenses. Well, now our investment portfolio is down over 40% from its peak. She will start collecting social security in December of this year and other than the paper loses, the economic downturn (read depression?) has had no effect on our lifestyle. If the S&P falls to 150 and stays there for a long time, our plans to fully pay for college for our grandchildren (none as yet) might have to be cut back and we may travel less and hold onto cars longer but that's about the only impacts.

Grumpy
 
audreyh1 said:
To me the unthinkable is nuclear holocaust. Oh yeah - losing family members is also unthinkable.

Audrey
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I'll one up you. If you listen to scientist and not politicians, which can be hard to distinguish nowadays, you will really get scared when you hear about a possible magnetic reversal on earth along with the lack of sun spot activity,...wait for it.....wait for it,.... ice age. Ice ages happen abruptly and on a very predictable cycle and guess what, we are due. 95% of glaciers have been growing for the past 10 years at a rapid pace. Al Gore just happened to focus on the 5% that aren't. A convenient lie......

 
Dex: I agree, this is the perfect time to give the USA a stress test.
Economy in shambles, military spread out,new untested administration.
Watch N Korea they have racheted up the tension in the past week, but of course
they may just want more aid.
Old Mike
 
newporttony said:
... "investment class" (which I believe is now about 60% of Americans) ....
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Wow, 60% of Americans qualify as "investment class"?? A little googling came up with this, dated 9/18/08 but could be today's news:

Investment Class : Clips & Comment

The financial markets are no longer the playground of just the investment class. The financial markets add to or detract from the bottom line of nearly every American who has anything socked away for retirement.... If you have money in a 401k or IRA or other investment vehicle, there is less in that account than there was a week ago.
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The funny thing is this: with all the talks about great-depression lately, I realized that I have been preparing for years for bad economic times.

When I was younger I learned from my great depression-era grandparents how to stretch resources and be self-reliant (recycle everything, grow food, make bread, etc...). I bought a plot of raw land with my first pay check on the advice of my grandparents: their thinking was that, with raw land you can farm, you can't go hungry. I have saved a good chunk of my income since 2000 (for rainy days). I started hoarding gold and silver in 2003 (for fun at first). I started buying books about the great depression in 2004 and survival guides in 2006 (I can't remember what compelled me to buy such books at a time when the economy was striving). In the past 3 years I have learned valuable skills (that could become critical in a crisis as it turns out), such as growing vegetables in tight, urban spaces and curing mild ailments with natural remedies (I have started a small medicinal garden in my backyard). Somehow I had never connected all those dots until recently.

No, I am not crazy. I didn't lock myself in a bunker for Y2K (I was so confident it was a bunch of fluff that I was actually flying at 35,000 ft over the Atlantic Ocean on 01/01/2000 at 12:00 a.m.) and I don't have boxes upon boxes of freeze dried food piled up in my garage. I don't stockpile guns and ammo and I do not expect civilization to end or even break down any time soon. I certainly wouldn't consider myself a survivalist. And I remain hopeful that we will avoid another great depression.

But looking back on this, it just wish I had better prepared my portfolio...
 
Ed_The_Gypsy said:
Dividends will continue. Just like in the Great Depression. You do own stocks that pay dividends, don't you?
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I keep seeing stuff like this, finally have to [-]butt in[/-] refute this (at least to a certain extent). According to Value Line data, the DOW stocks had $12.8 in dividends in 1929. This dropped to $11.1 in 1930, $8.4 in 1931, $4.6 in 1932, and $3.4 in 1933. It wasn't until 1949 when dividends on the dow stocks returned to 1929 levels. In percentage terms, almost three quarters (73.4%) of the dividends were lost by 1933.

I own lot's of dividend stocks, but please don't believe that the dividends are sacrosanct.

(In comparison, the dow stocks earnings went from $19.9 in 1929 to a low of -0.5 in 1932, while book value didn't have nearly the same drop... $91.3 in 1929, $80.5 in 1933.)
 
REWahoo said:
Since 2/3 of Wellesley's holdings are bonds, I'm hopeful the impact of all the cuts to stock dividends will be small. The yield is still showing at 5.6+% and that is encouraging.
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I did a quick analysis of Wellesley's stock portfolio. In the top 30 holdings, I see 5 companies that have cut dividends (all banks + GE), 15 companies that have maintained their dividends and 10 companies that have increased their dividends (whut?!?). If you take into account the great yields that can be found currently on corporate bonds, I think there is a good chance that Wellesley's dividend will remain substantial in the near future. But there is a risk if the economy worsens markedly and for a prolonged period of time.
 
I think the one of the saddest things we humans face is the death of expectations. DH and I always dreamed that when we retired we would be able to winter far away from these awful northern winters. Some place warm and beautiful. I realize now that that will never happen. Oh, not that we couldn't manage a week or two here and there, but certainly not a whole winter. Now we will have to do more with less money like most of the people here.
 
copyright1997reloaded said:
I keep seeing stuff like this, finally have to [-]butt in[/-] refute this (at least to a certain extent). According to Value Line data, the DOW stocks had $12.8 in dividends in 1929. This dropped to $11.1 in 1930, $8.4 in 1931, $4.6 in 1932, and $3.4 in 1933. It wasn't until 1949 when dividends on the dow stocks returned to 1929 levels. In percentage terms, almost three quarters (73.4%) of the dividends were lost by 1933.

I own lot's of dividend stocks, but please don't believe that the dividends are sacrosanct.

(In comparison, the dow stocks earnings went from $19.9 in 1929 to a low of -0.5 in 1932, while book value didn't have nearly the same drop... $91.3 in 1929, $80.5 in 1933.)
Click to expand...

Well, I feel much better about the situation having read the above...NOT!:LOL::LOL::LOL::LOL::ROFLMAO::ROFLMAO:
 
shoe said:
DH and I always dreamed that when we retired we would be able to winter far away from these awful northern winters. Some place warm and beautiful.
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Well come on down to my neck of the woods...we could be neighbors! Very nice homes to be had without spending a lot of money.

It's warm, but not beautiful....unless you have a few Shiners; then the atmosphere can be quite lovely. :greetings10:
 
Thanks for the invite bbbam1! What do you mean by Shiners? Black eyes?
 
This thread makes me want to re-read "The Road". It will seem uplifting ... (I do love Cormac McCarty and have read all of his books.)

t.r.
 
shoe said:
I think the one of the saddest things we humans face is the death of expectations. DH and I always dreamed that when we retired we would be able to winter far away from these awful northern winters. Some place warm and beautiful. I realize now that that will never happen. Oh, not that we couldn't manage a week or two here and there, but certainly not a whole winter. Now we will have to do more with less money like most of the people here.
Click to expand...

South Louisiana doesn't cost much. It is warm (REALLY warm) down here in the summer. My house is only 1600 square feet, but I think it is beautiful. There are flowers everywhere in my neighborhood, and it was sunshiny and around 80 today. You can have it for a modest price at any closing date you wish in the next year. No beer required! :D
 
The question of what will happen if the S&P500 hits 150 is not an impossibility. As a matter of fact our government has basically been arguing that without their intervention into AIG , Citicorp BOA and all the other entities it might have happened already.

My take is that if the S&P500 hit 150 it would be similar to what happened in the 1930's when all the banks went bust. The great wealth of the country just evaporated. Now more people own equities than at any other time. it would be likely with S&P500 at 150 that there would be a severe lack of confidence in government at that point and many banks would have been closed or shut down.

If the S&P was at 150 most likely we would be engulfed in deflation and not inflation or else the prices of the stocks would be higher even if it was in inflated dollars. Therefore anyone not in debt and with cash available to purchase goods will see a gigantic increase in their living standard even though the economy at large would be in shambles. Scapegoats would be dragged out by politicians for the cause of the misery and conflicts between countries will surely escalate.

The idea of living under underpasses would not be likely as there are a whole lot more citizens than there are underpasses.

But from the bottom when finally struck, will come a growth that can last. But to survive and thrive one would need a healthy amount of cash that could survive intact from the chaos that would surely be engulfing the country if the S&P500 were to go to 150.
 
There is a life stress scale published at Holmes and Rahe stress scale - Wikipedia, the free encyclopedia

The unthinkable...that can take many forms. I've already collected the top 100 points, so I have a different perspective on what "the unthinkable" is.

On the lighter side, it is an interesting list...in our context...
Retirement earns 45 points.
Change in financial situation is 38 points.
So the combo for recent FIRE folks is 83 points.
then add a change in residence (20 pts) and you have 103 points.

Hmmmmm...so may we conclude that we should not retire, move, and lose our derriere in the market all at once?
 
Running_Man said:
The idea of living under underpasses would not be likely as there are a whole lot more citizens than there are underpasses.
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I've already have this figured out. I'm going to get two refrigerator boxes, tape them together and ta dah.....a duplex. I'll live in one box and rent out the other.
 
bbbamI said:
I've already have this figured out. I'm going to get two refrigerator boxes, tape them together and ta dah.....a duplex. I'll live in one box and rent out the other.
Click to expand...
If you start gathering boxes now you might be able to corner the DFW market...
 
REWahoo said:
If you start gathering boxes now you might be able to corner the DFW market...
Click to expand...

sFun_mischieviousbig.gif
 
bbbamI: The refrigerator boxes are probably made in China from crappy cardboard, they will dissolve during the first rain.
I also just love the pressed sawdust baby furniture.
Old Mike
 
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