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When you have enough?
Old 08-09-2020, 12:02 PM   #1
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When you have enough?

How do you know when you have enough to retire when the stock market is so wild? Even with diversification, it is crazy.

I think we have plenty but as March showed us, one could lose tens of thousands of dollars in one day.
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Old 08-09-2020, 12:14 PM   #2
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... I think we have plenty but as March showed us, one could lose tens of thousands of dollars in one day.
Stop watching. It will make you crazy. Check maybe once a year and have faith in the long-term trends.
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Old 08-09-2020, 12:17 PM   #3
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How do you know when you have enough to retire when the stock market is so wild? Even with diversification, it is crazy.

I think we have plenty but as March showed us, one could lose tens of thousands of dollars in one day.
No one knows for sure. Vast majority of folks believe that the stock market will generally go up in value. Try FireCalc which will simulate your numbers using data since before 1900 (?)
It will help to note that the market has always been wild; Going up and down as much as ~50% in history, and with those up and down data, FireCalc will let you know if you are likely to be OK or not
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Old 08-09-2020, 12:24 PM   #4
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Impossible to know, just make best guess.
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Old 08-09-2020, 12:27 PM   #5
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... FireCalc will let you know if you are likely to be OK or not
Well, not exactly. From the FireCalc home page:

(FAQ) How can FIRECalc predict future returns from past performance? (Answer) It can't.
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Old 08-09-2020, 12:28 PM   #6
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You could also use Firecalc' tab "Your Portfolio" and click "Portfolio Consistent Growth" and put 0 or .1 or .01. I've done this thinking absolute worse case scenario, using a starting portfolio of 1/2 of what we have currently. So, you're entering numbers that you're actually losing money over time. The inflation rate might be 2% and your consistent growth might be 1%. Or a negative number in consistent growth.



It's my "doomsday" scenario. This approach helps me stay in the market, actually. We're staying in 60/35/5.
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Old 08-09-2020, 12:38 PM   #7
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With respect to market volatility, it helps me to remember that Iím only relying on a small portion of my retirement portfolio each year. Iím decumulating well in advance of RMD time (personal choice) and will be withdrawing 2.9% this year. Any percentage change this year will only affect that 2.9%. Then start again, so time is on your side.
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Old 08-09-2020, 12:41 PM   #8
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How do you know when you have enough to retire when the stock market is so wild? Even with diversification, it is crazy.

I think we have plenty but as March showed us, one could lose tens of thousands of dollars in one day.
Before you answer that question, you have to answer the question "what do I need?" Calculators like FIRECalc will help you find that answer. Once you have that number, that will put a different perspective on what you choose to have in the market.

The other exercise I do, imagine your equities are priced at 50% (or lower if you are really pessimistic) of what they are now. What does that do to your numbers? If you can still sleep at night, fine. If not - reconsider your AA.
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Old 08-09-2020, 12:46 PM   #9
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I recall a posting saying that Firecalc updated its recent market data, does this include the great recession of 2020 data in its models?
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Old 08-09-2020, 12:50 PM   #10
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I didn't retire until I had a nice buffer. How big of one depends on your comfort level and what you think of the market in general, and how much you rely on it. It could possibly drop 50% as someone above said, but it would likely (but not certainly) bounce back from there.

A lot also depends on how fed up you are with your job, how your health is, how easy it would be for you to make a decent income if you did have to return to work, how easy it is to cut fat out of your retirement budget, and so on.

As you can see, there are too many factors to give you a concrete answer. Back to my situation, I'm glad I didn't pull the trigger going into the great recessions. I waited until 2011 because my job situation was very manageable. It's been really nice to not sweat whether my funds will last, even as the market dropped this year.
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Old 08-09-2020, 12:52 PM   #11
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I recall a posting saying that Firecalc updated its recent market data, does this include the great recession of 2020 data in its models?
Firecalc usually has its data updated around Apr/May once a year for data up until 01/01 of the the current year, so no Mar 2020 update yet.
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Old 08-09-2020, 12:53 PM   #12
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Try using many of the retirement calculators to feel a little more comfortable.
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Old 08-09-2020, 12:55 PM   #13
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I use firecal along with fidelity's tool (always counting on the very worst market conditions just in case). So far, they have given me increasing confidence in the plan we acted on almost 4 years back. No matter what, some of this RE biz is (for me) a bit of guesswork & intuition combined with years of finance experience + luck & the largest by far being good advice. Much of this guidance was gathered in these forums, or in places to which they referred.
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Old 08-09-2020, 12:59 PM   #14
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Firecalc usually has its data updated around Apr/May once a year for data up until 01/01 of the the current year, so no Mar 2020 update yet.
thanks !
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Old 08-09-2020, 03:18 PM   #15
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Stop watching. It will make you crazy. Check maybe once a year and have faith in the long-term trends.
Great advice. I have no idea how I would have the willpower to pull this off though.
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Old 08-09-2020, 03:20 PM   #16
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This has nothing to do with watching the markets on a daily basis. It has to do with how do you know when you have enough and can retire without worrying if the market goes down.

I feel like we have enough now but if the market were to go down like it did in March, we would have sleepless nights. I guess that is my answer!
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Old 08-09-2020, 03:35 PM   #17
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This has nothing to do with watching the markets on a daily basis. It has to do with how do you know when you have enough and can retire without worrying if the market goes down.

I feel like we have enough now but if the market were to go down like it did in March, we would have sleepless nights. I guess that is my answer!
I agree. When you're making a big decision like when to ER, you don't just look at the market once a year. Especially when it really seems overpriced right now.
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Old 08-09-2020, 03:37 PM   #18
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This has nothing to do with watching the markets on a daily basis. It has to do with how do you know when you have enough and can retire without worrying if the market goes down.

I feel like we have enough now but if the market were to go down like it did in March, we would have sleepless nights. I guess that is my answer!
Forgetting the quickness of it, the March drop represents a typical bear market, but just much more condensed.
Over the longer term, the markets usually work out if one has a reasonable WR%.
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Old 08-09-2020, 04:39 PM   #19
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This has nothing to do with watching the markets on a daily basis. It has to do with how do you know when you have enough and can retire without worrying if the market goes down.

I feel like we have enough now but if the market were to go down like it did in March, we would have sleepless nights. I guess that is my answer!
Then you are holding too much equity. It may not have anything to do with the amount you have but more your tolerance for volatility.
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Old 08-09-2020, 04:41 PM   #20
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Maybe you just don't have enough saved to retire if you are really dependent on market returns.... Check out some of the "won the game threads" that talk about this in some detail.

Example, in my case I set aside enough in fixed income investments that I could live comfortably for the rest of my life if the market tanked for an extended period of time. The rest I play the market and hope for the best. Now totally economic collapse would get us all.
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