|
|
10-23-2017, 05:39 AM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
|
I retired 7/5/2016. I planned for a bit of a buffer. I assumed my expenses would be double whet they actually were, and my revenue half of what it was. It's only been a few months, but the portfolio is up, and rents are up very nicely too.
If you retired on a bare minimum, you are at risk of many things. Inflation, lifestyle creep, changing of laws, etc. Sequence of events is just one event.
Worse case happens, and you run out of money, there are many programs that keep people in shelter, food, and healthy. The only thing better financial planning gets you is choices.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
10-23-2017, 06:12 AM
|
#22
|
Thinks s/he gets paid by the post
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,688
|
I FIREd in 2013 and addressed sequence of return risk by assuming a arbitrary 20% increase in expenses, that our money would have to last forever and a few other things.
Returns have been in my favour over the last four years. I know they won't always be so good but I'd like to think we're able to withstand a few bad years without losing sleep.
__________________
Budgeting is a skill practised by people who are bad at politics.
|
|
|
10-23-2017, 06:33 AM
|
#23
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,421
|
Quote:
Originally Posted by Senator
If you retired on a bare minimum, you are at risk of many things. Inflation, lifestyle creep, changing of laws, etc. Sequence of events is just one event.
|
Agree. 'Sequence risk' might only apply if you're in the market.
IMO, having all your money in CDs or other vehicles with low potential for good growth is far more risky to long term portfolio survival than sequence risk. Poor money management skills is another.
Having said that, I retired at the start of 2006 and endured the 2008 crash 18 months later without any permanent damage; buy and held (white knuckled some days, but held).
__________________
Living well is the best revenge!
Retired @ 52 in 2005
|
|
|
10-23-2017, 06:53 AM
|
#24
|
Full time employment: Posting here.
Join Date: May 2014
Posts: 986
|
According to a calculator, the annualized S&P 500 return from January 2000 to September 2017 is only 1.076%. It would be 2.977% with dividends reinvested. So valuation does matter. When you retire does matter. Money should be discounted when the valuation is high.
|
|
|
10-23-2017, 07:01 AM
|
#25
|
Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,212
|
I retired 2014. Earlier this year I posted a thread asking how long do I need to worry about sequence of returns... I still, very much, worry about it... And an keeping my purse strings tightly held. The market gains have been great.... But we all know there are cycles to the market... Including down cycles. I figure we'll be out the worst SOR risk about the time my kids get out of college.... (Freshman and junior in high school now). That's also when we plan to seriously bump up our travel.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
|
|
|
10-23-2017, 07:04 AM
|
#26
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,698
|
I retired in late 2008 as the markets were crashing. But that actually helped me a lot, giving me an extra boost to begin my retirement I had not anticipated when I was putting together my ER plan. What happened was I was able to buy about 25%-30% more shares in a bond fund at bargain-basement prices. Those extra shares have given me extra dollars each month in the fund's monthly dividends.
I have two AAs in my portfolio, each monitored separately with different goals. In my taxable portfolio, the one which provides me with the money to pay my bills, I want to keep it more income-oriented while keeping a decent amount in stocks to act as an inflation guard. It's about 65/35 in favor of bonds and I adjust it only to tweak the dividend inflow. Since 2014, I have been taking as cash (instead of reinvesting) the stock fund's quarterly dividend to supplement the bond fund's income and help cover my expenses while maintaining a cushion to enable me to maintain my daily lifestyle. I had always envisioned doing this as part of my ER plan.
In my rollover IRA, one I won't have unfettered access to until I turn ~60 (5 years from now), I have been gradually adjusting the AA toward more bonds. Back in 2008, when I first created it from my 401k, it was 53/47 in favor of stocks (55/45 target). Now, with a 54/46 AA in favor of bonds, it is 53/47. I have made many rebalancing moves in the last 9 years thanks to the stock market increase although a few moves went in the other direction. Both the stock side and bond side have more than doubled.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
|
|
|
10-23-2017, 07:06 AM
|
#27
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
|
Quote:
Originally Posted by flyingaway
According to a calculator, the annualized S&P 500 return from January 2000 to September 2017 is only 1.076%. It would be 2.977% with dividends reinvested. So valuation does matter. When you retire does matter. Money should be discounted when the valuation is high.
|
Do you have a link to this calculator? That S&P 500 annualized return sounds low to me.
|
|
|
10-23-2017, 07:07 AM
|
#28
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
|
Quote:
Originally Posted by flyingaway
According to a calculator, the annualized S&P 500 return from January 2000 to September 2017 is only 1.076%. It would be 2.977% with dividends reinvested. So valuation does matter. When you retire does matter. Money should be discounted when the valuation is high.
|
100% agree. If you retire too late, you could be dead.
How do you know if the valuation is too high? And do you keep working until it is low? Or how much do you discount it? Those are the OMY+ things that keep many people in the salt mines...
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
|
|
|
10-23-2017, 07:17 AM
|
#29
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,421
|
Quote:
Originally Posted by Senator
How do you know if the valuation is too high? And do you keep working until it is low? Or how much do you discount it? Those are the OMY+ things that keep many people in the salt mines...
|
Right. "When you retire DOES matter" but it's usually in hindsight.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
|
|
|
10-23-2017, 07:27 AM
|
#30
|
Thinks s/he gets paid by the post
Join Date: Dec 2016
Posts: 1,336
|
Quote:
Originally Posted by Senator
100% agree. If you retire too late, you could be dead.
How do you know if the valuation is too high? And do you keep working until it is low? Or how much do you discount it? Those are the OMY+ things that keep many people in the salt mines...
|
Exactly...
and valuations like PE are not predictive....PE at end of 2008 was over 50...markets aren't that easy to predict....and this whole CAPE thing is flawed too and by admission of the author is not predictive either....
|
|
|
10-23-2017, 08:30 AM
|
#31
|
Gone but not forgotten
Join Date: Jul 2012
Location: Peru
Posts: 6,335
|
Retired 1989.
Can't comment on investment risk because I don't have a good background in finances. So far, probably below average returns on our IBonds (1989 -2003)... long haul about 5+%. The good part is that our net worth hasn't changed dollarwise since retirement, and now planning for the future is much easier, since the "future" is much shorter. A quick look at the median net worth for our age (soon to be 82) shows we're at the 75th percentile.
The "best" part is that at this age, worry about money is no longer there, having been replaced by concern about the coming zombie apocalypse.
|
|
|
10-23-2017, 08:41 AM
|
#32
|
Full time employment: Posting here.
Join Date: May 2014
Posts: 986
|
Quote:
Originally Posted by MichaelB
Do you have a link to this calculator? That S&P 500 annualized return sounds low to me.
|
dqydj.com
|
|
|
10-23-2017, 08:53 AM
|
#33
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,022
|
Quote:
Originally Posted by flyingaway
According to a calculator, the annualized S&P 500 return from January 2000 to September 2017 is only 1.076%. It would be 2.977% with dividends reinvested. So valuation does matter. When you retire does matter. Money should be discounted when the valuation is high.
|
These numbers are "inflation adjusted" by the calculator. https://dqydj.com/sp-500-return-calculator/
Not adjusting for inflation the calculator shows the returns are 3.222% and 5.164% respectively.
__________________
Numbers is hard
|
|
|
10-23-2017, 08:55 AM
|
#34
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
|
|
|
|
10-23-2017, 09:54 AM
|
#35
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,376
|
Careful there, for many of us qualified dividends and LTCG are 0%, not 15%.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
10-23-2017, 10:29 AM
|
#36
|
Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Texas
Posts: 3,024
|
I retired in July 2013. DW and I both have pension annuities and some rental income. That, combined with dividends from the taxable account, means that we rarely sell shares. Our WR is less than the overall portfolio dividend rate, but because we reinvest in tax-deferred, we do have to sell shares occasionally in the taxable account.
We are both 56 with no mortgage and two large SS benefits still to come. We also plan to downsize the house at some point, which will reduce total expenses by about 15%. Portfolio is up 32% since July 2013 and that includes expenditures for a new car, several home improvement projects, college expenses for DD the first year, and international travel every year.
I don't worry much about SOR. The market could drop 32% and we'd still have the same nestegg as the day we retired. Plus same cashflow coming in and several years closer to SS. If necessary, in the remaining years before SS, we could easily drop discretionary spending such that expenses were covered with cash inflows from pensions, rentals, and dividends.
My bigger long-term concern is inflation since one pension is non-COLA and the other has a partial COLA. I also worry about longevity and LTC both for ourselves and the in-laws who are 85, in poor health, and just about out of money.
__________________
Retired at 52 in July 2013. On to better things...
AA: 85/15 WR: 2.7% SI: 2 pensions, SS later
|
|
|
10-23-2017, 10:34 AM
|
#37
|
Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
|
Cobra: sounds like you are in excellent shape. I would note however that based on your portfolio increasing 32% since retirement you could have a .32/(1+.32) or about 24% decline to get back where you started.
|
|
|
10-23-2017, 10:38 AM
|
#38
|
Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
|
Quote:
Originally Posted by SheitlQueen
I retired two years ago and also plan to slowly reduce my equity AA as I get older.
|
I also retired two years ago but plans to keep my 60/40 ratio.
|
|
|
10-23-2017, 10:49 AM
|
#39
|
Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,999
|
Quote:
Originally Posted by flyingaway
dqydj.com
|
I assume this does not reflect any rebalancing activity. However, if one rebalanced a 60/40 portfolio over all of these years, I suspect the returns would be much higher.
|
|
|
10-23-2017, 11:00 AM
|
#40
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2010
Posts: 5,915
|
Retired in 2011.
Sequence of returns has provided significant gains to our portfolio. So has low inflation. There was an added bonus from downsizing, placing our home equity in the market, and renting for five years.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|