Any stories of portfolio running out?

[tmitchell]

I was just reading a thread by @Dawgman who decided he's 'over saved,' which doesn't seem uncommon here.

Has anyone actually ran out, or gotten close to running to the end of their portfolio in this community?

 

[audreyh1]

Maybe we’re not old enough yet, LOL!

 

[foxfirev5]

FWIW. Nobody here has run thru a true failure sequence. Time will tell.

 

[RunningBum]

There have been a couple of people who have gone back to work though, haven't there? Wasn't there someone who was heavy on BofA with their dividends, and he really got tagged? As I recall he bravely came back here briefly to tell his story.

 

[NW-Bound]

During the Great Recession of 2007-2009, there were some posters who showed apprehension of their stash getting pummeled, and feared that they would not have enough. They eventually dropped out and never posted again.

The market has been bullish in the last 10 years. The recent turmoil was nowhere near enough to cause the same problem as it did 10 years ago. We will have to wait and see.

 

[MuirWannabe]

There have been a couple of people who have gone back to work though, haven't there? Wasn't there someone who was heavy on BofA with their dividends, and he really got tagged? As I recall he bravely came back here briefly to tell his story.

Yes, I believe that was Vacollector. He told his story in a couple old threads from the day. He really got hurt, although I seem to recall he slowly hung in there and was somewhat recovering. He was brave in his admissions of some big mistakes.

 

[pb4uski]

Yes, I believe that was Vacollector. He told his story in a couple old threads from the day. He really got hurt, although I seem to recall he slowly hung in there and was somewhat recovering. He was brave in his admissions of some big mistakes.

There have been a couple of people who have gone back to work though, haven't there? Wasn't there someone who was heavy on BofA with their dividends, and he really got tagged? As I recall he bravely came back here briefly to tell his story.

I found this:

Yep…inherited shares of BAC…retired knowing that I could get by on the dividends and would have the continued growth to fund most anything else I could imagine…

Then came the banking fiasco and BAC's troubles….still decided to try and make it work rather than return to it….I'm sill poorer and still holding BAC….

To add to my incredible investment skills, when I sold the 3 rental properties that we owned at the peak of the real estate market, I also put those funds in BAC (before the meltdown) ….only to watch those funds melt away too….


Some of us never learn!!

 

[cyber888]

I know stories of people with less than $2000 savings and are on SSI .. divorced. One person I know .. hubby emptied their bank account. If she has a little more, she hid the money to continue getting SSI. You stop getting SSi if you have more than $2000 in savings. These people don’t usually come to FIRE discussions. I knew one old school manager who was getting $75,000 a year and had no college degree and got unemployed in 2008 - he was never able to find another managerial job. His savings run out. He does janitorial job for,a school now and stayed with his mother. When his mom died, the family decided to give him their mom’s house, since he took care of her.

 

[Dtail]

Not sure there would be many stories of failure admitted to on this site, but who knows?

 

[tmitchell]

I guess not surprising there are no big stories here with this lot. In fact I haven't really heard any stories of running out anywhere in the FI community. Maybe just the mindset!

 

[RunningBum]

As NW-Bound said, the last 10 years have been very good to the market, and had low inflation. About the only way to fail would be unexpected catastrophic expenses or taking too much risk with a single stock. Or there's all the ways that lottery winners blow through their money, so I guess that goes to the mindset of people here to not do that.

Check back in another 10 years. Hopefully we have more of the same, but who knows?

 

[calmloki]

I dunno - we're down about 3 new 2020 Grand Touring Maxda CX5s in the last 19 days. Might not take 10 years to start seeing some failures. Guess we'll keep driving the 2017. Do hope that most of our tenants continue to pay rent, unlike the several who haven't bothered for the last 5 months. Count us in the Dawgman camp though, thank heavens.

 

[SecondCor521]

The only person I know of who even came close to running out was Rob Bennett, aka h o c u s.

There were several here in the 2008/2009 downturn who got nervous. I think some reallocated their portfolio to be less risky and thus probably did permanent damage. I believe some went back to work to protect the portfolio; these folk probably did fine and in retrospect didn't need to work but it wasn't a bad idea at the time.

 

[harllee]

The Continuing Care Retirement Community where DH and I plan to move requires you have a certain amount of assets and income before you move in (you have to provide a financial statement). The CCRC has a trust fund in case anyone ever runs out of money--they have never kicked anyone out. I asked if anyone ever had to use the trust fund. I was told there were 2 ladies, each over 100, who had run out of money and were getting payments from the trust fund. I guess anyone of us could run out of money if we live long enough.

 

[walkinwood]

The only person I know of who even came close to running out was Rob Bennett, aka h o c u s.

There were several here in the 2008/2009 downturn who got nervous. I think some reallocated their portfolio to be less risky and thus probably did permanent damage. I believe some went back to work to protect the portfolio; these folk probably did fine and in retrospect didn't need to work but it wasn't a bad idea at the time.

Count us as ones who went back to work, but in retrospect didn't need to.

We worked for a while in 2010 - 9 months for DW, 6 months for me. We had ER'd in May 08, so our skills were still relevant & it gave us comfort to leave our savings to recover. It also gave us more confidence in our ER prospects when we stopped working again.

If we need to, we'll do it again - but it will be years before a "failure" in our portfolio.

 

[rodi]

I think, in general, folks on this forum tend to be the type to be flexible... If the market has big down turns, they cinch their belts on spending... A natural reaction.

I also think if folks 'perfect plans' turn out less than perfect, they are less likely to post about it here... They quietly slip away...

 

[Stormy Kromer]

I knew several retirees in the 1970's and 80's who retired with their life savings in bonds, bank savings accounts and CD's planning to live off the interest and a modest SS check.


Interest rates went from double digits to near nothing and their bonds got called in.


Inflation ate up what spending power they used to have and many formerly wealthy people died without much wealth left at all in about 10 years time.


These were people who started life in the Great Depression and were very frugal and practical. They were scared to death of any investment that wasn't FDIC insured and many loathed the stock market. They viewed stocks as an evil investment just for "bankers and big shots" and some compared it to gambling, which is a sin.


My grandparents were of this sort. One kept cash in a cream can buried in the grove and another kept some cash in her deep freeze and another stash in the toilet tank. They saw banks go broke and it wasn't going to happen to them again.


The Depression affected them so hard that they never mentally recovered. They lived poor just in case they had to again. Funny thing is that by living like they were poor, it actually made them poor.

 

[ugeauxgirl]

I am a retiring FA and saw it happen a few times. There was a local bank that went public and then was acquired by a larger bank. Everyone thought it was bullet proof and many people refused to diversify. 2008 proved that it was not bullet proof.

Also, some people just didn't believe they could spend all the money they had. They didn't save enough and continued their working lifestyle in retirement. They NEEDED a swimming pool, and then a lavish trip to China, and then helping the grandkids with college... They ignored warnings that they were spending more than their portfolio could stand. Eventually they just spent it all.

Not in this community though.

 

[tmitchell]

I knew several retirees in the 1970's and 80's who retired with their life savings in bonds, bank savings accounts and CD's planning to live off the interest and a modest SS check.


Interest rates went from double digits to near nothing and their bonds got called in.


Inflation ate up what spending power they used to have and many formerly wealthy people died without much wealth left at all in about 10 years time.


These were people who started life in the Great Depression and were very frugal and practical. They were scared to death of any investment that wasn't FDIC insured and many loathed the stock market. They viewed stocks as an evil investment just for "bankers and big shots" and some compared it to gambling, which is a sin.


My grandparents were of this sort. One kept cash in a cream can buried in the grove and another kept some cash in her deep freeze and another stash in the toilet tank. They saw banks go broke and it wasn't going to happen to them again.


The Depression affected them so hard that they never mentally recovered. They lived poor just in case they had to again. Funny thing is that by living like they were poor, it actually made them poor.

Wow, what's it mean to have your bonds "called in?" Never heard of that.

 

[ugeauxgirl]

When interest rates decrease a lot, the issuer wants to refinance at a lower interest rate, same as you would with refinancing your house. They refund your principal, sometimes with a call penalty, and then you have to go out and find another bond to buy. Which will likely be paying a much lower interest rate.

 

[audreyh1]

Not all bonds are callable.

 

[Koolau]

Not all bonds are callable.

Yeah, just the ones I bought back in the day, but YMMV.

 

[Markola]

These were people who started life in the Great Depression and were very frugal and practical. They were scared to death of any investment that wasn't FDIC insured and many loathed the stock market. They viewed stocks as an evil investment just for "bankers and big shots" and some compared it to gambling, which is a sin.


My grandparents were of this sort. One kept cash in a cream can buried in the grove and another kept some cash in her deep freeze and another stash in the toilet tank. They saw banks go broke and it wasn't going to happen to them again.


The Depression affected them so hard that they never mentally recovered. They lived poor just in case they had to again. Funny thing is that by living like they were poor, it actually made them poor.

I knew such a person, a retired professor, who had, among other diverse assets, $100,000 in gold coins in a safe deposit box, which he called, “My go-to-hell money.” I helped him set up an endowed scholarship and, when the dot com bust happened, he was unusually distressed when its principal fell a bit.

 

[jazz4cash]

I know stories of people with less than $2000 savings and are on SSI .. divorced. One person I know .. hubby emptied their bank account. If she has a little more, she hid the money to continue getting SSI. You stop getting SSi if you have more than $2000 in savings.

That is stunning to me. I looked it up to be sure I understood. A relative recently lost her husband and he never enrolled for survivor benefits on his pension. He had his adult children from former spouse as beneficiaries on some small life insurance policies. She had another policy that she took out but it was only half as much as she thought, less than 10k. She’s generally “not good with numbers” and stands a real risk of running out. She says she’s on SS Disability ... not sure if that’s the same as SSI. She does have ~100k from inheritance that is over the 2k resource limit for SSI. Is it wrong for me to hope it is not revealed? $2k in the bank is a pittance (but 100k is not). I suppose she would still qualify for some regular SS if the SSI payment goes away but she expects to file under former spouse’s record and keep the SSI benefit. We help her run errands but won’t get more involved since she has adult children and a sibling that should be stepping up.

 

[JoeWras]

She says she’s on SS Disability ... not sure if that’s the same as SSI.

Not the same. SS disability is much better.

SSI is the absolute SHTF backup if all else fails, like not having enough SS credits, etc.