Assets Depleting after Retired

[jkern]

NW has increased 65% since retiring in 2009.

 

[2017ish]

...

Remember that the focus of this site is early retirement, so folks here [-]may[/-] are not [-]be[/-] even close to being representative of the population as a whole. It's all about the numbers - some people have them, some don't.

ftfy.

 

[kcowan]

Retired in 2002. Had a good conservative plan. Got confident and bought a snowbird condo in 2007. Lots of added cost remodelling and maintenance. Then sweated through 2008/9!

But emerged smelling like a rose, owing to budget savings from living way down south, Adapted our LR plan and am now convinced we can live forever AND leave a legacy. Been gradually increasing the spend on gifts, entertainment and charity.

Awaiting the pending pullback to confirm our LR plan and then will accelerate the spend. Already we are looking for truly needy cases in which we can make a difference and making significant contributions. Just did one which the recipient commented was life changing!

 

[Enuff2Eat]

I think there is a barbell distribution of outcomes. Those (most on here) who retire with a nice nest egg and then LBYM. Over a long period, with average market returns, these people will die with more money than they retired with.

On the other side (some in my family) will retire with little to no net worth and die in debt. Their net worths will teeter back and forth around the zero line.

In my case, net worth up 32% after 11 years. Of course the Great Recession started shortly after I FIRE'd, so at one point net worth was 47% below where it is now.

my point exactly.... Assets will likely to increase if you retire with a "nice nest egg". Many people in the real world DON'T.

thus it is not typical to see John Doe next door neighbor is in this category

 

[RunningBum]

my point exactly.... Assets will likely to increase if you retire with a "nice nest egg". Many people in the real world DON'T.

thus it is not typical to see John Doe next door neighbor is in this category

You disguised your point extremely well in your original post.

 

[Koolau]

12 years in. I had a modest pension and just now started SS. WDR was 2% to 6% depending upon needs. We easily spend twice what we spent prior to ER (think what we used to save, we now spend and then some.) Yet, even with 30% equities, our stash has grown somewhat (not to the extent that those with 60+% equities have - but then again, we never had a loss!) As always, YMMV.

 

[whatnot]

Hoping to retire next year and love reading all the different perspectives. These last few years have been great for retirees but being the big conservative - I know that this is not always the case, i.e. 2008-2009.
So - we are 60/35/5 and also DH has a good pension. My thoughts are the Bond/Cash will allow us to not sell equities when they are down. So that is our plan. Learned a lot from this site. Anxiously waiting for April 2018.

 

[iloveyoga]

I retired in 2013, my husband in 2004 and our assets have grown since both dates.

 

[texcurtis]

Net worth up 14% since retiring in Jan 2015. Fortunately I have a pension that mostly covers my expenses while savings grow to cover my older years & unexpected events.

 

[gcgang]

Wow... is it really possible? too many people keep telling me that I will out live your money.

enuff

You will outlive my money, if I do it right.

Probably anyone who retired within the last eight years has increased NW. Very lucky sequence of returns people.

I've gotten comfortable w +NW, but think it's a temporary, even unnatural, situation, unless the goal is to sacrifice standard of living to maximize legacy assets.

For us non-legacy maxi-misers with 50%+ in equity, it's not gonna be a gradual descent. We'll experience some serious air pockets on the ride. Just keep your belt buckled and stay in your seat when it happens.

 

[marko]

I never really thought about it this way, but after 12 years of RE, including the '08 crash, my NW is almost exactly double from what I started with. (How'd that happen??!!)

And I only started taking SS 3 years ago.

 

[Luck_Club]

It really depends on your retirement income stream. Mine is rental real estate dependent. As such my retirement date is very dependent upon debt depletion and a cross over point.

If I play my cards correctly, my net worth at death will be many times my starting point because of the following assumptions:
1) SS will create a larger surplus which will be diverted to additional investments.
2) MRD will further add to un-needed income, and that will go to further investments.
3) Spending will greatly diminish in my 70's as feebleness starts to kick in.

As an aside the tough part will be convincing the wife it will be OK to leave her job before a "socially acceptable age". Been running a 1 year cash flow experiment, and 6 months in we are green!

 

[Scuba]

Entirely possible and even likely given the strong markets since 2009. Depending on your asset mix and as long as you have a reasonable WR you will almost certainly have more now than in 2009. I retired in 2006 ( a particularly bad time) but even then have a lot more now than when I started. Have started to "up the spending a bit" to prevent being the "the richest guy in the graveyard". Even then I suspect we will never deplete the portfolio much below its current level.

Danmar, did you do anything differently in 2008-9 to preserve assets? Just curious as we are recent ER's and the market has been good to us so far but that could easily change in the next few years.

 

[Enuff2Eat]

It really depends on your retirement income stream. Mine is rental real estate dependent. As such my retirement date is very dependent upon debt depletion and a cross over point.

If I play my cards correctly, my net worth at death will be many times my starting point because of the following assumptions:
1) SS will create a larger surplus which will be diverted to additional investments.
2) MRD will further add to un-needed income, and that will go to further investments.
3) Spending will greatly diminish in my 70's as feebleness starts to kick in.

As an aside the tough part will be convincing the wife it will be OK to leave her job before a "socially acceptable age". Been running a 1 year cash flow experiment, and 6 months in we are green!

i like to hear about the "cash flow experiment".... may be it's a crucial data to know before pulling the plug or might even give me some idea if my nw decrease or increase after retirement

 

[pb4uski]

You probably should have turned the question around and asked if anyone had a smaller nestegg than when they retired!

 

[Koolau]

You probably should have turned the question around and asked if anyone had a smaller nestegg than when they retired!

IIRC we have had a couple of folks admit to having to go back to w*rk because their plan did not meet their needs in FIRE. Since most of us started with the assumptions of FIRECalc, it seems logical that most of us have done reasonably well during the 8 years or so since the great recession. That period alone should have made most of us better off than before if we followed the general guidelines (reasonable portfolio AA and WDR.) Naturally, things can happen, so YMMV.

 

[brucethebroker]

Enuff, would you be surprised if someone on SS retirement with no debt in a LCOL area lived only on that income while their 401-k stash grew? Plenty of people do it and it is the same principal. Also, if you own rental property, and you live on the rental income, but never sell the properties, your net worth would continue to grow over the years. Or if you took only dividends out of your retirement savings, and left the principal alone.

 

[Danmar]

Danmar, did you do anything differently in 2008-9 to preserve assets? Just curious as we are recent ER's and the market has been good to us so far but that could easily change in the next few years.

My experience during the 2008 recession was extreme. I had multi million dollar margin loans and large amounts of employee options that all went under water. I didn't do much other than to ensure enough liquidity to ride out the storm. Luckily my cash balances were very high and I supplemented that by putting some HELOC's on some property. Everything worked out fine and much sooner than I thought.

Since then my financial position is very much less risky. No debt. Live off divs and pension. Almost seems boring, but in a good way. All you can do is have an asset allocation that reflects your risk tolerance. My risk tolerance is quite high but nothing like 2008/09.

 

[audreyh1]

My experience during the 2008 recession was extreme. I had multi million dollar margin loans and large amounts of employee options that all went under water. I didn't do much other than to ensure enough liquidity to ride out the storm. Luckily my cash balances were very high and I supplemented that by putting some HELOC's on some property. Everything worked out fine and much sooner than I thought.

 

[kcowan]

My experience during the 2008 recession was extreme. I had multi million dollar margin loans and large amounts of employee options that all went under water. I didn't do much other than to ensure enough liquidity to ride out the storm. Luckily my cash balances were very high and I supplemented that by putting some HELOC's on some property. Everything worked out fine and much sooner than I thought.

Ironically, I reduced my equIty exposure by buying property in Mexico for cash in December 2007 when the C$ was at 1.065 US so even though some softness ensued, it was more than compensated by the FX gains. FX gains alone are 44%!

So even though I made out like a bandit, it was not any investing acumen! Although when I describe it now, I let the listener conclude that!

 

[ceciledian]

Living off one pension so far with another small one to come in 2025. Don't plan to touch 401ks until required by age so our assets are still growing. If SS is around when we reach FRA our income will be nearly 3X what it is now. LBYM and paying off debt long before we retired worked for us.

 

[Danmar]

That's exactly how I looked during that period.

 

[ERD50]

Originally Posted by Enuff2Eat View Post
my point exactly.... Assets will likely to increase if you retire with a "nice nest egg". Many people in the real world DON'T.

thus it is not typical to see John Doe next door neighbor is in this category

You disguised your point extremely well in your original post.

That's an understatement!

How the heck did the OP go from:

Are you retired? I saw a friend whom retired 3-4 years ago. To my surprise, he told me that his assets actually INCREASED since he retired.

why? how? I don't believe it. Those was my initial thoughts. It turns out that he didn't touch his 401k and the market did well the last 3 years. He lived on pension and withdraw small amount from his saving...

Wow... is it really possible?

to...

Assets will likely to increase if you retire with a "nice nest egg".

Maybe Enuff2Eat's account has been hacked? Sounds like two different people to me!

-ERD50

 

[David1961]

Stocks have done well the last three years. If you withdraw 4% but your investments grow by a bigger margin your portfolio should grow. As others have noted, down markets will occur.

 

[Enuff2Eat]

Enuff, would you be surprised if someone on SS retirement with no debt in a LCOL area lived only on that income while their 401-k stash grew? Plenty of people do it and it is the same principal. Also, if you own rental property, and you live on the rental income, but never sell the properties, your net worth would continue to grow over the years. Or if you took only dividends out of your retirement savings, and left the principal alone.

"plenty of people do it"... i m not so sure about that. it's nice that someone don't really need to touch the 401k and let it grows.