2008 ERs - any changes now?

[walkinwood]

We seem to have weathered the 2008/09 downturn by sticking to our portfolio allocations (60/40 equity/bond) and making some lifestyle changes that lowered our annual expenses. The move to Denver from NJ being the major one. Working in 2010 was another wise move.

Our portfolio is almost back to the original, inflation adjusted value, and we are living comfortably on less than 4% of the current portfolio value (we use 4% of portfolio value on Jan 1 as the budget for the following year). I am feeling relieved and positive about our chances to making it.

I am sticking to our AA, but am tempted to make it more conservative.

I am curious about other 2008 early retirees -
- are you rethinking your AA?
- feeling good about the future?
- back to your initial portfolio or close?
- anything else?

 

[arky]

Retired in Jan 2008 with approx a 30/40/30 AA. Slowly changed from 40/30/30 in Jan 2003 until present day where I sit at about 25/40/35. Have not had to cut back in lifestyle since retiring and my investible assets had rebounded to retirement date level by Jan 2010. SS is still at least 2 1/2 years off, so the future looks good so far !

 

[W2R]

I am curious about other 2008 early retirees -
- are you rethinking your AA?
- feeling good about the future?
- back to your initial portfolio or close?
- anything else?

I am a 2009 retiree, so maybe I shouldn't respond but we both retired in the recession.

I am not rethinking my AA. I was able to stick with it during 2008-2009, so it is "battle tested".

I feel great about the future. We have no place to go but up (from 2008-2009), right?

Yes, my portfolio has recovered, but then I was not living off of it in 2008 so that's one place where my situation does differ from yours.

Retiring at such a time gave me a lot of confidence in my capability of weathering future economic storms that I might not otherwise have. So, I think we were lucky.

 

[TeeRuh]

I retired in June 2008; pretty close to about worst possible scenario. But we all know that "luck" is also part of any good investment plan.

Two events allowed me to keep my sanity (and pretty much fully recover). One my DW (on her own) decided she just wasn't through teaching. So she didn't retire until 2010 and we were pretty much able to live on her salary alone.

Second thing was that I took a lump sum pension; receiving it in about July I think. I was still holding about 25% of it in cash when the bottom fell out. I moved this remaining cash fully into the market in February 2009 (about one month ahead of the bottom). (Pure luck.) This allowed for a very quick recovery as the market proceeded to about double over the next 12 months or so. (I'm not bothering to completely check out the exact dates and figures; I'm sure someone will let me know how far off I am. )

So I just muddle along (very, very happily) attempting to maintain a 55/45 investment portfolio (which I need to rebalance very soon as I know it is once again heavily skewed towards stock).

Life is good!

t.r.

 

[walkinwood]

Retired in Jan 2008 with approx a 30/40/30 AA. Slowly changed from 40/30/30 in Jan 2003 until present day where I sit at about 25/40/35. Have not had to cut back in lifestyle since retiring and my investible assets had rebounded to retirement date level by Jan 2010. SS is still at least 2 1/2 years off, so the future looks good so far !

Is that equity/bond/cash?

 

[novaman]

Going back to work always will be a good option to help with ER financial issues, but then you could argue that it isn't really ER anymore is it?

 

[jimnjana]

FIRE'D in Nov 2008. Intended to be snowbirds. 2009 decided 2 homes weren't enough so we bought another one. 2009 was the worst year financially for us. In retrospect we over extended ourselves financially. (purchased a vacation rental by taking out home equity loan and cashing in our stocks at a market low ouch). 2010 moved to FL full time and converted old primary home into vacation rental because of the poor housing market. 2011 was a financial recovery year rebuilding our cash reserves. 2012 small inheritance put us back on solid ground.

 

[arky]

Is that equity/bond/cash?

Yes, I'm a wuss, but it has worked well so far. Total "liquid" assets are up 16% in the last 5 years (since I retired). Not great, but that is after 5 years of expenses. Not recommending my AA, but it is what I feel comfortable with.

 

[foxfirev5]

Yes, I'm a wuss, but it has worked well so far. Total "liquid" assets are up 16% in the last 5 years (since I retired). Not great, but that is after 5 years of expenses. Not recommending my AA, but it is what I feel comfortable with.

It has worked and that's the important thing. I was amazed in running FirecCalc how little I actually needed in Equities to meet my 100% probability number. Currently I'm 45/40/15 but the 45 is my high end in equities. Like many others I'm reluctant to go overboard in bond funds at this stage. But, by my retirement age of 58-60 I plan to be at 40/40/20 keeping over 5 years expenses in stable value or cash. Of course that's subject to change but I don't see much happening with interest rates in the next couple years.

 

[ejman]

ER'd a little earlier (class of 2002) than the 2008 ER of the title but I can tell you that ER at the end of 2002 was kind of scary too. The market had been dropping like a stone for 3 years and it sure didn't look promising with the wars starting and all. Had an AA of 60/40 then which has dropped now to a nominal 50/50 on account of age (62 now). Other than that, I'm amazed the NW is almost twice what we started with - No Pension but just started SS. Just lucky I think.

 

[scrabbler1]

We seem to have weathered the 2008/09 downturn by sticking to our portfolio allocations (60/40 equity/bond) and making some lifestyle changes that lowered our annual expenses. The move to Denver from NJ being the major one. Working in 2010 was another wise move.

Our portfolio is almost back to the original, inflation adjusted value, and we are living comfortably on less than 4% of the current portfolio value (we use 4% of portfolio value on Jan 1 as the budget for the following year). I am feeling relieved and positive about our chances to making it.

I am sticking to our AA, but am tempted to make it more conservative.

I am curious about other 2008 early retirees -
(1) - are you rethinking your AA?
(2) - feeling good about the future?
(3) - back to your initial portfolio or close?
(4) - anything else?

I ERed at the end of October, 2008, just as the markets were crashing. However, that turned out to be a big help for me because the company stock I was cashing out was still pretty high and had not crashed while the bond fund I used its proceeds to buy into had crashed so I bought it at rock-bottom prices.

My portfolio is up about 36% since I ERed and it is majority bonds. As to your 4 questions:

(1) I have been keeping my Rollover IRA at 55/45 in favor of stocks but I have recently decided to take that down gradually to 50/50 in the next year or so as I age. My taxable accounts which are fully supporting my ER by generating the income needed to cover my expenses are more skewed to bonds, about 68/32. The only times I have done any rebalancing in my taxable accounts are when I see one asset type high and the other type low at the same time which last happened in 2010. Otherwise, I leave it alone as it has a natural drift to bonds due to the way I manage the bond funds.

(2) I am feeling good about the future. I updated my Retirement Income Planner with Fidelity and it came out looking really good, even better than it did a few years ago.

(3) My portfolio has more than fully recovered from 2008. I had been flirting with the $1M mark in late 2007 and the middle of 2008, and again in early 2010 before I broke through later in 2010 and exceeded $1.1M in 2012. And this is despite paying out $75k in income taxes when I cashed out the company stock in late 2008.

(4) Anything else? ER is great. My SWR is in the 2-2.5% range. Even excluding the IRA from the calculation, I am still under 3%.

 

[kramer]

I retired at age of 41 in mid-2007 with an asset allocation of 65 % stocks / 35% bonds. This portfolio really crashed during the 2008 crisis. I simply rebalanced and never panicked.

In early 2009 I was living in Chiang Mai, Thailand and I remember looking at my portfolio and trying to be honest with myself. Was ER really worth it? Am I financially OK or not? I concluded I did not have any regret for ER, that the last 2 years had been a great experience. And that I could still live OK on 4% of my portfolio, although not as well as I had planned.

Anyway, the markets recovered and my portfolio is higher now, adjusted for inflation, than it was when I retired in 2007. And I feel like I have "won the game" now because I have much more experience being retired and living abroad, have a low SWR, and my financial position is more secure than ever. My portfolio is now 60% stocks / 35% bonds / 5 % commodity futures fund (PCRIX). I bought PCRIX after the crash, in mid-2009 I think.

 

[shotgunner]

I don't think my timing could have been much worse as I left a full time benefitted job in April 2008 at age 51. At the time my portfolio excluding my home was about $1,025,000.

Being a wuss and feeling the need for structure I kept working at my old job as an hourly for 20 hrs a week. This kept my WR to an average of 2%.

At the low point of the crisis, Feb, 2009, my portfolio was at it's lowest value, $795,000.

Today, just about 4 years later I am back to $962,000 overall. About $100K netted from part time work.

The way I look at it if I had not been working from 2/2009 until now my portfolio would have increased about $67,000 and it would have covered my all my living expenses, $32 to $37K annually plus a new truck and $20K I gave to my daughter to help her with school.

I am now 56. Retirement is not so early any more. Perhaps I'll have courage to let go of the p/t job in the not too distant future.

 

[walkinwood]

Going back to work always will be a good option to help with ER financial issues, but then you could argue that it isn't really ER anymore is it?

That's exactly what it is to me, but then, I'm not looking for any validation

...
Being a wuss and feeling the need for structure I kept working at my old job as an hourly for 20 hrs a week. This kept my WR to an average of 2%.
...
I am now 56. Retirement is not so early any more. Perhaps I'll have courage to let go of the p/t job in the not too distant future.

A wuss? IMHO, not! Practical is more like it. If letting go will increase your happiness (satisfaction, peace of mind ..whatever you call it), you'll do it at the right time. If not, at least you don't have your nose to the grind full time.