By the time late 2021 rolled around, I was considering retiring around April of 2022 if the market held up, on my 52nd birthday. In the overall scheme of things, I don't think it's going to matter that much what time of the year I retire, but it's always been my fantasy to do it around my birthday. That's also just far enough into the year that I'd be able to max out my Roth for the year, as well as sock away a bit in the 401k. We usually get a bonus in February/March, and raises normally kick in around late March, so if I retired in April, I'd get the bonus, and my leave would get paid out at the higher, post-raise rate.
But lately, the bonus and increased amount on the leave payout isn't much of an incentive. For years now, the bonuses have been around $850-1000. And the increase on the leave payout might be at best, $500. So it's really not worth it to stick around, just for that.
In raw dollars, I was down about $531K in 2022, up about $471k in 2023, so overall my loss was about $60K. And I'm up about $50K so far this year, so I'm really only down about $10K. But, throw inflation into the mix, and I'm still at a pretty good loss. My asset value is up substantially, but only thanks to additional investments.
So, retiring at the start of 2022 would have been pretty scary, especially by the time it bottomed out around late Sept/Oct. But I think 2023, and what little we've had of 2024, would have put my mind at ease somewhat. Now, if 2023 had been another bad year, that would've been a different story.
During the time I've been investing, I think retiring around the end of 1999/beginning of 2000 would have been about the worst time. With my own performance, I was down about 5% in 2000, and 20+% in 2001 and again in 2002. It would have mostly recovered as the 2000s wore on, but then 2008 would have made a mess of it. I was down about 40% that year. Assuming a 4% withdrawal rate, and actual inflation, I estimate I would have run out of money in 2022.
But then, who knows? If I was actually retired, I probably wouldn't have been invested so aggressively. And, at some point, Social Security would have kicked in, so that 4% might have still lasted 30 years.
At 3%, I'd still be okay. However, if I had started with $1M on 12/31/1999, I estimate I'd be down to around $893K on 12/31/2023. The 2024 withdrawal would be around $56K, which is around 6.3%. But, at this point it would only have to last another 6 years, assuming a 30 year retirement. And again, SS would have come into play, at some point.
For simplicity's sake, my spreadsheet also assumes yanking out the whole 3, or 4 percent, on the first day of the new year. Realistically I probably wouldn't have done that. Maybe I would have during a good year, but during the lean times, I would have been pulling out what I needed at the moment, and letting the rest of it take its chances.
I could see 1966 being a really bad year to retire. I think the market pretty much peaked around then, and got a bit shaky. And while there were some good years in the 1970s, there was also that '74-75 turmoil, and the whole 1979-82 period was a mess. And I think there was a mild recession around 1970 or so? So, if you had anything left by 1982, it wasn't much, and your spending probably outpaced growth by a wide margin, so you didn't get to enjoy the later part of the 80s boom.
