Newly Retired & Survived First Bear Market

[DawgMan]

I officially retired 1/1/2022 at the age of 49. I watched our professionally managed brokerage and IRA's drop 26% (including fees) and I survived

I must say that retiring at the peak of a bull and watching your portfolios drop 26% was rough... so much so that I fired our AUM financial advisors (thanks to this website and bogleheads) and we rained in our expenses a fair bit. We are lucky because we have substantial rental properties (they don't generate a ton of income but they are worth a lot of money if/when we needed to sell them) which is why our brokerage and IRA's are in 100% equities.

Curious to hear your perspective/thoughts especially if this was your first bear market... Hopefully nobody pulled out of the market because (fingers crossed) it's headed back up!

Yep, retired this year at 58, but set up a 10 year bond ladder to cover planned spend just to sleep well at night. Everything else is in equities. Since my spend is highly discretionary, I have other levers to pull if needed. That said, the current drop in the market is really messing up pretty graph showing my net worth growing by 5% a year!

 

[DawgMan]

Yeah, if you believe in equities, you hold on through the whole roller coaster eh?

Equities funded complete inside and outside home improvements with 3 sheds, landscaping and irrigation. New furniture, 2 new cars and domestic first class travel. Not to mention putting DSD through UCLA

And the best for last, Dream Catcher;

Pops told me when I was young, after you have the house and the cash fund, start buying stocks, that's where you'll make the most -

Like your style!

 

[ImThinkin2019]

In a bear attack play dead, don't run, stay put and weather the storm.

You have seen many attacks and know the protocol to survive the bear attack.

This is essentially what we have done. Not because we're smart - just because we did not know what else to do. I think this is sort of what Warren Buffet recommended for the average investor. In my head I call it mental paralysis. It worked for us.

Just kept investing. Inertia, not genius.

The only difference now is we don't have jobs so no longer get paychecks from someone else. Just from ourselves and eventually the US Govt.

 

[Lsbcal]

I officially retired 1/1/2022 at the age of 49. I watched our professionally managed brokerage and IRA's drop 26% (including fees) and I survived

I must say that retiring at the peak of a bull and watching your portfolios drop 26% was rough... so much so that I fired our AUM financial advisors (thanks to this website and bogleheads) and we rained in our expenses a fair bit. We are lucky because we have substantial rental properties (they don't generate a ton of income but they are worth a lot of money if/when we needed to sell them) which is why our brokerage and IRA's are in 100% equities.

Curious to hear your perspective/thoughts especially if this was your first bear market... Hopefully nobody pulled out of the market because (fingers crossed) it's headed back up!

As others have noted we are not out of the woods yet. Suggest you look at the chart I updated on 8/12 (midway down the page) here:

https://www.early-retirement.org/forums/f44/how-does-this-decline-compare-to-previous-recessionary-ones-114071-5.html

 

[COcheesehead]

Second leg down in a bear is the killer.

 

[target2019]

Congratulations on ditching the FA.

The 200-day trend is still down for growth, but it appears for now that the worm has turned.

What may drive you a bit crazy is the stock market going sideways for an extended period. Value has been doing that for a year.

I guess we'll have to wait for the future!

 

[FLSUnFIRE]

I'll wait to celebrate for when my inflation adjusted available withdrawal doubles without increasing my withdrawal rate.... not sure a year (or 6 months) after FIRE gets one past the threat of SOR impacting ER... especially those of us in our 40s. Statistically, I should have some BTD$ eventually, but it'll be a while IMO.



So far, my portfolio has gone down in absolute and even more in inflation-adjusted value. Not that it causes me any stress but it would be more fun if it went the other way.

 

[JohnT]

My investments are now down about 8% from the peak earlier this year. I was down 15% - so nice little recovery in August. Let's see if it continues into the Fall.

I sold a bit last week to build up my cash position, otherwise am in good shape.

 

[aja8888]

I'm newly retired as well, but the bear is not my main concern, inflation is. IMHO, it has raised prices permanently, and even when it slows, the base prices, i.e. of food and other necessitates have been permanently raised.

My bold. This is a valid point.

I don't see grocers' lowering prices anytime soon. The yogurt I buy that went for $1.12 per container to 1.96 per container won't be reduced. Inflation may be pushed down to 2% (FED's target) and prices will continue to rise from the new base.

As retirees in our late 70's, I am concerned that we won't be able to maintain our current lifestyle as prices march up. Health care is rising way faster than daily costs. Even with good Medicare plans, we are spending over $1,000/month on healthcare and I am very healthy, DW, not so much.

 

[Montecfo]

My bold. This is a valid point.



I don't see grocers' lowering prices anytime soon. The yogurt I buy that went for $1.12 per container to 1.96 per container won't be reduced. Inflation may be pushed down to 2% (FED's target) and prices will continue to rise from the new base.



As retirees in our late 70's, I am concerned that we won't be able to maintain our current lifestyle as prices march up. Health care is rising way faster than daily costs. Even with good Medicare plans, we are spending over $1,000/month on healthcare and I am very healthy, DW, not so much.

You will see declines in commodity linked prices due to competition. Retailers and manufacturers can't just unilaterally decide to "keep prices high". Competitors will use that to grab market share.

Prices of things like lumber, fuel and airlines tickets have already declined from where they were.

You will also see prices consolidate as inflation moderates.

 

[Looking4Ward]

I FIREd'd over 8 years ago with $1.2M. I've been spending considerably more than I planned each year ($72K-$90K) and when Covid hit I dropped to $1.15M.

I was back up to over $1.6M last December but have since dropped to $1.35M. Still more than I started with.

This year I decided to start Social Security so that I can lessen my withdrawals for a few years, giving my portfolio a chance to take a few deep breaths.

So technically I've been thru two "crashes" so far and haven't had to go to the local food banks. Oh, and like RobbieB, I've managed to pick up a few toys along the way:

 

[Bamaman]

I retired in 2008, and watched my funds as they had dropped in value.

Now, I've got to start making RMD's in 2022--after the market tanked. And needless to say I'm not too thrilled to have to sell/trade more of my Fidelity account than I ever made in a year's salary. And I don't need the funds for anything.

 

[RetiredAt49]

I've managed to pick up a few toys along the way:

Glad to hear that you picked up some toys along the way! Enjoy hearing experiences from those of you who are retired and experienced bear markets. I’m hoping we are recovering and not in a bear rally!

 

[OldShooter]

... I’m hoping we are recovering and not in a bear rally!

Actually if you are in the accumulation phase, that is not what you want. What you want is for stocks to be very cheap up until you move into a phase where you are selling rather than buying. Then you want a strong bull market.

​

 

[RetiredAt49]

Actually if you are in the accumulation phase, that is not what you want. What you want is for stocks to be very cheap up until you move into a phase where you are selling rather than buying. Then you want a strong bull market.

Duly noted. I retired at the beginning of this year (at peak of last bull) so hoping for a bull now.

 

[MarieIG]

My bold. This is a valid point.

I don't see grocers' lowering prices anytime soon. The yogurt I buy that went for $1.12 per container to 1.96 per container won't be reduced. Inflation may be pushed down to 2% (FED's target) and prices will continue to rise from the new base.

As retirees in our late 70's, I am concerned that we won't be able to maintain our current lifestyle as prices march up. Health care is rising way faster than daily costs. Even with good Medicare plans, we are spending over $1,000/month on healthcare and I am very healthy, DW, not so much.

We are not on Medicare yet but even with a subsidy from DH's union, our health insurance is over $1,000 per month (paid directly out of DH's pension). It will turn into our secondary insurance once we are both on Medicare, and our youngest is off the policy. We do expect between IRMMA and health insurance to pay hefty monthly fees.

Totally agree, the staples like eggs and yogurt are up; and will rise from the new base.

 

[GravitySucks]

Retired in 2013 and this is my first Bear too. (Not counting the quick March 2020 Bear. I didn't even have time to notice that one because of dealing with family health issues.)
I think this Bear still has a few swipes left in it so I'm still playing dead. (Thanks for that analogy.)

 

[MRG]

I retired 9 years ago at 56. Our first few years we lived conservative, perhaps not as restrictive as some but it was a change for us. Since the pandemic we've spent a lot more; new vehicles, expensive accommodations on airfare, cruises and more. Despite being down 15% YTD we still have 25% more investable assets than nine years ago. I've sold my bond funds and replaced with CDs and individual bonds thanks to the board. We have several years of expenses covered without selling anything. My SS at 70 is supposed to be a substantial amount but I haven't allowed myself to acknowledge it very much.

It's the first bear I acknowledged, others were when I was still working. I didn't have time to worry about my investments very much as keeping systems going during panic was part of my job. I'll always remember the 87 crash as it helped "provide opportunities" for some including me.

 

[UnrealizedPotential]

You're assuming it's over?

Exactly. I think we have come close to the 50% retracement. IOW, 4231 on the Sp500 using the high of 4797 on the sp500. Almost immediately after coming close to that 50% retracement, we started heading down again. So it is not clear what that means.

IMO we cannot assume this downturn is over. My guess is we will retest the lows of 3666 on the SP500. Whether we go down past that number or it holds is anyone's guess. But I do not think we can assume the worst is over. Not yet.

 

[KrisQuit]

In a bear attack play dead, don't run, stay put and weather the storm.

You have seen many attacks and know the protocol to survive the bear attack.

Hiking perspective: In a grizzly attack, play dead. If a black bear attacks, fight back or cause a ruckus to scare it away. I’m going with grizzly right now.

I retired in October 2021 . . . yay! Then 2022 happened. Fortunately, I had signed a consulting contract with my employer for Feb-Sept 2022, bringing in about half my previous salary for a couple days of work each month (good negotiations). This is my first bear market, when it really matters (down 12%’ish), and I am able to ride this out and not draw on investments for at least another year, if not longer. By then, I hope, that grizzly will wander off to do something else.

 

[MichealKnight]

Thanks all for sharing

I need an average nominal return of 5% in stocks over the next 4 years. In 4 years, 1st kid would start college.

I have in bank: 5 years cash expenses + 1 year college expenses.

4 years from now - anything more than 5% - would certainly make things easier.

Less than 5% - would make it harder.

I feel 5% isn't so much to ask.

But what do I know.

Not much.

 

[COcheesehead]

I need an average nominal return of 5% in stocks over the next 4 years. In 4 years, 1st kid would start college.

I have in bank: 5 years cash expenses + 1 year college expenses.

4 years from now - anything more than 5% - would certainly make things easier.

Less than 5% - would make it harder.

I feel 5% isn't so much to ask.

But what do I know.

Not much.

I wouldn’t bank on 5% return in equities. Too much can happen yet and we may go lower for longer just like the early part of this decade. The infamous lost ten years.
You can get 5%+ from 5 year A rated corporate bonds. If you really need a 5% return to make things work, that’s the route I would go.

 

[MichealKnight]

Thanks very much for chiming in. This is a basic question - but I'll ask it anyways.

Yes, agreed - it's tempting - 4%+ from things like McDonald's, Boeing, etc -- I don't think they are going away. So other than default - what is the risk to one's investment in these bonds? Thanks

 

[Chuckanut]

Newly Retired & Survived First Bear Market

Read How to Survive a Bear Attack. Yes there is such a book. First thing is to figure out if you are a threat or prey. If a threat playing dead is usually best. Once you are no longer a threat the Bear will usually leave you alone to lick your wounds. If prey, you are it’s next meal. FIGHT!!!!!!!!!

How this relates to financial markets, I’m not sure. But, I can guess.

 

[FLSUnFIRE]

Futures down another 4% this morning..... I'm still holding off to dance until my current WDR is half my starting WDR.... it's not going the right way. LOL


Ironically/counterintuitively, since I'll be selling to my MAGI limit at the end of the year, I'll withdraw more total $ if the market is depressed since there will be a greater proportion that is principle and not capital gains (if too much, I'll reinvest and step up my basis).