Early retirees who were close - how are you adjusting

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stocknoob4111
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Early retirees who were close - how are you adjusting

Post by stocknoob4111 »

This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
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David Jay
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Re: Early retirees who were close - how are you adjusting

Post by David Jay »

First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
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Re: Early retirees who were close - how are you adjusting

Post by sailaway »

We signed a new two year lease. We are hoping by then the world has pretty much opened up to travelers again. The bigger financial buffer is icing on the cake.

DH was talking about taking a sabbatical a couple of weeks ago and I told him I don't think I could handle him being home all day without being distracted by work for a big portion of it. He gets antsy if he doesn't have a project.
anonsdca
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Re: Early retirees who were close - how are you adjusting

Post by anonsdca »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
Absolutely have zero worries about any withdrawal strategy or %. I lived my life and invested so I didn't have to sweat that kind of stuff. Portfolio (equity and cash) throws off enough dividends and interest to well cover my expenses. I was going to retire last year, but held off for certain reasons. Still working (remotely) but I haven't even once thought about changing my strategy or working any longer than I want.
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geerhardusvos
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Re: Early retirees who were close - how are you adjusting

Post by geerhardusvos »

David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
4% withdrawal rate is a great rule thumb even out to 40 and 50 year retirements, especially if you have an equity heavy portfolio. In fact, the data suggests that a 50/50 portfolio has about a 9 out of 10 chance of lasting >40 years, which means that someone in their 50s reasonably uses 4% wr for planning... Especially given Social Security and other potential money, this is historically well safe. Stop worrying about 4% WR, especially if you hold equities!

Image
Last edited by geerhardusvos on Sun Apr 26, 2020 9:20 am, edited 4 times in total.
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Small Savanna
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Re: Early retirees who were close - how are you adjusting

Post by Small Savanna »

Our situation may not exactly fit your template, but here it is: I'm 59 and my wife is 54. In 2017 I retired from a federal job with a pension that is about 36% of my "high three" salary. I wasn't ready to not work, but had an opportunity to take a job that pays slightly better than my final federal pay in a different part of the country; I'm stashing as much of that money as possible into retirement accounts. My wife was a principal at a private school and eased into a somewhat less stressful teaching job in our new location. She has 403b accounts, and will also get a $7k /year pension from a previous job when she turns 65. Our total balance in all accounts (taxable, tax deferred, and Roth) was $2.6M at the end of 2019, dipped to about $2.1M in March and is $2.3M now, so realistically we could retire now if we wanted to.

Over the Christmas holidays we were enjoying the time off and thinking about setting a retirement date in the near future. My wife would be happy to substitute teach or volunteer, and I would like to slow down the pace. Of course a lot has changed in the past few months. The following considerations are keeping me in the workforce for at least a couple more years:
1. Losing $300K on paper was painful, and I'd like to get back to where I was a few months ago.
2. I'd like to wait until I'm 70 to collect social security, and that still seems pretty far in the future.
3. My social security benefit may be significantly lower than I thought because the bend point formula for people born in 1960 (me) is dependent on average wages in 2020; bad timing given what's going on in the economy.
4. We still have a mortgage. I don't need to pay it off to retire, but that would provide significant peace of mind if everything else goes bad.
5. I still enjoy working, and I don't have a great plan for how to stay busy after retirement.

I don't think that #1 through #4 are compelling reasons to keep working, but they are reasons. I wouldn't mind scaling back to part-time work, but that seems hit or miss. I've done some adjunct teaching, but I don't know when they will need me again. I've had a few offers of short-term consulting gigs that I turned down, but again nothing predictable, and I expect those will get less frequent as I get older. So for now, I'm going make hay while the sun is shining.
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Re: Early retirees who were close - how are you adjusting

Post by fatcoffeedrinker »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
Not really any change. I'm planning to retire at the end of 2023 at 55. Before corona, I was projecting to have 40x expenses, or 50x+ if I include taking SS at 70 and subtract from the portfolio a 15-year TIPS bridge. With where we are now, maybe I lop off 3-4x expenses from the projections. That's still enough cushion. We started 2020 at 40/60, so we haven't gotten too badly hurt so far (except for the SCV tilt :twisted: ).
decades
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Re: Early retirees who were close - how are you adjusting

Post by decades »

I'm 63 single 1.4 networth , 1.2 financial assets mostly cd's . Only had about 7% allocated to stocks . I know this is not a good long term strategy.
heyyou
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Re: Early retirees who were close - how are you adjusting

Post by heyyou »

Retired late in 2005, age 55, then the 2008 Crash occurred. We just watched our spending, not dissimilar to our intense saving in the last couple of years prior to retiring. We were so grateful to escape from our jobs, that we didn't need expensive entertainment. Staying home, no commute, sleeping late, felt luxurious to us. Others may say we were easily amused, but we were early retirees!

Maybe not on topic, but relevant: It is not uncommon for new retirees to face a stock crash early in retirement, because a bull market pushed portfolio values to the magic number for retiring.

I am using the RMD percentages for my age, as the withdrawal % for the entire portfolio, precisely because each withdrawal is based on recent portfolio value, so our spending should match our slightly variable annual income but that contributes to portfolio longevity. If it is adapt or perish, we have chosen to adapt instead of spending like the bull market was going to last forever.
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Re: Early retirees who were close - how are you adjusting

Post by abracadabra11 »

geerhardusvos wrote: Sat Apr 25, 2020 5:42 pm
David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
4% withdrawal rate is a great rule thumb even out to 40 and 50 year retirements, especially if you have an equity heavy portfolio. In fact, the data suggests that a 50/50 portfolio has a 9 out of 10 chance of lasting >40 years, which means that someone in their 50s reasonably uses 4% wr for planning... Especially given Social Security and other potential money, this is historically well safe

Image
I see 86% chance of success for 40 years and 74% for 50 years @ 50% stock.

Separately, agree that data shows higher equity allocation has historically supported higher SWRs and longer longevity.
2020 ButClassic
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Re: Early retirees who were close - how are you adjusting

Post by 2020 ButClassic »

That's what geerhardusvos said too, kinda , i.e, 86% rounded to 9 out of 10.
3504PIR
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Re: Early retirees who were close - how are you adjusting

Post by 3504PIR »

I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a military pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Last edited by 3504PIR on Sun Apr 26, 2020 5:54 pm, edited 1 time in total.
olympia_t
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Re: Early retirees who were close - how are you adjusting

Post by olympia_t »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
Our plan was to slow travel for 12 months. We were going to put our house on the market this spring or summer. Real estate is doing nothing right now so that will not be happening. A big chunk of our networth is tied up in our house in a HCOL area so we were going to plan to move to a LCOL area after travelling. So, we're kind of in a holding pattern. SO is really anxious to get out of job. We started a small business that I've been running but it's not been doing too well and as it turns out might not be as profitable as we had hoped. So I'm kind of semi retired at the moment while SO still has job and benefits, etc. I think we'll get back on track but it might take a bit longer. Depending on how much longer I might look for a traditional job again. Hopefully maybe a year or two. It's also possible that we could end up renting out our house but I'm not sure. We're still excited to be on the cusp of it. Both of us working/semiworking from home has been a really nice transition and shows us what a better work/life balance could look like.
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Re: Early retirees who were close - how are you adjusting

Post by goblue100 »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
This fits me, I suppose. I'm 59. was looking to retire next year but I'm not one who is has so much that its a no brainer, especially with the uncertainties of 5 years of healthcare on my own dime. Now there is some question if my job will even last another year, so there is that. I think at this point I'm still likely to hang it up either when the ax comes or next year. I was in a more conservative asset allocation, so while there was damage it was not SO bad.
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Re: Early retirees who were close - how are you adjusting

Post by geerhardusvos »

3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
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teen persuasion
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Re: Early retirees who were close - how are you adjusting

Post by teen persuasion »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
We are 53, and had basically just entered OMY territory. We'd hit 25* leanfire, but another year of saving and portfolio growth would have gotten us to my target of 30*, hopefully. It would have meshed well with our other long term financial issue - youngest child and college expenses (aka, FAFSA filing intricacies).

He's in his first year of HS, which means 2020 is our last year before our tax returns are again reported on the FAFSA - 2021 begins 4 more years of FAFSA calculations, but DS5 appears to be an only child now, not youngest in a large family (as the others had to their benefit). Working incomes are harder to manipulate to an advantageous EFC because retirement contributions are added back to income (as if available for college expenses) and FICA is an increasing portion of unavoidable expenses as base income grows in later career (harder to reach AGI $26k for auto EFC zero). If we'd RE, we'd be Roth converting to access tIRA early, and we could dial in our AGI, with no extra working expenses like FICA. It's interesting that living on the same net amount can have different results for something like financial aid calculations, based on where the income comes from (or what type the income takes).

As another poster mentioned, FIREes often experience a market decline soon after RE, because a market run-up propelled them to their number. As the market had been on a long run-up, I've kept the probability of a market decline in the back of my mind and my plans. Entering OMY territory didn't mean setting a date for retiring, it meant making firmer plans A, B, and C depending on how things progressed. DH was definitely getting burned out, and ready to quit. I'm still having fun at my job, but working regularly would put a crimp in any travel plans (new grandchild, etc). Plus, we still have a teen in the house for a few more years. So we had some hybrid plans - he retires, I keep working as is and we live mostly on my part-time income. He dials back to subbing occasionally while I continue as is. I begin cutting back at work gradually, shifting more to using our assets to support us as they grow.

The current situation is an interesting preview of FIRE life. We are both WFH, and fully paid right now, but working minimally, honestly. So we are almost living as if RE (except for inability to travel to see new grandchild) and it's been a good experience.

We are playing it by ear for now, but we were doing that before, really. OMY was always an uncertain timeframe anyways. And DH's not so burnt out ATM, so he's got a recharge to handle more (whenever things return to non-WFH). And the whole college/FAFSA situation is much less certain - will this school year be a bust (losing 3.5 months)? Will he graduate as expected and begin college as expected? How much will this whole situation trigger systemic changes to colleges (teaching, dorm life, tuition) and financial aid as a whole?

Stepwise refinement.
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Re: Early retirees who were close - how are you adjusting

Post by printer86 »

I posted a couple times on other threads about our current situation. We are a one income, two person household. As we entered the new year, my plan was to retire from my megacorp sales job sometime this summer, around my 56th birthday. I was waiting until mid-March, when I received a sizable commission check and the proceeds from the sale of our old house, before I announced my plans.

Once the market tanked, I held off announcing my retirement plans. However, I've been somewhat slow rolling my new business efforts at work this year. Also, I think my sales manager is on to me based on the nasty email I received last week. So, I'm probably going to go ahead and announce my retirement plans anyway. I guess the only thing that's up in the air right now is whether my company will let me set my own retirement date.

Our financial position is that we have 50% our our investable assets in taxable, thus allowing me to retire early and not tap our tax deferred accounts until sometime around age in our early 60's. The tax deferred accounts should provide about 50% of our desired annual funds once we start making withdrawals.

I already have 35 years of decent Social Security earnings, so each additional year of work will only add about $15-20 to our monthly payment. My small pension @65, my SS and DW's spousal SS should provide the another 50%, or more, each year based on the age we claim it.

While our tax deferred accounts are 2/3rds stock, our taxable accounts are currently 2/3rds cash. I'm presently having trouble committing any more of our taxable funds to the stock market as I plan to use this money for my early retirement years. I may wait until we get past the second wave of this pandemic before I consider adding to our taxable stock allocation.

Wish me luck.
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Re: Early retirees who were close - how are you adjusting

Post by dh »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pm This question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule. Now that your portfolio has fallen quite a bit have you decided to go ahead and retire anyway, pushed out your retirement date or decided to retire but with a lower SWR? If you've pushed your retirement date out are you just waiting for the recovery to the previous value or within a certain range - say within 5% of the peak?
Like the OP, I am interested in reading others strategies. Several years ago, I decided to use Kitces' V-Shaped equity glide path where equity exposure decreases from age 55 (60% in equities) to 65 (30% in equities), then by spending down fixed income allowing equities to increase to 60% at age 80. From what I understand (please educate me if I am wrong- I love to learn from Bogleheads), after age 80 spending comes from both equities and fixed income to maintain 60% in equities for the rest of life. I have rebalanced once in 2020 to maintain my Kitces target equity allocation for my age (I am in the middle of the 55-65 range).

I look forward to reading others thoughts.
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Re: Early retirees who were close - how are you adjusting

Post by BruinBones »

I was going to retire 12/31/19 at age 54, but experienced "one more (half) year syndrome" and changed to 6/30/20. This additional 6 months allows me to maximize my 403b and 457b in half the time. With the restrictions from the pandemic, we are not spending as much on travel, eating out, clothes, and daughter's college housing, since she was sent home to finish the semester on-line. The drop in the stock market allows me to dollar cost average my 403b and 457b contributions at a relative discount. Also still contributing to a 529. I am also able to take advantage of restaurant and gas deals currently given to frontline workers. So overall, adjusting reasonably well.
Engaging in sloth
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Re: Early retirees who were close - how are you adjusting

Post by Engaging in sloth »

We are 59. $900 k cash, 7% equities. Glad to be mostly out of the market. Very uncertain market times ahead and we believe more chance for negative returns than sustained positive returns for next few years. :(
3504PIR
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Re: Early retirees who were close - how are you adjusting

Post by 3504PIR »

geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2% or so, maybe a little less. Only withdrawing income from our portfolio, I.e. dividends, bond coupons and the like.
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Re: Early retirees who were close - how are you adjusting

Post by geerhardusvos »

3504PIR wrote: Sun Apr 26, 2020 5:53 pm
geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2% or so, maybe a little less. Only withdrawing income from our portfolio, I.e. dividends, bond coupons and the like.
Congrats! Your heirs rejoice :D
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Re: Early retirees who were close - how are you adjusting

Post by Sand101 »

On Feb. 14th was 0.3% away from my theoretical number. Now 20-ish%. So the answer is twofold - 1. Pay off my house so as to be antifragile for whatever comes next and 2. resign myself to working a number of more years and continue to pack away funds to get back to where I was.
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Re: Early retirees who were close - how are you adjusting

Post by blahblahsunshine »

We are early 50's and have been planning to punch out this June for the last couple years. We are still planning to be done in the next couple months. Looking forward to a change of life. :)

I think we are at about 40-50x living expenses.
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Re: Early retirees who were close - how are you adjusting

Post by KlangFool »

David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
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Re: Early retirees who were close - how are you adjusting

Post by geerhardusvos »

KlangFool wrote: Sun Apr 26, 2020 9:44 pm
David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
Don’t you want to leave your heirs $10 million though with a <3%wr? :wink: :mrgreen:
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Re: Early retirees who were close - how are you adjusting

Post by KlangFool »

geerhardusvos wrote: Sun Apr 26, 2020 10:07 pm
KlangFool wrote: Sun Apr 26, 2020 9:44 pm
David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
Don’t you want to leave your heirs $10 million though with a <3%wr? :wink: :mrgreen:
Wealth does not past 3 generations.

KlangFool
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Re: Early retirees who were close - how are you adjusting

Post by smitcat »

KlangFool wrote: Mon Apr 27, 2020 7:14 am
geerhardusvos wrote: Sun Apr 26, 2020 10:07 pm
KlangFool wrote: Sun Apr 26, 2020 9:44 pm
David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
Don’t you want to leave your heirs $10 million though with a <3%wr? :wink: :mrgreen:
Wealth does not past 3 generations.

KlangFool
"Wealth does not past 3 generations."
Not for you.
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Re: Early retirees who were close - how are you adjusting

Post by KlangFool »

smitcat wrote: Mon Apr 27, 2020 8:08 am
KlangFool wrote: Mon Apr 27, 2020 7:14 am
geerhardusvos wrote: Sun Apr 26, 2020 10:07 pm
KlangFool wrote: Sun Apr 26, 2020 9:44 pm
David Jay wrote: Sat Apr 25, 2020 4:54 pm First off, the 4% SWR is for 30 years, so it is not appropriate for someone retiring in their 50s.

I would calculate for what is needed above and beyond Social Security at 4% and then add the additional funds that I need to get to SS as a separate line item.
David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
Don’t you want to leave your heirs $10 million though with a <3%wr? :wink: :mrgreen:
Wealth does not past 3 generations.

KlangFool
"Wealth does not past 3 generations."
Not for you.
With 2,000+ years of family history, we have plenty of examples without counting on me to prove or disprove this.

KlangFool
smitcat
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Re: Early retirees who were close - how are you adjusting

Post by smitcat »

KlangFool wrote: Mon Apr 27, 2020 8:22 am
smitcat wrote: Mon Apr 27, 2020 8:08 am
KlangFool wrote: Mon Apr 27, 2020 7:14 am
geerhardusvos wrote: Sun Apr 26, 2020 10:07 pm
KlangFool wrote: Sun Apr 26, 2020 9:44 pm

David Jay,

Not necessarily true. It could be true if

A) The 25X/4% SWR is based on the annual expense without Social Security Income.

B) Social Security Income provides a significant amount of annual expense when it shows up.

My annual expense is 60K. My annual social security benefits with my wife are about 30K per year. So, 25X 60K = 1.5 million is more than enough for me to retire in the 50s.

KlangFool
Don’t you want to leave your heirs $10 million though with a <3%wr? :wink: :mrgreen:
Wealth does not past 3 generations.

KlangFool
"Wealth does not past 3 generations."
Not for you.
With 2,000+ years of family history, we have plenty of examples without counting on me to prove or disprove this.

KlangFool
We agree completely - in your case this is true.
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CyclingDuo
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Re: Early retirees who were close - how are you adjusting

Post by CyclingDuo »

stocknoob4111 wrote: Sat Apr 25, 2020 3:29 pmThis question is to any early retirees here (<= 55 years old) who were very close to retirement and had just reached a number to support the 4% rule.
So you have to be equal to or younger than age 55 to participate?
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deikel
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Re: Early retirees who were close - how are you adjusting

Post by deikel »

In general, I think anyone trying to retire (early or otherwise) and does so in a planned way (not by job loss or health scare) should not be affected at all.

You don't pull the trigger just because you barely reached the 4% rule on your networth and then call it a day. You are planning for an economic downturn in the first ten years of your retirement (where you are most vulnerable) and you plan for an asset allocation and a magic number that will support that event - at least that's what I learned here at the BH.

I am still a little away from the magic number - but had I reached it before COVID, I would have still pulled the trigger and not looked back. And with a planned cash cushion (or cash equivalents) of 5 years worth of living expenses - why would I have worried ? Do we think the current crisis will last 5 years ?

I would have (as I did for real) stopped all unnecessary expenses until the situation becomes more clear - but I find that to be prudent rather independent of being in retirement or not - after all, you draw your living expense from a cash flow - either from a salary or from a portfolio. SO its really more a question of securing cash flow.

If this did make a difference for the OP (or anyone else who was close) - that would be an indicator that you had not planned for such an event and you should correct the plan. Maybe I have the benefit of having gone through the 08/09 recession - but they will come again ....and again.
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Re: Early retirees who were close - how are you adjusting

Post by galeno »

Why is this topic even a concern to pre-retirees?

Our 45/55 port is only down 3.6% YTD and 5.8% from its highest value.

This doesn't even qualify as "noise" as per "noise to signal ratio".
KISS & STC.
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Re: Early retirees who were close - how are you adjusting

Post by carminered2019 »

I retired at 50 last August 2019 and made a big adjustment with 60/40 cash to 96/4 cash right before DOW 18K.
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Re: Early retirees who were close - how are you adjusting

Post by jimmyq »

I retired at 52 last year with a 50:50 allocation, and my initial withdrawal is around 3.5% (and no pension). Yes, my accounts dropped a bit and I didn't really enjoy seeing my nest egg tumble, but I was always aware this was a possibility and have planned for it. Thus far, I have plodded along and rebalanced to 50:50 whenever my allocation was off by 5%. The reason I sleep well at night is because the house is paid off, I have no debt, and most importantly, I could lower my expenses and drop my withdrawal to 2% if I absolutely had to. Don't want to, but I could survive just fine on 2% if I had to.
3504PIR
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Re: Early retirees who were close - how are you adjusting

Post by 3504PIR »

geerhardusvos wrote: Sun Apr 26, 2020 6:20 pm
3504PIR wrote: Sun Apr 26, 2020 5:53 pm
geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2% or so, maybe a little less. Only withdrawing income from our portfolio, I.e. dividends, bond coupons and the like.
Congrats! Your heirs rejoice :D
They probably do and we don’t need to spend it needlessly. We have been fortunate and spend as needed to a level of luxury my parents never dreamed of. Kobe steaks on Saturday were fantastic. If you are judging me, and I sense you are, then I’ll simply say worry about yourself and yours. I’ve got everything covered on my end.
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Re: Early retirees who were close - how are you adjusting

Post by JBTX »

We are mid 50s and if we assumed a 4% rule we theoretically could retire (not quite that simple, but nonetheless). However I would never be comfortable with 4% "swr", and neither one of us are itching to retire.

If you have a typical age appropriate allocation the portfolio should have recovered enough to within a fairly normal range of ups and downs. Whether it stays that way who knows.

If I were in your shoes I wouldn't panic but look for some sort of job that you like and brings in some income. Maybe part time. You may have to wait until things normalize a bit.
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Re: Early retirees who were close - how are you adjusting

Post by JBTX »

3504PIR wrote: Mon Apr 27, 2020 11:31 pm
geerhardusvos wrote: Sun Apr 26, 2020 6:20 pm
3504PIR wrote: Sun Apr 26, 2020 5:53 pm
geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2% or so, maybe a little less. Only withdrawing income from our portfolio, I.e. dividends, bond coupons and the like.
Congrats! Your heirs rejoice :D
They probably do and we don’t need to spend it needlessly. We have been fortunate and spend as needed to a level of luxury my parents never dreamed of. Kobe steaks on Saturday were fantastic. If you are judging me, and I sense you are, then I’ll simply say worry about yourself and yours. I’ve got everything covered on my end.
Why would anybody be judging you? You have a plan and are executing it, successfully by all accounts.
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galeno
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Re: Early retirees who were close - how are you adjusting

Post by galeno »

With an AWR = 3.5% your port should last 60 yr. Probably more. You should seriously think about increasing yours.

2.5% to 3.5% is 40% more fun. And you ain't getting any younger.
jimmyq wrote: Mon Apr 27, 2020 4:12 pm I retired at 52 last year with a 50:50 allocation, and my initial withdrawal is around 3.5% (and no pension). Yes, my accounts dropped a bit and I didn't really enjoy seeing my nest egg tumble, but I was always aware this was a possibility and have planned for it. Thus far, I have plodded along and rebalanced to 50:50 whenever my allocation was off by 5%. The reason I sleep well at night is because the house is paid off, I have no debt, and most importantly, I could lower my expenses and drop my withdrawal to 2% if I absolutely had to. Don't want to, but I could survive just fine on 2% if I had to.
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galeno
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Re: Early retirees who were close - how are you adjusting

Post by galeno »

Why did you do that? Don't compound the mistake by selling. Just hold on.
vipertom1970 wrote: Mon Apr 27, 2020 3:55 pm I¹ retired at 50 last August 2019 and made a big adjustment with 60/40 cash to 96/4 cash right before DOW 18K.
JamesJonesJrJr
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Re: Early retirees who were close - how are you adjusting

Post by JamesJonesJrJr »

I use a dynamic withdrawal strategy. The market is down 2.3% since a year ago and in a year my investment horizon has shrunk by just as much, so my retirement income is roughly unchanged from last year.
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Re: Early retirees who were close - how are you adjusting

Post by jimmyq »

galeno wrote: Tue Apr 28, 2020 5:40 am With an AWR = 3.5% your port should last 60 yr. Probably more. You should seriously think about increasing yours.
I personally believe that 3.5% is a prudent starting point for someone retiring in their early 50's, especially with current valuations and an unknown sequence of returns. I don't intend to stick to a simple and strict withdrawal rate that only increases with inflation, either. It will vary depending on how well the market does as well as what my financial needs are in any particular year. So if the market gives, then I will taketh (and vice versus). Also, any one year may be out of wack due to large expenses such as a new roof or vehicle.
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galeno
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Re: Early retirees who were close - how are you adjusting

Post by galeno »

We run firecalc.com every year which gives us that year's SWR.

I like it because it takes all the emotion out of the decision. Also every year less of term = more SWR.
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Re: Early retirees who were close - how are you adjusting

Post by lakpr »

galeno wrote: Tue Apr 28, 2020 5:46 am Why did you do that? Don't compound the mistake by selling. Just hold on.
vipertom1970 wrote: Mon Apr 27, 2020 3:55 pm I¹ retired at 50 last August 2019 and made a big adjustment with 60/40 cash to 96/4 cash right before DOW 18K.
??? vipertom1970 is saying he moved to 96% equities just before Dow 18k, seems to me that he's bought low ... it's not a mistake, in retrospect it's a genius move.
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galeno
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Re: Early retirees who were close - how are you adjusting

Post by galeno »

"??? vipertom1970 is saying he moved to 96% equities just before Dow 18k, seems to me that he's bought low ... it's not a mistake, in retrospect it's a genius move."

I understood the opposite. My bad.
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Re: Early retirees who were close - how are you adjusting

Post by Call_Me_Op »

jimmyq wrote: Mon Apr 27, 2020 4:12 pm I retired at 52 last year with a 50:50 allocation, and my initial withdrawal is around 3.5% (and no pension). Yes, my accounts dropped a bit and I didn't really enjoy seeing my nest egg tumble, but I was always aware this was a possibility and have planned for it. Thus far, I have plodded along and rebalanced to 50:50 whenever my allocation was off by 5%. The reason I sleep well at night is because the house is paid off, I have no debt, and most importantly, I could lower my expenses and drop my withdrawal to 2% if I absolutely had to. Don't want to, but I could survive just fine on 2% if I had to.
But you should never have to drop your withdrawal rate. As long as you can stick to 3.5%, you can never run out of money.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: Early retirees who were close - how are you adjusting

Post by bltn »

3504PIR wrote: Mon Apr 27, 2020 11:31 pm
geerhardusvos wrote: Sun Apr 26, 2020 6:20 pm
3504PIR wrote: Sun Apr 26, 2020 5:53 pm
geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2
Congrats! Your heirs rejoice :D
They probably do and we don’t need to spend it needlessly. We have been fortunate and spend as needed to a level of luxury my parents never dreamed of. Kobe steaks on Saturday were fantastic. If you are judging me, and I sense you are, then I’ll simply say worry about yourself and yours. I’ve got everything covered on my end.
Double post.
Last edited by bltn on Tue Sep 01, 2020 8:47 am, edited 1 time in total.
bltn
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Re: Early retirees who were close - how are you adjusting

Post by bltn »

3504PIR wrote: Mon Apr 27, 2020 11:31 pm
geerhardusvos wrote: Sun Apr 26, 2020 6:20 pm
3504PIR wrote: Sun Apr 26, 2020 5:53 pm
geerhardusvos wrote: Sun Apr 26, 2020 9:26 am
3504PIR wrote: Sun Apr 26, 2020 1:46 am I retired in August officially after leaving my job on accumulated vacation pay at the end of May at 56 aided by a militant pension which enabled us to hyper save during our post military career. We moved to a radically lower COL location also in May (Hawaii to Western North Carolina). Refinanced our mortgage in February to further improve cash flow. Overall the lock down has saved us in spending due to our cancelled travel plans and overall less consumption the past few months, although I bought a lot of food for the pantry back in January after initial reports on the virus came out. I expect our spending to remain very low through the summer for the same reason. All this matters to us as our biggest concern with early retirement was based on cash flow, not so much withdraw rate which for us is a longer term metric.

I’m not particularly happy about the market downturn or vague future, but looked back at the 2008-9 downturn in our planning and were pretty conservative with our spendable cash and income opportunities from bond income and meager interest from cds and the like. 2008-9 was a significant event in our financial lives and future planning. Overall we are in good shape with a portfolio by BH standards that is overly conservative when compared to most here. Retiring younger than many and having a mortgage drove us in that direction.
Congratulations on your retirement! I’m curious, not including your military pension, what will be your withdrawal rate on your portfolio?
We will be about 2% or so, maybe a little less. Only withdrawing income from our portfolio, I.e. dividends, bond coupons and the like.
Congrats! Your heirs rejoice :D
They probably do and we don’t need to spend it needlessly. We have been fortunate and spend as needed to a level of luxury my parents never dreamed of. Kobe steaks on Saturday were fantastic. If you are judging me, and I sense you are, then I’ll simply say worry about yourself and yours. I’ve got everything covered on my end.
I think you ve got things well covered. With your early retirement age being a bit conservative is very wise. You always have the option to securely increase your spending if necessary or desired . A secure increase in spending is not an option for someone retiring early on a 4% withdrawal rate.
I retired in my mid 60 s on a 3% withdrawal rate. This provided us with 150% of the spending money we were used to . And I still found myself saving 10% of these withdrawals, out of habit! The kids are going to do fine, and so are we. The security of our financial position is a good feeling.
Congratulations on your personal financial management.
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