I thank those here for what you have said about my contributions in this forum. So many here have assisted me with their advice and wisdom that if I said some things which rings bells with some, i am pleased, even though i am amazed.
I'll try to make a few additional comments using JCE66's questions, some of which may be in this thread from years back.
JCE66 wrote: Looking back, and knowing what you know now - would you have done the same thing (sell off assets to cover 3 years of expenses)?
(1)Looking back, would you have had enough cash assets to 'ride out' the worst of the market storm? I define market storm as September 2008 through April 2009. I am asking if you had enough cash to meet expenses had you done nothing back in 2008.
(2)Looking back, and knowing what you know now - what would you have done differently, and why? I am not talking about market timing, but I am wondering about things like, 'when I saw that things were starting to head south, I started making sure my asset allocation was X' or something similar. I am interested in how you as a retiree and investor 'thought and acted'. We can be our own worst enemy, right? So from a behavioral perspective, I am interested in the 'thoughts' and 'behaviors from those thoughts' as you recall them.
(3)Now for the big question. I am 15-20 years from retirement (age 50) - maybe sooner if I get a little lucky. It is highly likely that I will experience 1-2 'big bears' in this time. And after I retire, 1-2 more 'big bears'. If there was one thing to tell a younger man about how to behave through those periods of market turbulence - what would that one thing be?
Answers and comments.
(1)In this circumstance I would not change. My cash accounts were gone. I was meeting monthly expenses from SS and investments. I was taking distributions monthly from the investment accounts, so I was already selling off assets monthly. With my decision of selling it all at once that was actually making it easier for me in the future.....get it over with and done rather than suffering every month. I was actually comparatively relaxed afterwards. When you look back you will see the market continued to drop after I sold off, so, as it worked out I did not sell at the bottom
I should note that I had planned the 3 year or so cushion when I retired, but greed got to me, as I did not keep it up and instead invested it.
(2) and (3) comments will be in one paragraph, I think. Here goes. (It is after midnight again...2 nights in a row, but this time I did not wake up to make comments as I was away grocery and other shopping, planting flowers, cleaning, eating out, and seeing a movie and so on....it was a nice day.) so let's see what comes out of these typing fingers.
I made a fundamental cash-flow error when I retired. I took my pension as a lump sum. The lump sum or pension annuity question comes up here so often. The lump sum idea seemed like the right thing...i would have the money in my hand to invest and could have a nice remainder for someone or some group to inherit. Actually that is working out quite well, so why was that an error? In 2008, I had nothing coming in monthly along with SS and SS is not enough for me. Everything I had was invested. If I had had that pension, I would not have had to sell anything. I would have been much less stressed having to
sell as the market dropped. Sure, a major market collapse would still hurt somewhat as the nest egg drops in value, but it would not have felt like a disaster as there would be enough money coming in every month. So, I would not take a lump sum today for that reason, plus it would have made it so much easier for my wife to receive monthly cash after I passed on.
I changed something In the last 3 years, in my 80s, and that was I purchased SPIAs from which the payouts will cover all of our normal distributions for spending, so, in effect, I funded my own new "pension plan". (Actually my SS and SPIAs have excess over normal expenses so I am able to have several thousand annually for some larger purchases and donations.
So, what is the one thing
I would recommend to help a young person through market turbulence? Don't be greedy in good times. Don't invest money that you will "need" in the next 3 to 5 years. Need might mean that you want to buy a new house or auto or take that big cruise in that period, but it also would mean, especially in retirement, what you will need for monthly expenses.
“One moment of patience may ward off great disaster. One moment of impatience may ruin a whole life.” — Chinese Proverb