Recent Early Retirees How are You Coping?

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BGeste
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Recent Early Retirees How are You Coping?

Post by BGeste »

I retired last year at 51 (had to because of layoff). My strategy is to live on less than a 3% with-drawl rate. Most expected to come from distributions.I started retirement mid last year with about 35 times annual expenses.

My net worth increased considerably to 41 times expenses, until the sell off started a few weeks ago. I was feeling very confident in the future.

With the sell off, I still have 32 times expenses. I have not changed my AA or sold any shares. However, no one knows what will happen from here.

How are others in this early retiree situation copying with what seems to be a very uncertain future?
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Johnsson
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Re: Recent Early Retirees How are You Coping?

Post by Johnsson »

Not quite your target responder, but...

Planning to retire in January-ish, 2021. We had 38x and are also down to 32x. My plan was to spend 2.5% for basic living and 3.3% for fancy living. As for you, the math has changed.

Though not quite at a rebalancing band I'm tempted to rebalance (~4%) fixed to equities.

We'll have ~11 years until SS with fixed income to make it there (with about 5 years to spare) without spending equities... THAT gives me confidence (even though I won't like equity drops, like this).

We're not down that far. A 50% drop will be harder to swallow, though it's not over yet!!
'In theory there is no difference between theory and practice. In practice there is.' Yogi Berra
Nyc10036
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Re: Recent Early Retirees How are You Coping?

Post by Nyc10036 »

Not an early retiree.
Semi-retired since 2013.

I had been planning on getting a HELOC and "cashing out" some of my stock funds to buy a new house this year.
And then selling my current home.
This economic uncertainty has me reconsidering.

Money-wise I am okay.

I plan on continuing to get contract jobs.
Problem is I am guessing many companies that have jobs open may hold off in hiring.
MidMNtom
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Re: Recent Early Retirees How are You Coping?

Post by MidMNtom »

We retired Jan 2 2020 both at aprox 65yr old. Had a asset allocation set to be able to live off the bond yields, letting the stocks do what they may.

Plan was approx 60/40 stocks. Allocation is doing exactly what it was suppose to do.

Now I'll just stick with the plan (like we really have a choice?)

We made it thorough 1987, 2001, 2008-9 and we'll make it through this.

I never sold when we had a crisis before and I wont now.

We have delayed some purchases temporarily, but thats been more to give us the illusion of at least some control.

Best of luck!
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Watty
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Re: Recent Early Retirees How are You Coping?

Post by Watty »

BGeste wrote: Fri Mar 13, 2020 10:55 am Most expected to come from distributions.I started retirement mid last year with about 35 times annual expenses.

My net worth increased considerably to 41 times expenses...

.....I still have 32 times expenses.
Looking at the "times expenses" does not work well since your expenses will be different at different ages.

For example once I start Social Security and I am getting Medicare the expenses that my portfolio will need to supply will be fraction of what I will need when I am younger.
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pondering
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Re: Recent Early Retirees How are You Coping?

Post by pondering »

Does your life expectancy come into your calculations?

Do you reevaluate it periodically?
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BGeste
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Re: Recent Early Retirees How are You Coping?

Post by BGeste »

pondering wrote: Fri Mar 13, 2020 3:40 pm Does your life expectancy come into your calculations?

Do you reevaluate it periodically?
My parents are both alive at 87. I am planning on making it to 90 or higher. So at least 38 years to go.
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lj3jim
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Re: Recent Early Retirees How are You Coping?

Post by lj3jim »

My wife and I retired in 2011 at ages 57 (me) and 54. It's a modest retirement that works well for us. We planned to live on a 5% withdrawal from our portfolio until I reach age 70 in 2023. At that point, we'll start taking Social Security. All has gone well, and our portfolio has held up well. Our lifestyle is such that when we take SS, we can cover all of our normal expenses with just SS. We'll use our portfolio for extras (mostly travel). The recent stock dip hurt our portfolio more than anything else since 2011, but we're not concerned. I did rebalance yesterday, and will look at it again in 6 months. Our portfolio is about 20 times our annual expenses. So, to answer your question, we're coping just fine!
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JDCarpenter
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Re: Recent Early Retirees How are You Coping?

Post by JDCarpenter »

We retired in July of 2017 at 57 and 56.

As I told some friends on the verge of early retirement last night, the drop as of then was well within planning/historical parameters. As always, our yearend portfolio will determine next year's spending. Nonetheless, if another big percentage drop from yesterday, we likely will scale back spending in the second half of the present year (we have a 2 month international trip sketched out, which still has a good deal of flex as to what we spend).

So, remaining aware of things, but a long way from having any significant impact. In the midst of planning 3 months of domestic driving trips right now.

:beer

(60/40 target, no pensions except what we might end up getting from social at our respective age 70s; after-tax spending quite a bit higher than when we were working.)
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Golf maniac
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Re: Recent Early Retirees How are You Coping?

Post by Golf maniac »

I retired at 56 in late 2015. Any money I need in the next 10 years is in very conservative investments. Money after that I am in Lifestyle funds that will get more conservative over time. I have no concerns as after this passes investments will bounce back over the long haul. Panic selling now is absolutely the wrong thing to do.
heyyou
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Re: Recent Early Retirees How are You Coping?

Post by heyyou »

As an early retiree (2006), the 2008 crash pushed against my SWAN (Sleep Well At Night) limit. This time, not so much with age 70 SS starting next month. With a 60/40 allocation, spending only from the bond side (which is slow, indirect rebalancing), and an effort to spend a somewhat fixed percentage (my age based RMD %) of each recent portfolio value, I'm thinking those will contribute to portfolio longevity.

This was one of the longest bull markets on record,and we know what is behind a bull--it stinks and is not unanticipated, just unscheduled. Steep stock drops ("bull droppings" ?) are built into the history that was used to determine the portfolio survival rates, and the worst period for portfolio survival was sustained high inflation, not a stock crash following a bull market. The crash is bad for those who become unemployed, but less so for new retirees who have numerous years of spending, saved in bond funds.

Virus deaths are low compared to the number of car wreck deaths, cancer deaths, etc., which are no longer newsworthy, so we will also adapt in the future to this new, bad news. The virus death rate is 4% of those who do get infected, focused on the old and weak who are not the most productive part of the economy, while 96% recover from the disease.
obgraham
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Re: Recent Early Retirees How are You Coping?

Post by obgraham »

Been retired for almost 20 years. So we've seen this scenario before. If you are living off your IRA, as we are, it is always stressful to watch it plummet. IMHO anyone who denies that is just blowing smoke.
I found 2008 much worse, because I was 70/30 in equities. As a result, I've changed to 40/60, rebalanced the first week in January, and find it less stressful now.
I have the next 2 years funding very secure, and presumably by then things will have upturned. If not, we will simply adapt to a cheaper brand of TP.
toocold
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Re: Recent Early Retirees How are You Coping?

Post by toocold »

Late 40s. Just recently left work 6 months ago with no plans to go back to another job. Between deferred compensation, a real estate portfolio, dividend payments, and retirement investment holdings, we have more than enough passive income to cover our living expenses several times over. My biggest issue is that I exercised stock options after I left work (great timing) and I am trying to figure out how to reinvest in this chaotic market.

I do need to turn off the news once in awhile because all this information is not helping me enjoy life.
kevinaces
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Re: Recent Early Retirees How are You Coping?

Post by kevinaces »

Plans of retirement, thwarted; I am 64 + 11 months. I gave my employer my retirement notice 5 weeks ago; now I am hopeful they can allow me a reduction in hours, while allowing me to work at least 1 more year. I will be posing this to them in the next few days...
SandysDad
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Re: Recent Early Retirees How are You Coping?

Post by SandysDad »

For starters if you went from 41x to 32x you were almost all equities and little in bonds and cash.

So when you retired (even unexpectantly) did you ask yourself “if the market declined by 50% would I stay retired?

My guess at your AA was “no”.

So now you are in the situation of too late to sell and too early to buy. An expensive lesson.

The good news at 32x that is still a very reasonable wd rate even in early 50s.

What to do in your case right now? No easy answers
MnD
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Re: Recent Early Retirees How are You Coping?

Post by MnD »

Doing fabulously after retiring 11/20/18 at age 56, just before the prior drop. In the past 15 months we've completed a major home remodel which vastly improves the experience of hanging out at home, bought a teardrop camper which we use frequently and just celebrated the well-attended marriage of our son (last weekend - talk about lucky timing- whew). Have a very comfortable income from safe sources that covers all needs and a decent portion of wants plus portfolio income on top of that, no debt, low fixed expenses and so much more time to enjoy life. Lost a lot of weight since retirement and started running again, now up to 38 miles per week plus several hours of cross-training. Had I been at the weight and fitness level now that I was when I retired - I'd be terrified. Instead with all the changes in health I'm not concerned at all. My Garmin Forerunner GPS watch says my fitness age is age 20 (skeptical) with an estimated 5K race time of 23 minutes (seems optimistic but we shall see). It's so much easier to deal with unexpected stresses including the current kerfuffle without job stress and demands piled on top. Every day is a weekend! :beer
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
basspond
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Re: Recent Early Retirees How are You Coping?

Post by basspond »

Just like we did in the previous 3 downturns in 1987, 2000, and 2008. Only differences are we are not taking advantage of the lower costs of dollar cost averaging and no work related stresses. We do have a couple of trips that we might have to cancel because DW is getting sucked into the gloom and doom prophecy. Like I heard the other day, when ever the number goes up it is covered like a plane crash which is 24/7.
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amp
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Re: Recent Early Retirees How are You Coping?

Post by amp »

I retired at age 47 in 2018. Once I hit my number, I reduced my AA down to 55/45 from 75/25. Since then it had crept up to 60/40 (I'm planning on a rising equity glide path in retirement) but now it's fallen back down to where I started. I do plan on rebalancing if it goes below 50/50, but we'll see if I have the stomach for it when the time comes.

I've kept my withdrawal rate fairly low, especially in these first years of retirement, so in spite of all the market turmoil I haven't yet experienced any real worries about my portfolio. I don't regret retiring for one instant.

One small silver lining is that if the market continues to fall, I'll be able to harvest some capital losses which will come in handy next year at tax time.
nguy44
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Re: Recent Early Retirees How are You Coping?

Post by nguy44 »

Retired at age 60 in June 2018. Going into retirement move my AA to 40/37/23 stocks/bonds/cash. Moved stock percent to 35 last July.

Cash is for planned expense needs beyond my pension for about 5 years, without being forced to sell stocks or bond allocation, before taking SS. Actual expenditures have been half of what we expected, even with adding a third card and expensive travel (our greatest expense so far in retirement). At this "rate" the cash would last closer to 10 years. This year travel will be much less so there will be even less of a hit.

So while my "ego" does not like seeing a "paper" loss of close to $200k, we still have plenty. We still have more than when I had at retirement. I had been looking at paying off the balance of our mortgage (currently $52K), but now I am considering dollar cost averaging that amount back into the market.
michaeljc70
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Re: Recent Early Retirees How are You Coping?

Post by michaeljc70 »

I don't think the future is very uncertain. That seems overly negative to me. I am coping fine. My plan is built for this and worse. Is it fun? No, but I didn't expect the market to hit new highs every other week without any pullbacks. I also slightly miss dollar cost averaging in from my paychecks during the decline (but don't miss working).
FrankLUSMC
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Re: Recent Early Retirees How are You Coping?

Post by FrankLUSMC »

Wife (61) and I (63) are fully retired as of Jan 2 this year. Had a 70/30 portfolio which many think is too risky for new retirees. The market may move us involuntarily to 60/40 LOL!

I don't plan any physical moves at the moment, but my IPS says to make a move on 10% equity changes. Maybe now that we are retired, I should allow the 60/40 be the base point in our IPS.
3feetpete
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Re: Recent Early Retirees How are You Coping?

Post by 3feetpete »

I retired almost three years ago and have been living off my IRA's with the plan to delay SS until 70. I just turned 68 and started wifes SS and my spousal SS. For 3 years I've been selling stocks during peaks to generate cash for expenses. For the foreseable future I will be selling bonds as needed instead of stocks. Since I am now getting some income I had planned to slowly reduce my bond holdings anyway. I've also taken this as an opportunity to do ROTH conversions since the reduced values generate less of a tax impact and I'll probably sell bonds to cover that tax.
jcoll1
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Re: Recent Early Retirees How are You Coping?

Post by jcoll1 »

MidMNtom wrote: Fri Mar 13, 2020 1:57 pm We retired Jan 2 2020 both at aprox 65yr old. Had a asset allocation set to be able to live off the bond yields, letting the stocks do what they may.

Plan was approx 60/40 stocks. Allocation is doing exactly what it was suppose to do.

Now I'll just stick with the plan (like we really have a choice?)

We made it thorough 1987, 2001, 2008-9 and we'll make it through this.

I never sold when we had a crisis before and I wont now.

We have delayed some purchases temporarily, but thats been more to give us the illusion of at least some control.

Best of luck!
We are in a very similar situation except we have a fair amount of cash on hand right now due to making changes that were planned but have been interrupted due to market conditions. Our intention was to buy more holdings in our current portfolio but we're holding off until the market settles some.

We are also considering the purchase of another rental but we've been hesitant due to what we consider inflated prices in the area we desire to live.

We'll have more cash on hand soon due to the sale of our primary residence. What happens with that will depend on how things shake out with the market turmoil. Our plans for a place to live did include renting at least until Nov. of this year, so no change expected there. A rental has already been secured.

Other than that we'll hope for the best!
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protagonist
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Re: Recent Early Retirees How are You Coping?

Post by protagonist »

To put things in perspective, if you have had assets in the market for 3 years, you still have quite a bit more money today than you did then, in the face of hardly any inflation.

Any panic is just panicking over losing massive gains.

The ones suffering are the ones who just started investing.
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amp
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Re: Recent Early Retirees How are You Coping?

Post by amp »

protagonist wrote: Sun Mar 15, 2020 10:35 am To put things in perspective, if you have had assets in the market for 3 years, you still have quite a bit more money today than you did then, in the face of hardly any inflation.

Any panic is just panicking over losing massive gains.

The ones suffering are the ones who just started investing.
For retirees sequence of returns risk is a huge potential problem. If they're not adequately prepared, a market drop early in retirement will affect them for the remainder of their lives.
protagonist
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Re: Recent Early Retirees How are You Coping?

Post by protagonist »

amp wrote: Sun Mar 15, 2020 10:44 am
protagonist wrote: Sun Mar 15, 2020 10:35 am To put things in perspective, if you have had assets in the market for 3 years, you still have quite a bit more money today than you did then, in the face of hardly any inflation.

Any panic is just panicking over losing massive gains.

The ones suffering are the ones who just started investing.
For retirees sequence of returns risk is a huge potential problem. If they're not adequately prepared, a market drop early in retirement will affect them for the remainder of their lives.
Yes, that is true. That said, I am pointing this out to minimize panic (which never ends well).
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willthrill81
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Re: Recent Early Retirees How are You Coping?

Post by willthrill81 »

BGeste wrote: Fri Mar 13, 2020 10:55 am I retired last year at 51 (had to because of layoff). My strategy is to live on less than a 3% with-drawl rate. Most expected to come from distributions.I started retirement mid last year with about 35 times annual expenses.

My net worth increased considerably to 41 times expenses, until the sell off started a few weeks ago. I was feeling very confident in the future.

With the sell off, I still have 32 times expenses. I have not changed my AA or sold any shares. However, no one knows what will happen from here.

How are others in this early retiree situation copying with what seems to be a very uncertain future?
The future is always unknown and never certain.


That said, if you still have 32x after the current downturn, you're historically golden. It doesn't feel good to see your stocks drop by 20%, but it shouldn't have any impact at all on the long-term viability of your retirement.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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steve roy
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Re: Recent Early Retirees How are You Coping?

Post by steve roy »

Retired 3 years , 4 months. Our AA is 74% fixed and we live on our cash flow.

Biggest concerns are how kids are doing because they both work in industries affected by shut downs (but doesn't everybody?). And my mother is 94 and living in a senior facility and who knows what'll happen there?

Other than that, we combat house fever by taking dogs on long, scenic walks, and I've started putting lotion on my hands since with constant washing and the high desert air, the skin on them is turning into 15th century parchment.
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ram
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Re: Recent Early Retirees How are You Coping?

Post by ram »

JDCarpenter wrote: Fri Mar 13, 2020 3:59 pm no pensions except what we might end up getting from social at our respective age 70s;
I assume you have reviewed the most appropriate age for starting SS for each one of you. Though we are far from receiving SS (not retired yet) the ages for us on preliminary evaluation turned out to be 70 for the one with longer work record and 62 for the one with shorter work record. If I recall correctly both of you are professionals who likely paid at the upper limit of the SS wage base for most of your working lives.
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JDCarpenter
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Re: Recent Early Retirees How are You Coping?

Post by JDCarpenter »

ram wrote: Sun Mar 15, 2020 11:41 am
JDCarpenter wrote: Fri Mar 13, 2020 3:59 pm no pensions except what we might end up getting from social at our respective age 70s;
I assume you have reviewed the most appropriate age for starting SS for each one of you. Though we are far from receiving SS (not retired yet) the ages for us on preliminary evaluation turned out to be 70 for the one with longer work record and 62 for the one with shorter work record. If I recall correctly both of you are professionals who likely paid at the upper limit of the SS wage base for most of your working lives.
Yep. 70 for her (close to max earner and likely to be extremely long lived). 67-68 recommended for me depending upon tool used, but we'll go with 70 under current rules/law. (high earner, completely unknown longevity given prior-to-70 deaths of all known male ancestors due to tobacco use; since we are unlikely to need the money, prudent call is more longevity insurance given my health, physically easy profession, and no history of tobacco use.)

Always a good post to remind folks to run the numbers on social. :beer
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