Retired in a bear market

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Ana-Maria57
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Retired in a bear market

Post by Ana-Maria57 »

I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
CaptainT
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Re: Retired in a bear market

Post by CaptainT »

I personally have a lot of faith in the consumerist urge of the US consumers. They will want to buy things and others will want to sell things. I believe our markets will over time prosper because of this. Now any week month or year will and can always be down but consumer greed will always win out.

Zombie apocalypse or alien invasion or nuclear war or any of those horrible things that are out of control that could defeat the greed of the US consumer well really how valuable will my 401k be in that situation anyway
Parkinglotracer
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Re: Retired in a bear market

Post by Parkinglotracer »

I am staying the course with the quasi traditional 60-40 Stock (VTI/VXUS) and Fixed income portfolio because I don't see a path to a higher probability of success any other way

Fixed Income is Vang MM Fund, TSP G Fund, I bonds, CDs, 1-3 year Treasury ladders

We have a few years of needed retirement spending in cash or short term securities so i will withdraw from that mainly while the equity market is down

if the market doesn't recover some in the next 3-5 years we will have to spend less in retirement in keeping with a 3 - 4 % withdrawal rate

for us that will be less travel, less home improvements, less gifts to kids, etc.

Still feel lucky I could retire for a few years in my 50's and again at age 60.
jebmke
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Re: Retired in a bear market

Post by jebmke »

I retired in December, 2007. I followed my plan to harvest losses and re-balance as needed. It seemed to work fine that time. I have no reason to think it won't work this time.

Economic news is notoriously short sighted and heavily influenced by current conditions. It is ignore-worthy except for entertainment value. Listen to Bloomberg radio for just an hour or so and you will get enough opposing views of the future that certainly one will fit your mood.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Californiastate
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Re: Retired in a bear market

Post by Californiastate »

My long term plan hasn't changed.
"There's always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they DO NOT KNOW ABOUT IT! MIB
harvestbook
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Re: Retired in a bear market

Post by harvestbook »

The news is always bad if you're looking for bad news.

Worrying about whether a pile of money will last 30 years is really a first-world problem. The odds are you will die before you run out of money, no matter what. I'm a recent retiree and I have enough for today and I figure I can work it out day by day and year by year as I go. In a weird way, I'd rather retire right now than when everything's looking rosy, because that too is an illusion. Good luck!
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greenskeeper
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Re: Retired in a bear market

Post by greenskeeper »

The markets always recover… every-single-time
manuvns
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Re: Retired in a bear market

Post by manuvns »

reduce expenses and increase income ( passive or earned)
Thanks!
dcabler
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Re: Retired in a bear market

Post by dcabler »

I will be retiring into this bear market and I don't believe this time is any different.
You might want to search the forum for some of the panics people were having back during 2008...

Cheers.
exoilman
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Re: Retired in a bear market

Post by exoilman »

jebmke wrote: Tue Sep 20, 2022 11:31 am I retired in December, 2007. I followed my plan to harvest losses and re-balance as needed. It seemed to work fine that time. I have no reason to think it won't work this time.

Economic news is notoriously short sighted and heavily influenced by current conditions. It is ignore-worthy except for entertainment value. Listen to Bloomberg radio for just an hour or so and you will get enough opposing views of the future that certainly one will fit your mood.
+1 like your comment on Bloomberg, also CNBC

I retired Dec. 2002. We have enough till we meet our maker. Currently adding to treasuries. Approximately 35% equities all yielding
2-4%

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JoeRetire
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Re: Retired in a bear market

Post by JoeRetire »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
It's not different, even if you can't see past the horizon. There's nothing new under the sun.
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term?
Unless you entered retirement extremely close to the vest, just remember that nothing lasts forever - not the bulls, not the bears. All things must pass.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.
Are your tax rates rising? Are you getting a new mortgage? If not, these shouldn't worry you. Are you maximizing your inflation-protected, tax-beneficial social security income stream? If not yet, perhaps you should. Don't worry, be happy.
Anyone want to weigh in about changes you are making to your overall retirement planning?
Not changing anything. I was never planning on an infinite bull run in the market, so no need for any changes. I never promised you a rose garden.
Last edited by JoeRetire on Tue Sep 20, 2022 1:19 pm, edited 2 times in total.
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260chrisb
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Re: Retired in a bear market

Post by 260chrisb »

I'm now six months into retirement, have not strayed from the plan and at this point have no plans to in the near future. I protected three years worth of expenses in late 2019 knowing I was two years away from needing it based on an April Fools Day 2022 retirement date. I did this in the event we experience a down market for 1,2 or even 3 years. Well, here we are in a down market which likely will end the year down or at least flat which is what I planned for. I'll never forget the thoughts I had at the end of 2019 thinking I'm walking away from earnings as the markets continued to boom. Once I got the money out of the markets and got my head around why I'm doing this, I was good with it and of course still am. The markets have always recovered and I'm of the mind set they will this time. Do I like seeing the S&P down 17% YTD? Nope, but at this point I don't need the money so I'm staying put. If we have three years in a row of down markets I'm not sure what I'll do but have other assets that could be sold if I had the need for money instead of selling funds within my investment accounts.
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squirrel1963
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Re: Retired in a bear market

Post by squirrel1963 »

In moments like these things always look gloomy because there is always reason to worry.
No one knows if this year will just be a blip on the radar screen or it will turn into a sequence-of-events bad scenario, but either way, I stay the course because:
(1) it always worked in the past
(2) the only one time I didn't stay the course was during the 2000 market crash, when I lost money and learned my lessons
(3) in the midst of this fog and uncertainty the best thing to do is do nothing. Jack Bogle always said this :-)
| LMP | safe portfolio: TIPS ladder + I-bonds + Treasuries | risky portfolio: US stocks / US REIT / International stocks |
the_wiki
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Re: Retired in a bear market

Post by the_wiki »

I mean, what is your alternative? If there was an obvious alternative, maybe we talk about it. But everything sucks right now, so nothing to do but wait out the storm.

I also think it is hard to feel too bad about this year, when we just had the best few years run I can remember. So we are all down a bit right now. I bet you are still way up since start of 2019. I find it is easier to stay positive when you focus on longer term returns.
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Kenkat
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Re: Retired in a bear market

Post by Kenkat »

It’s fun, ain’t it? :? :?

In terms of safe withdraw rates, you often hear about 4% is “safe” or maybe 3.5% is “safe”, but for a given start date, you could have taken 6% or 7% and been “ok”. It seems like we are more at the 3.5-4% end of the pool right now. The scenario occurring now may, key word may, be the reason withdraw rates have to be pretty conservative.

My retirement plan has me funding 11 years of spending before social security kicks in, so I am doing that with a conservative 30/70 bucket of money I am drawing down, using TIPS, stable value and a little bit of equities to fund that gap to age 70. The rest of the money I have can wait for the market to recover as I don’t need it anytime soon.
iamlucky13
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Re: Retired in a bear market

Post by iamlucky13 »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold?
How close of a horizon are you to looking for a recovery? Which traditional approach are you referring to?

The well-tested traditional approaches should still succeed most of the time even if a downturn occurs.

The 4% rule, for example, is not intended to rely on a dramatic recovery. Even a return to slow growth from a decreased initial amount can eventually dig out of most holes. If you follow the 4% rule, a 30 year period of poor market performance may cause concerns along the way, but there should be a low risk of running you out of money. It should take a near-worst (but not unprecedented...we don't want to forget that) 30 year period to deplete such a portfolio.

If you are using a lower withdrawal rate or a variable withdrawal strategy, or can at least lower your withdrawal rate if needed, you should be even less likely to deplete your savings.

If you have room to cut your spending a bit while waiting to see how the market evolves, it might be worth doing so for some extra peace of mind, but I would not be making any major changes to your plan, like increasing stock allocation beyond what you already planned to chase returns.
MnD
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Re: Retired in a bear market

Post by MnD »

I began investing in July 1986 and retired in November 2018 - making monthly or bi-weekly investments for that entire 32+ year span.
The S&P 500 (currently 3858) ranged between ~230 to ~2800 during my accumulation phase.

So I'm not sure where the constantly repeated concern by retirees about "spending in a down market" comes from.
Is their expectation that the market only goes up, so that every time they go to the grocery store they are spending at an all-time market high?

Not that it matters, but if one were to use FIFO accounting for retirement spending I'm probably spending shares that were acquired when the S&P 500 was around 300. I've been spending 5% of annual portfolio balance since retirement (which spans 2 or 3 bear markets and a global pandemic) and my portfolio is larger in both real and nominal terms than the day I retired. :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.
Marseille07
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Re: Retired in a bear market

Post by Marseille07 »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Retiring to a bear market is very common because people hit their "number" during a bull market.

Nothing to worry about, at least not on Year 1 of a bear market.
US & FM (5% seed) | 350K Cash
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Flobes
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Re: Retired in a bear market

Post by Flobes »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am Anyone want to weigh in...?
I was foreceably "retired" in 2008 at age 57, when I was jettisoned from my "ultra-safe" employment and there were not jobs to be had.

Then the market tumbled.

All seemed bleak, and there was not a moment of silence about doom in all media.

Fourteen years later, I am just fine. There's more in my Vanguard account than there was then, even after all these years of travel and spending. (Yea, I know each of those dollars is worth less, but that misses the metaphorical point.)

I'm not changing anything. Except resuming big spending on travel AC (after COVID). And I've aged into QCDs for RMDs from Inherited IRA, and will next year for my own IRA RMD start date, and it's great fun to be giving it away tax free, per the plan.
strummer6969
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Re: Retired in a bear market

Post by strummer6969 »

Marseille07 wrote: Tue Sep 20, 2022 3:11 pm
Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Retiring to a bear market is very common because people hit their "number" during a bull market.

Nothing to worry about, at least not on Year 1 of a bear market.
People that were able to retire very early in the recent years might be sweating it.

But if you worked and invested through 60 yrs of age, you'd be doing great. A thousand bucks a month invested from 1985 to present would've gotten you $2M in a 60/40 portfolio, even with the market down YTD. 8% AR is not bad at all.

I've revised upward my retirement age. I'm expecting a 5-6% return going forward. Anything more will be a windfall.
vested1
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Re: Retired in a bear market

Post by vested1 »

Staying at 60/40 and not even looking this time. I was never happier than now that I waited to file for SS until age 70 two months ago. Fixed income meets all needs and then some, so no withdrawals until RMD's begin in 2024. Luck has been my friend however, defeating bonehead decisions that won't be repeated.

A close relative who started RMD's this year and is subject to 12/31/21 IRA balances is having trouble seeing the big picture though. This too shall pass.
thenow
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Re: Retired in a bear market

Post by thenow »

My wife and I retired in 2007 and the market was questionable. For about five years we stayed in our home of over 35 years and then moved out West, Nevada) to be closer to our daughter who lived in San Diego county. We moved from a very inexpensive small town to a somewhat costly large city. Costs were much higher plus I’m now unsure if I like a HOA. Quite frankly the financial concerns were very minor. We were fortunate, however, to move to a HOA were there were many transplants from the Midwest and California. We made friends quickly and it wasn’t a senior community. The financial concerns turn out to be minor. Since my wife and I were dedicated educators it was harder to slow down without feeling guilty. Another issue that surface was dealing with two surprising cancers in retirement as well as other health concerns. In a nutshell, sometimes we worry about planning our finances when health and lifestyle become much more important in retirement. To paraphrase a boxer, you have a boxing plan (retirement finances) until you get hit hard in the face the very first time. Food for thought on financial retirement planning with a bear market as well as unplanned events —both in health and other matters.
Golf maniac
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Re: Retired in a bear market

Post by Golf maniac »

Retired at 56 in 2015. It was a good long run but the bear is back. I am staying with my same philosophy to not make hasty changes in a down market. We do watch expenses but no more than before. We look for areas where we can improve our return such as moving our checking to Fidelity CMA, high yield savings, and taking advantage of Treasury Direct I Bonds. Our goal for our budget is to try and maintain our expenses at the same level each year. Not easy, but we have been able to do that for the past 4 years. My pension has a COLA which helps and my wife has a small SS check. To allow me to sleep at night I have my own spreadsheet that estimates my expenses and needed withdrawals. I also use the planning tool on Fidelity that provides a significantly below average return, below average return, and average return. All the tools I use say we will be fine even in a significantly below average return. Finally, we categorize our expenses into essential and non essential expenses. We can cut 40% of our expenses if everything fell apart. So overall I am not worried about this current market.
jdamo
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Re: Retired in a bear market

Post by jdamo »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
I worry about the same things all the time. We are 3 years into retirement. I feel this time may be different after reading and listening to all the news. Then, I go to the bogleheads forum and find good advice and feedback from folks that have already been there. We get good advice from retirees that have been retired for longer term. I have also read 2 of the Bogle books. So, this calms me down and I stick to the Boglehead approach and mainly the 3-fund strategy. I still feel our 40% stocks/60% bonds & fixed income (age in bonds as Jack said and I think is good) is about the right asset allocation for us through now a pandemic and all the turbulence we have been through.

We are also fortunate in that my past employer pays for an independent financial planner for us after retirement who has helped also with advice and each year updates our long term financial plan and outlook that includes Social security and inflation (historical 3% assumed long term into future). This shows we are still ahead of plan by 1M(!) for this year despite all the problems and downturn so far. Perhaps the Vanguard or Fidelity long range planner does similar analysis. So I feel ok and am sticking to the Boglehead approach! Plus I can't figure a better approach! Maybe this helps you to hear this too.

So, Many thanks Bogleheads and Jack Bogle! :mrgreen:
Leesbro63
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Re: Retired in a bear market

Post by Leesbro63 »

greenskeeper wrote: Tue Sep 20, 2022 12:48 pm The markets always recover… every-single-time
If you live long enough. 1929 and 1966 are examples of where "every single time" doesn't really apply to those retiring on those dates. But I'm not saying we are headed for that again. Hopefully this is just a garden variety bear market that gives way to new market highs in not too many years. But "every single time" isn't a fair statement.
visualguy
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Re: Retired in a bear market

Post by visualguy »

Leesbro63 wrote: Tue Sep 20, 2022 6:25 pm
greenskeeper wrote: Tue Sep 20, 2022 12:48 pm The markets always recover… every-single-time
If you live long enough. 1929 and 1966 are examples of where "every single time" doesn't really apply to those retiring on those dates. But I'm not saying we are headed for that again. Hopefully this is just a garden variety bear market that gives way to new market highs in not too many years. But "every single time" isn't a fair statement.
Also, if you look at markets outside the US, the statement is even shakier.
delamer
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Re: Retired in a bear market

Post by delamer »

While the future is never exactly like the past, there’s no reason to believe that investment returns (and other aspects of the economy) over the next 25 years will be such an anomaly that current retirement planning is out the window.

The greater percentage of your core expenses that you can cover via your fixed income — like Social Security, pensions, SPIAs — the lower your stress will be, regardless of what the economy throws at you.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Normchad
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Re: Retired in a bear market

Post by Normchad »

I’m likely to retire next year at age 54. I’m not concerned.
Leesbro63
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Re: Retired in a bear market

Post by Leesbro63 »

delamer wrote: Tue Sep 20, 2022 6:44 pm While the future is never exactly like the past, there’s no reason to believe that investment returns (and other aspects of the economy) over the next 25 years will be such an anomaly that current retirement planning is out the window.

The greater percentage of your core expenses that you can cover via your fixed income — like Social Security, pensions, SPIAs — the lower your stress will be, regardless of what the economy throws at you.
How many have access to a significant helping of inflation protected SPIAs and pensions? Government retirees, perhaps.
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Taylor Larimore
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Re: Retired in a bear market

Post by Taylor Larimore »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Ana-Maria57

I am 98 years old and have been investing more than 70 years. Of course, this time is different, but for long-term, stay-the-course investors, simply staying-the-course (assuming it is the correct course) has worked well for me -- certainly much better than attempting to forecast what's ahead which no one knows.

This graph is a bit old, but it contains over 200 years of real (after inflation) returns for various type investments. You will notice that, despite many U.S. stock bull and bear markets, that U.S. stocks have maintained a remarkably straight line of 6.7% real returns.

Image

I currently own 3-funds: Vanguard Total Stock Market Index Fund, Vanguard Total Bond Market Index Fund, and a Money Market Fund. During the past 20 years or so, I never made changes in my "overall retirement planning" except to increase my bond allocation as I grew older. As a result, I now enjoy a financially comfortable retirement.

I hope that my personal experience will help you.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Stay the course. Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor."
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celia
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Re: Retired in a bear market

Post by celia »

Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
I think EVERY year is “really different”. Nothing unusual about that. It depends on what you decide to focus on. You could move, be seriously ill, be paying for college, doing Roth conversions, doing more travel than usual, inherit assets, . . .

Yep, every year is different. The stock market does it’s thing while we do our things. . .
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term?
Stocks are on sale!
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Not necessarily, since the percentage you need to take increases each year as you get older.
Carol88888
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Re: Retired in a bear market

Post by Carol88888 »

greenskeeper wrote: Tue Sep 20, 2022 12:48 pm The markets always recover… every-single-time
+1
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whodidntante
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Re: Retired in a bear market

Post by whodidntante »

Meh. You call this a soccer riot? All the good bear markets have a doom cloud. The big stories here are:
- an impressive drawdown in bonds and a ho-hum drawdown in stocks occurring at the same time
- inflation is quite severe and sudden. So whatever you think you lost, it's significantly worse in terms of your purchasing power, so you might want to jot that down.
- US stock valuations are still quite high. Earning compression and a deep recession could really make this an impressive bear market that we'll apply the word "great" or something to.
- Cost of debt is way higher.
- HFEA found its coffin corner.

Good news:
- nominal and real yields on Treasuries are up quite a bit.
- foreign stocks have decent valuations.
- value spread is still deep.
- if you are reading this, you are alive.*

* assuming you are not an artificial intelligence who does not meet generally accepted standards for life. These days, one has to check.
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bampf
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Re: Retired in a bear market

Post by bampf »

Taylor Larimore wrote: Tue Sep 20, 2022 7:00 pm
Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Ana-Maria57

I am 98 years old and have been investing more than 70 years. Of course, this time is different, but for long-term, stay-the-course investors, simply staying-the-course (assuming it is the correct course) has worked well for me -- certainly much better than attempting to forecast what's ahead which no one knows.

This graph is a bit old, but it contains over 200 years of real (after inflation) returns for various type investments. You will notice that, despite many U.S. stock bull and bear markets, that U.S. stocks have maintained a remarkably straight line of 6.7% real returns.

Image

I currently own 3-funds: Vanguard Total Stock Market Index Fund, Vanguard Total Bond Market Index Fund, and a Money Market Fund. During the past 20 years or so, I never made changes in my "overall retirement planning" except to increase my bond allocation as I grew older. As a result, I now enjoy a financially comfortable retirement.

I hope that my personal experience will help you.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Stay the course. Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor."
I really appreciate your commentary. It is reasoned, measured and of course built on a life time of personal experience. Your advice has helped me immeasurably. In the spirit of keeping it simple, thank you. I don't have many bonds, but, your message of simplicity and stay the course resonates deeply with me.

Thanks again!
--Bampf
Nescio
heyyou
Posts: 4263
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Re: Retired in a bear market

Post by heyyou »

We retired in late 2005, my age 55.5, with a no-COLA pension, a portfolio, and a new, paid-off small home in a lower cost area with good recreation. By using a variable portfolio spending plan based on a slowly rising % of each recent annual portfolio value, we adjust our spending annually, which boosts portfolio longevity. To me that is a sensible path in retirement. We can see next year's spending amount change as the portfolio value fluctuates during each year, so there is not a surprise on Dec. 31st.

As already mentioned, it is common for a market decline to occur early in your retirement, following a period when your portfolio has risen to a comfortable size. Those historical fluctuations are part of the data used to determine safe annual spending rates. Yes, there is a noticeable difference on how you felt during stock market fluctuations when you were employed, and those that occur after you are retired.

https://crr.bc.edu/wp-content/uploads/2 ... 19-508.pdf Percentage numbers are on page 8, buried in the appendix.
placeholder
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Re: Retired in a bear market

Post by placeholder »

The news isn't near as gloomy as 2008 when a lot of people thought the banking system and the real estate market were about to collapse simultaneously and people on this very forum were capitulating.
gavinsiu
Posts: 702
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Re: Retired in a bear market

Post by gavinsiu »

I haven't retired yet but have steered my mom's retirement so I have views on both side of the coin. Because you will most likely live for decades, you will eventually encounter multiple bear markets in retirement. As for gloom and doom, you say that there is no good news, but is it really that bad compare to various period in US history. Are you being sent overseas to fight in a war? Is this as bad as the 80's when the mortgage was in double-digit?

You have to stick to a plan. Your asset allocation is supposed to be more aggressive when you are young so that you can scoop up more shares when there is a downturn. Your asset allocation is supposed to be less aggressive when you are closer to retirement so that market falls has less of an effect on your portfolio. Take the emotion out of investing. When times are good, don't be tempted to double-down on stock. When times are bad, don't be tempted to go all to cash. Just rebalance your portfolio as needed.
thedaybeforetoday
Posts: 37
Joined: Fri Sep 02, 2022 5:16 am

Re: Retired in a bear market

Post by thedaybeforetoday »

Things I am doing differently:
Watching and reading less about current events and checking my bottom line a lot less frequently.
Outside more, accomplishing more home maintenance and improvement tasks.
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
7eight9
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Joined: Fri May 17, 2019 7:11 pm

Re: Retired in a bear market

Post by 7eight9 »

Retirees might want to consider having a PLAN B.

Taylor Larimore wrote a wonderful post about this very topic - "Maximum Tolerable Loss" -- Not just a fear factor.
viewtopic.php?t=30085#p362384

In my opinion it was THE thread of the 2008/09 crash.
I guess it all could be much worse. | They could be warming up my hearse.
catermick
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Re: Retired in a bear market

Post by catermick »

celia wrote: Tue Sep 20, 2022 7:04 pm
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term?
Stocks are on sale!
Since I am on a fixed income - IRA and social security - this is hard to take advantage of even though I have approximately 3 years reserve in my IRA money market. I will drain that cash reserve before selling the fund investments and trust in better days.

If I were still employed, I would definitely be buying on the down.

-jim
now what?
Wanderingwheelz
Posts: 2210
Joined: Mon Mar 04, 2019 9:52 am

Re: Retired in a bear market

Post by Wanderingwheelz »

strummer6969 wrote: Tue Sep 20, 2022 3:29 pm
Marseille07 wrote: Tue Sep 20, 2022 3:11 pm
Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Retiring to a bear market is very common because people hit their "number" during a bull market.

Nothing to worry about, at least not on Year 1 of a bear market.
People that were able to retire very early in the recent years might be sweating it.

But if you worked and invested through 60 yrs of age, you'd be doing great. A thousand bucks a month invested from 1985 to present would've gotten you $2M in a 60/40 portfolio, even with the market down YTD. 8% AR is not bad at all.

I've revised upward my retirement age. I'm expecting a 5-6% return going forward. Anything more will be a windfall.
How old are you? Excess savings for retirement isn’t a windfall. It’s just that - excess money that you could have spent or given away, but chose to hang onto it.

I’ve probably over-saved for retirement like just about all of us here have. But.. it’s money my wife and I worked hard to earn- far from the definition of a windfall.
pappupager
Posts: 34
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Re: Retired in a bear market

Post by pappupager »

Parkinglotracer wrote: Tue Sep 20, 2022 11:30 am I am staying the course with the quasi traditional 60-40 Stock (VTI/VXUS) and Fixed income portfolio because I don't see a path to a higher probability of success any other way
I am 75-15-10 (VTI/VXUS/BND). Looking at VXUS specifically, the price has been the same in 2012 vs 2022, while during the same duration, VTI has quadrupled. No one has the crystal ball, and past performance is no indicator of the future, but why does everyone push heavily for VXUS as a counter for VTI? I would like a counter that has been profitable over a long duration of time.

Thoughts?
delamer
Posts: 14745
Joined: Tue Feb 08, 2011 6:13 pm

Re: Retired in a bear market

Post by delamer »

Leesbro63 wrote: Tue Sep 20, 2022 6:58 pm
delamer wrote: Tue Sep 20, 2022 6:44 pm While the future is never exactly like the past, there’s no reason to believe that investment returns (and other aspects of the economy) over the next 25 years will be such an anomaly that current retirement planning is out the window.

The greater percentage of your core expenses that you can cover via your fixed income — like Social Security, pensions, SPIAs — the lower your stress will be, regardless of what the economy throws at you.
How many have access to a significant helping of inflation protected SPIAs and pensions? Government retirees, perhaps.
Yep re: the government pensions.

Although SPIAs are available to everyone. But you have to be willing to part with some of your nest egg, which many are reluctant to do (understandably). Essentially, though, that’s what many government employees do. They are taking a reduced salary over many years, while employed, for a future pension. So it isn’t quite as psychologically painful as handing over 6 figures all at once.

Inflation protection is an issue with annuities. But you can set aside some money to provide that yourself. Scott Burns had a method to do just that, although unfortunately I can’t find his column that describes it.

This article talks about a TIPS ladder as an alternative to an inflation-adjusted SPIA: https://obliviousinvestor.com/inflation ... -now-what/

The fear of running out of money is real. But there are ways to mitigate it if you are willing to accept the trade-offs. There are risks no matter what strategy you choose.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
jebmke
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Location: Delmarva Peninsula

Re: Retired in a bear market

Post by jebmke »

celia wrote: Tue Sep 20, 2022 7:04 pm
Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
I think EVERY year is “really different”. Nothing unusual about that. It depends on what you decide to focus on. You could move, be seriously ill, be paying for college, doing Roth conversions, doing more travel than usual, inherit assets, . . .

Yep, every year is different. The stock market does it’s thing while we do our things. . .
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term?
Stocks are on sale!
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Not necessarily, since the percentage you need to take increases each year as you get older.
What are they when they go down another 25-30%? Clearance?
When you discover that you are riding a dead horse, the best strategy is to dismount.
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HMSVictory
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Re: Retired in a bear market

Post by HMSVictory »

MnD wrote: Tue Sep 20, 2022 3:06 pm I began investing in July 1986 and retired in November 2018 - making monthly or bi-weekly investments for that entire 32+ year span.
The S&P 500 (currently 3858) ranged between ~230 to ~2800 during my accumulation phase.

So I'm not sure where the constantly repeated concern by retirees about "spending in a down market" comes from.
Is their expectation that the market only goes up, so that every time they go to the grocery store they are spending at an all-time market high?

Not that it matters, but if one were to use FIFO accounting for retirement spending I'm probably spending shares that were acquired when the S&P 500 was around 300. I've been spending 5% of annual portfolio balance since retirement (which spans 2 or 3 bear markets and a global pandemic) and my portfolio is larger in both real and nominal terms than the day I retired. :beer
This. Read MnD's signature line for a KISS retirement plan that I like very much. Well done Sir.
Stay the course!
michaeljc70
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Re: Retired in a bear market

Post by michaeljc70 »

As others said, it will recover. This market is down only around 1/2 of what it was down in 2020 (that was just 2 years ago).

If your stocks are down, how are your taxes going up?

Having flexibility in your plan (mainly through being able to cut expenses) helps a lot. I couldn't take what I had in 2016 when I retired and predict what my tax rate and portfolio balance and what a carton of eggs will cost in 2040. I am confident I can cover my mandatory expenses and likely all my discretionary expenses though.
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ApeAttack
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Re: Retired in a bear market

Post by ApeAttack »

dcabler wrote: Tue Sep 20, 2022 12:57 pm I will be retiring into this bear market and I don't believe this time is any different.
You might want to search the forum for some of the panics people were having back during 2008...

Cheers.
Are you retiring with 25x expenses, or are you padding the numbers just in case?
Just another lazy index investor.
greenskeeper
Posts: 52
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Re: Retired in a bear market

Post by greenskeeper »

Leesbro63 wrote: Tue Sep 20, 2022 6:25 pm
greenskeeper wrote: Tue Sep 20, 2022 12:48 pm The markets always recover… every-single-time
If you live long enough. 1929 and 1966 are examples of where "every single time" doesn't really apply to those retiring on those dates. But I'm not saying we are headed for that again. Hopefully this is just a garden variety bear market that gives way to new market highs in not too many years. But "every single time" isn't a fair statement.
Did the market recover from 1929 and 1966 ?
Leesbro63
Posts: 8435
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Re: Retired in a bear market

Post by Leesbro63 »

greenskeeper wrote: Wed Sep 21, 2022 12:28 pm
Leesbro63 wrote: Tue Sep 20, 2022 6:25 pm
greenskeeper wrote: Tue Sep 20, 2022 12:48 pm The markets always recover… every-single-time
If you live long enough. 1929 and 1966 are examples of where "every single time" doesn't really apply to those retiring on those dates. But I'm not saying we are headed for that again. Hopefully this is just a garden variety bear market that gives way to new market highs in not too many years. But "every single time" isn't a fair statement.
Did the market recover from 1929 and 1966 ?
Not in time for many (most?) who retired in those years.
strummer6969
Posts: 407
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Re: Retired in a bear market

Post by strummer6969 »

Wanderingwheelz wrote: Wed Sep 21, 2022 9:17 am
strummer6969 wrote: Tue Sep 20, 2022 3:29 pm
Marseille07 wrote: Tue Sep 20, 2022 3:11 pm
Ana-Maria57 wrote: Tue Sep 20, 2022 11:08 am I know the conventional wisdom is that the market recovers following a large downturn. But it's hard to see any good economic news on the horizon. Anyone think that traditional approaches to investing won't hold? In other words "This time it really is different."
For those of us who are already retired with a 25-30 year time frame, how do we look at this long term? Do the old monte carlo calculators provide useful information?
For those taking RMD's, the required withdrawals are likely to be smaller next year.
Tax rates rising, cost of living higher, mortgage rates, health care inflation and pensions and annuities that do not keep up with inflation impact our long term financial planning.

Anyone want to weigh in about changes you are making to your overall retirement planning?

Thanks!!
Retiring to a bear market is very common because people hit their "number" during a bull market.

Nothing to worry about, at least not on Year 1 of a bear market.
People that were able to retire very early in the recent years might be sweating it.

But if you worked and invested through 60 yrs of age, you'd be doing great. A thousand bucks a month invested from 1985 to present would've gotten you $2M in a 60/40 portfolio, even with the market down YTD. 8% AR is not bad at all.

I've revised upward my retirement age. I'm expecting a 5-6% return going forward. Anything more will be a windfall.
How old are you? Excess savings for retirement isn’t a windfall. It’s just that - excess money that you could have spent or given away, but chose to hang onto it.

I’ve probably over-saved for retirement like just about all of us here have. But.. it’s money my wife and I worked hard to earn- far from the definition of a windfall.
Old enough to know there's always a catch and young enough to know better than to depend on a fully funded Social Security system when I retire.

You don't consider this a windfall? I do.

S&P 500 Total Returns by Year
2021 28.71%
2020 18.40%
2019 31.49%
2018 -4.38%
2017 21.83%
2016 11.96%
2015 1.38%
2014 13.69%
2013 32.39%
2012 16.00%
2011 2.11%
2010 15.06%
2009 26.46%
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