What will the next 10%+ correction look like?

[brooklynguy]

FYI, in today's post Go Curry Cracker (in typically excellent fashion) went through a similar mental exercise of envisioning a worst case early retirement scenario (but wearing rose colored glasses instead of the shit brown ones we've been sporting in this thread):

http://www.gocurrycracker.com/the-worst-retirement-ever/

(Edit: corrected link)

[BarkyardBQ]

FYI, in today's post Go Curry Cracker (in typically excellent fashion) went through a similar mental exercise of envisioning a worst case early retirement scenario (but wearing rose colored glasses instead of the shit brown ones we've been sporting in this thread):

http://www.gocurrycracker.com/the-worst-retirement-ever/

(Edit: corrected link)

Popular topic trending...
Mike & Lauren
http://www.mikeandlauren.com/the-economy-is-about-to-collapse-but-that-doesnt-change-our-plans/

[Pooperman]

FYI, in today's post Go Curry Cracker (in typically excellent fashion) went through a similar mental exercise of envisioning a worst case early retirement scenario (but wearing rose colored glasses instead of the shit brown ones we've been sporting in this thread):

http://www.gocurrycracker.com/the-worst-retirement-ever/

(Edit: corrected link)

Popular topic trending...
Mike & Lauren
http://www.mikeandlauren.com/the-economy-is-about-to-collapse-but-that-doesnt-change-our-plans/

Yeah. The YouTube video was very good. Basically what I say too. I don't care what the economy does and it will not deter me from investing. Why? If shit really did hit the fan, that means the market -> 0 which would only happen if enough people died to cause a societal collapse (50% population decline isn't close to enough). The likely outcome is me being dead; and if I'm not, I am positive that I will endure with the skills I have learned. If such an event does not occur, then I will live a life of luxury for half my life or more.

[NICE!]

Go Curry Cracker's post was good, I wonder if he was reading our thread?

[theoverlook]

And I'll fall back to my prior post.. the "worst time for FIRE" was an awesome time to be in the accumulation phase.

http://forum.mrmoneymustache.com/investor-alley/what-will-the-next-10-correction-look-like/msg633997/#msg633997

We can just hope we don't end up with a 1973 as our retirement date, but even if we do, apparently it won't be that bad.  Thanks Curry man!

[NICE!]

What if it is half of your accumulation phase and the first years of your retirement? That would also be unfavorable!

[dungoofed]

"People think [venture capitalists] are just throwing money at everything. If people think it is a bubble, then it is not a bubble. A bubble is what happens when you have total capitulation and everybody believes it is going up forever. That is what happened in 1999. No one was saying it was a bubble." - Ben Horowitz

Since everyone is saying "the stock market is overvalued" it may actually mean that the stock market is not in fact overvalued.

(edit: typo)

[dragoncar]

"People think [venture capitalists] are just throwing money at everything. If people think it is a bubble, then it is not a bubble. A bubble is what happens when you have total capitulation and everybody believes it is going up forever. That is what happened in 1999. No one was saying it was a bubble." - Ben Horowitz

Since everyone is saying "the stock market is overvalued" it may actually mean that the stock market is not in face overvalued.

It's not a bubble, but bubbles aren't the only times the markets go down

[forummm]

"People think [venture capitalists] are just throwing money at everything. If people think it is a bubble, then it is not a bubble. A bubble is what happens when you have total capitulation and everybody believes it is going up forever. That is what happened in 1999. No one was saying it was a bubble." - Ben Horowitz

Since everyone is saying "the stock market is overvalued" it may actually mean that the stock market is not in fact overvalued.

(edit: typo)

People were totally saying it was a bubble in 1999. Even in 1997.

[matchewed]

"People think [venture capitalists] are just throwing money at everything. If people think it is a bubble, then it is not a bubble. A bubble is what happens when you have total capitulation and everybody believes it is going up forever. That is what happened in 1999. No one was saying it was a bubble." - Ben Horowitz

Since everyone is saying "the stock market is overvalued" it may actually mean that the stock market is not in face overvalued.

It's not a bubble, but bubbles aren't the only times the markets go down

Okay just gotta say lovin' your avatar or whatever the hell the tiny picture is called.

[theoverlook]

What if it is half of your accumulation phase and the first years of your retirement? That would also be unfavorable!

Not sure what you mean.  If you retired in, say, 1979, I think you did pretty dang well.

[MoneyCat]

According to CNBC every single day, we're about to have a stock market collapse of 40% or more, so everybody buy gold and ammunition!

[Chuck]

The next year, he gets his wish, a 2008-like crash. But little does he know, he's getting served the 1970s "recovery" to go with it. Here is his thought process:

• 2016 - down 24%: "Sweet! FINALLY I get to buy stocks 'on sale'!"
• 2017 - down another 34%: "Even better! Now I'm getting stocks on SUPER-sale! This is exactly like that 2008 crash; when the bounce-back comes I'm gonna be soooo golden! (though hopefully it comes soon, because I have to admit I am a little freaked out seeing how low my portfolio balance is today...)"
• 2018 - up 30%: "Yep, the recovery's right on schedule! Though now I'm actually a little sad it didn't stay down longer, I wouldn't have minded another year to keep buying on sale..."
• 2019 - flat: "Awesome! I can't believe how this market keeps granting my wishes...a nice little pause here while halfway-recovered to allow me to continue purchasing shares at a discount before we return back up the rest of the way".
• 2020 - down 11%: "Hmm, that's not what was supposed to happen! I was kind of expecting to declare myself FI this year, but I guess I'll have to wait for next year's recovery now..."
• 2021 - up 3%: "ok, that helps a little, but I'd be FI now if I'd just gotten those 'boring' 7% returns rather than this stupid crash. :-( Well, I guess next year will be the year."
• 2022 - up 1%: "what the fuck guys, this joke is starting to get a little old...  If I hadn't been adding things, my 2015 portfolio would still be down 36%, and that was 7 years ago...I'm starting to wonder if I was sold a bill of goods on this stock market bullshit.  :-(("
• 2023 - up 13%: "OK! Fucking finally! If we keep going at this rate, by next year the market will be fully recovered."
• 2024 - down 10%: "FFFFFFFUUUCKKK YOUUUUUUUUU!!!!! THIS BULLSHIT IS ALL FUCKING BULLSHIT!!!! I WAS SUPPOSED TO BE RETIRED 5 YEARS AGO!!!  Ok, ok, despite all this bullshit and the world dicking me over, the five extra years I've spent slaving away at a job I hate may have let me accumulate enough wealth to declare myself FI by now, but that was under THE OLD RULES. The stock market clearly doesn't work anymore as a tool to build wealth, so there's no fucking way that "4% SWR" bullshit is going to hold going forward, which makes my planned 60-year (now 55-year) retirement a fucking childish pipe-dream. I'm selling all my stocks and putting it in gold. Peace out, assholes."

Again, there's no reason to believe that 1972 crash will be exactly repeated, but there's also no reason to think a 2008 scenario is more likely to happen than the 1972 scenario. And especially not just because that's what happened most recently.

The 70's really were a living hell...

[NICE!]

Not sure what you mean.  If you retired in, say, 1979, I think you did pretty dang well.

I meant back it up like 5 years. Start the retirement in say, 1974.

[Pooperman]

Not sure what you mean.  If you retired in, say, 1979, I think you did pretty dang well.

I meant back it up like 5 years. Start the retirement in say, 1974.

1965 - 1985 was not a good 20 years. That's what scares me with FIRE and why I want non-market sources of income in addition to market sources. If 25x expenses is all you've got and real returns were flat/negative for that long, you'd run out if you only are in the market. Yay diversification.

[theoverlook]

Not sure what you mean.  If you retired in, say, 1979, I think you did pretty dang well.

I meant back it up like 5 years. Start the retirement in say, 1974.

Still seems to yield a pretty satisfactory retirement.  Backtesting from 1974 through 2013 results in a 7.75 CAGR and at no point does your portfolio decline below the initial amount.  I tested it with 100% US equities, $210k to start (25x annual spending of $8401 which is $40k in today's dollars), 4% annual withdrawals, you end up with almost $3mm by 2013.  Seems like 1974 was a great time to retire if you had the money.

What am I missing?

[brooklynguy]

NICE! probably meant to pick a slightly earlier start year.  Run the same numbers for a retirement commencing in 1973, and it fails miserably.

[theoverlook]

NICE! probably meant to pick a slightly earlier start year.  Run the same numbers for a retirement commencing in 1973, and it fails miserably.

Well, he was responding to my point that while 1972 was a lousy year to retire, that period was a great time to be in the accumulation phase thanks to strong returns post-1972.

[brooklynguy]

Oh, good point - I agree with you, and I'm not sure what NICE meant -- the poor returns that are a bad thing for retirees in the withdrawal phase are necessarily a good thing for aspiring retirees still in the accumulation phase (except to the extent they are correlated with other bad consequences that might befall accumlators, like lay-offs).

[NICE!]

Overlook, first - love the name and avatar.

Second, apparently my brain doesn't work well. I meant to subtract 5 years from your original number. Maybe I was half-asleep the first time I posted?

Anyway, we're just tossing around worst case scenarios around here. I think what is more likely, as others have noted, is for a future worst-case scenario to look nothing like the past ones. We're all looking for a zig and the markets are going to zag on us. How do we protect our psyche from that?

[theoverlook]

Overlook, first - love the name and avatar.

Second, apparently my brain doesn't work well. I meant to subtract 5 years from your original number. Maybe I was half-asleep the first time I posted?

Anyway, we're just tossing around worst case scenarios around here. I think what is more likely, as others have noted, is for a future worst-case scenario to look nothing like the past ones. We're all looking for a zig and the markets are going to zag on us. How do we protect our psyche from that?

Thanks!

I agree, future market downturns will look different and feel apocalyptic to us. So I also wonder - how do we protect from ourselves? Or our spouses? I find I still can't resist checking market returns too often.  And I've not had serious skin in the game through the big downturns of the past.  So while it felt like bargain hunting season in 2009 to me, what will it feel like now that I've got "big money" (to me) in the market?  Only one way to find out.  And I hope not to find out any time soon.

[matchewed]

Overlook, first - love the name and avatar.

Second, apparently my brain doesn't work well. I meant to subtract 5 years from your original number. Maybe I was half-asleep the first time I posted?

Anyway, we're just tossing around worst case scenarios around here. I think what is more likely, as others have noted, is for a future worst-case scenario to look nothing like the past ones. We're all looking for a zig and the markets are going to zag on us. How do we protect our psyche from that?

Thanks!

I agree, future market downturns will look different and feel apocalyptic to us. So I also wonder - how do we protect from ourselves? Or our spouses? I find I still can't resist checking market returns too often.  And I've not had serious skin in the game through the big downturns of the past.  So while it felt like bargain hunting season in 2009 to me, what will it feel like now that I've got "big money" (to me) in the market?  Only one way to find out.  And I hope not to find out any time soon.

Well there are ways to mitigate it, you don't necessarily have to throw your hands in the air and say, "Well I'll act how I'll act when it happens." Having a written plan, reduce your exposure to seeing market prices, the whole wisdom to tell the difference about things you can do something about and things you can't, and learning about how your reactions can sometimes be not in your best interests so learn how to act rather than react.

Because it will happen. There will several times in your life that you will lose significant amounts of money. Better to have a plan and have thought some deep thoughts on it rather than react to it.

Not that you necessarily will. You is meant more generally in this context.

[theoverlook]

Well there are ways to mitigate it, you don't necessarily have to throw your hands in the air and say, "Well I'll act how I'll act when it happens." Having a written plan, reduce your exposure to seeing market prices, the whole wisdom to tell the difference about things you can do something about and things you can't, and learning about how your reactions can sometimes be not in your best interests so learn how to act rather than react.

Because it will happen. There will several times in your life that you will lose significant amounts of money. Better to have a plan and have thought some deep thoughts on it rather than react to it.

Not that you necessarily will. You is meant more generally in this context.

Here's the thing though; even with all the prep work in the world you don't actually know how you'll react to a situation - any situation - until you go through it for real.

I agree there are ways to prepare for it but the true test is to have it really occur and study your own reactions.

[Pooperman]

Well there are ways to mitigate it, you don't necessarily have to throw your hands in the air and say, "Well I'll act how I'll act when it happens." Having a written plan, reduce your exposure to seeing market prices, the whole wisdom to tell the difference about things you can do something about and things you can't, and learning about how your reactions can sometimes be not in your best interests so learn how to act rather than react.

Because it will happen. There will several times in your life that you will lose significant amounts of money. Better to have a plan and have thought some deep thoughts on it rather than react to it.

Not that you necessarily will. You is meant more generally in this context.

Here's the thing though; even with all the prep work in the world you don't actually know how you'll react to a situation - any situation - until you go through it for real.

I agree there are ways to prepare for it but the true test is to have it really occur and study your own reactions.

Based on the last two crashes,or, really, any "disaster", I tend to get super excited. Not sure why, but it energizes me and so I highly doubt I'll be afraid when the bottom drops out of the market. I'll be excited for the opportunity it'll afford me. I am very positive when it comes to the future. I plan for the worst but expect the best. It's a good way to be :D.

[NICE!]

Based on the last two crashes,or, really, any "disaster", I tend to get super excited. Not sure why, but it energizes me and so I highly doubt I'll be afraid when the bottom drops out of the market. I'll be excited for the opportunity it'll afford me. I am very positive when it comes to the future. I plan for the worst but expect the best. It's a good way to be :D.

Maybe it won't look like a disaster. Maybe inflation will be high at say, 6%, and stock returns will be near-normal at say, 8%. That's only a 2% real return. That will have a pretty big effect on things.

[Pooperman]

Based on the last two crashes,or, really, any "disaster", I tend to get super excited. Not sure why, but it energizes me and so I highly doubt I'll be afraid when the bottom drops out of the market. I'll be excited for the opportunity it'll afford me. I am very positive when it comes to the future. I plan for the worst but expect the best. It's a good way to be :D.

Maybe it won't look like a disaster. Maybe inflation will be high at say, 6%, and stock returns will be near-normal at say, 8%. That's only a 2% real return. That will have a pretty big effect on things.

I hope for a 1987 style crash (followed by the rise through 2000), but prepare for a 1965-1985 type scenario (where 2008 is roughly equivalent to 1965). High inflation with flat nominal returns ain't good.

[brooklynguy]

Here's the thing though; even with all the prep work in the world you don't actually know how you'll react to a situation - any situation - until you go through it for real.

I agree there are ways to prepare for it but the true test is to have it really occur and study your own reactions.

There have been a bunch of threads aimed at providing a taste of what it feels like to live through the type of sharp crash the market has most recently seen (sort of like how this thread turned into an incubator for thought experiments on worst case accumulation/retirement scenarios).  This was a good, pretty recent one:

http://forum.mrmoneymustache.com/investor-alley/what-does-100-equities-feel-like/

[NICE!]

I hope for a 1987 style crash (followed by the rise through 2000), but prepare for a 1965-1985 type scenario (where 2008 is roughly equivalent to 1965). High inflation with flat nominal returns ain't good.

Oh it is definitely bad, which is why I mentioned it. I think that a bunch of people would actually not notice it for some time if stocks kept performing at near-normal levels.

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands. You could be seeing your stache grow without paying the necessary attention to inflation-driven increases in spending.

[Pooperman]

I hope for a 1987 style crash (followed by the rise through 2000), but prepare for a 1965-1985 type scenario (where 2008 is roughly equivalent to 1965). High inflation with flat nominal returns ain't good.

Oh it is definitely bad, which is why I mentioned it. I think that a bunch of people would actually not notice it for some time if stocks kept performing at near-normal levels.

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands. You could be seeing your stache grow without paying the necessary attention to inflation-driven increases in spending.

Definitely agree, thought I have an XIRR spreadsheet for this in google sheets. I 100% count inflation in whatever is going on. It's currently at -0.10% for whatever that's worth. Consider the opposite scenario where stocks are declining or sideways but inflation is negative so the real is positive. Both are odd and hard to see.

[brooklynguy]

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands.

This argument gets bandied about all the time in early retirement circles, but I don't think it holds water.  An early retiree's spending is just as susceptible to inflationary pressures as anyone else's, however minimal that spending may be.  If anything, the frugal early retiree's spending is more affected by inflation, because most of the fat has already been trimmed from their spending.

[arebelspy]

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands.

This argument gets bandied about all the time in early retirement circles, but I don't think it holds water.  An early retiree's spending is just as susceptible to inflationary pressures as anyone else's, however minimal that spending may be.  If anything, the frugal early retiree's spending is more affected by inflation, because most of the fat has already been trimmed from their spending.

100% agree, and have argued the same for years.

"Oh, but you use less gas because you bike, so gas prices increasing doesn't affect you as much."

Wrong.  The percentage of gas that's in your budget raises by the same percent as everyone else's.

It doesn't affect you as much dollar-wise, but that's not relevant to you individually.

[Mississippi Mudstache]

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands.

This argument gets bandied about all the time in early retirement circles, but I don't think it holds water.  An early retiree's spending is just as susceptible to inflationary pressures as anyone else's, however minimal that spending may be.  If anything, the frugal early retiree's spending is more affected by inflation, because most of the fat has already been trimmed from their spending.

Likewise, I'm not convinced it holds water, either. However, I also doubt that the early retiree's spending should be more susceptible to inflation. If you take a gander around the forums (and I know you have), you'll see that very few early retirees are subsisting on ERE-style rock bottom retirement spending. Even the MMM-level spenders seem to be the minority. I think most early retirees have budgeted for a few luxuries like international travel and fancy-pants food. The price-conscious Mustachian should be more aware of prices than the average person and therefore quicker to make substitutions (for things like food), repairs instead of replacement (for durable goods - cars, appliances, clothes, etc.) and deferred spending (for things like travel). Obviously it would be undesirable to reduce spending permanently, but, equities should catch up...eventually. Of course, the '70s taught us that it can take a while, but I still don't think that inflation should be able to outpace equities forever, unless the economy is dying, in which case, we're screwed anyway. But, that's just one optimist's take on the situation.

[arebelspy]

However, I also doubt that the early retiree's spending should be more susceptible to inflation.

I agree. Who argued it would?

[foobar]

Now, of course, we all know that the traditional inflation measures won't have nearly the effect on us MMMers as the rest of the population, but the point still stands.

This argument gets bandied about all the time in early retirement circles, but I don't think it holds water.  An early retiree's spending is just as susceptible to inflationary pressures as anyone else's, however minimal that spending may be.  If anything, the frugal early retiree's spending is more affected by inflation, because most of the fat has already been trimmed from their spending.

Everyones inflation case is a bit personal.  Last years inflation was about 1.5%. But food was up ~3 % while energy was down ~15%. The early retiree with an average food budget and below average energy budget felt inflation a lot more.  When energy prices were going through the roof, things worked out different.  Medical care is the other big one. Even if prices don't go up, you getting older can cause your costs to go up (obviously ACA makes this extra complicated).


From the original post 10% isn't even a correction. It is just random variance. You get 10% swings every couple years. They just don't matter. When you get to the ~20% corrections (something like 2011) is when people start panicking. At that point you have no way of knowing if they markets are about to bounce back or lose another 20%.  But again it really doesn't matter. If you need money fro 40-50 years you are going to face 3-4 of these cycles. Unless you are doing some market timing (good luck), it just isn't worth worrying about.

[brooklynguy]

However, I also doubt that the early retiree's spending should be more susceptible to inflation.

I generally agree, and that's why I qualified my statement with the conditional "if anything" :)

But it is true that even the non-rock-bottom MMM-level spenders aren't swimming up at the surface with the "consumer sucka" masses, so there is still less trimmable fat and spending-substitution flexibility than in the average person's budget.  (Whether the spender has more awareness of that fact is a different issue, and I agree with you that the average early retiree probably does.)

[Mississippi Mudstache]

However, I also doubt that the early retiree's spending should be more susceptible to inflation.

I agree. Who argued it would?

That was a response to brooklynguy, not you. You posted while I was writing my reply.

[brooklynguy]

Everyones inflation case is a bit personal.  Last years inflation was about 1.5%. But food was up ~3 % while energy was down ~15%. The early retiree with an average food budget and below average energy budget felt inflation a lot more.  When energy prices were going through the roof, things worked out different.  Medical care is the other big one. Even if prices don't go up, you getting older can cause your costs to go up (obviously ACA makes this extra complicated).

That's an excellent point.  To Mud's point, it's good to have both price consciousness and flexibility in your budget so you can arbitrage between items with prices inflating at different rates, but there's only so much you can control -- if half your spending is on food, and prices for all food items are inflating at a high rate, there's not much you can do about it.  Really the only example of someone not susceptible to inflation that I can think of would be someone entirely self-sufficient, living completely off the grid.

And welcome back, foobar :)  I'm glad to see you here; I thought you had left us for greener pastures.

[NICE!]

brooklyn/arebelspy et al, my admittedly unscientific reasoning for this is based upon reading the posts of our fellow MMMers. I don't see a whole lot of inflation in this bunch. In fact, some people are managing to lower their spending every year, or at least hold it constant. I know that this isn't indicative of inflation/deflation per se, but it does demonstrate better price sensitivity in this community (as noted above).

I think a Mustachian will be much quicker to react to high inflation with lifestyle changes. For example, a bunch of us have been talking about steak recently and for better or worse (I'd say for worse), beef prices are linked to oil prices. So, if the price of oil jumps up again, causing steak to do so as well, I bet the people here will cut back on it more readily than the vox populi.

Again, I know that's unscientific and more representative of our collective flexibility to roll with the punches, but I do think it is germane to the discussion.

[brooklynguy]

brooklyn/arebelspy et al, my admittedly unscientific reasoning for this is based upon reading the posts of our fellow MMMers. I don't see a whole lot of inflation in this bunch. In fact, some people are managing to lower their spending every year, or at least hold it constant. I know that this isn't indicative of inflation/deflation per se, but it does demonstrate better price sensitivity in this community (as noted above).

But I think this results from the same recency bias that all the discussion in this thread about retirement-dream-killing market conditions was intended to dispel.  Inflation has been very low in recent years, which is why you haven't seen a lot of it, and which is probably why it is not often discussed in early retirement circles (even though, as Rebs points out every now and again, it has historically been the early retiree's number one enemy).

[arebelspy]

brooklyn/arebelspy et al, my admittedly unscientific reasoning for this is based upon reading the posts of our fellow MMMers. I don't see a whole lot of inflation in this bunch. In fact, some people are managing to lower their spending every year, or at least hold it constant. I know that this isn't indicative of inflation/deflation per se, but it does demonstrate better price sensitivity in this community (as noted above).

I think this is because most are in the "optimizing" phase.  Naturally they can lower or keep it the same.  After 15 years ER'd with an optimal budget, inflation will affect you, either by increasing costs, or cutting into your standard of living.

[NICE!]

...either by increasing costs, or cutting into your standard of living.

Sure, but it seems like we're pretty adaptable. There are one or two posters in here that have been FIRE for awhile and who have managed to keep spending in check. Of course, as brooklyn pointed out, our low inflation era certainly played into that but I think it wasn't just the numbers, I think it was our flexibility.

I think this is because most are in the "optimizing" phase.  Naturally they can lower or keep it the same.

Maybe, although I think optimizing is an iterative process. I'm not convinced it is ever over.

But I think this results from the same recency bias that all the discussion in this thread about retirement-dream-killing market conditions was intended to dispel.  Inflation has been very low in recent years, which is why you haven't seen a lot of it, and which is probably why it is not often discussed in early retirement circles (even though, as Rebs points out every now and again, it has historically been the early retiree's number one enemy).

Yes, that's true to an extent, but we're seeing people continuing to drop their expenses. I can't remember the poster's name, but there's a dude that keeps going sub-10k and doing better.

Again, we're probably all saying the same basic thing but emphasizing different parts of it.

[arebelspy]

Never mind.

[dragoncar]

Mustachians don't suffer from inflation because we readily switch to substitute goods.  For example, when the price of beef went up earlier this year, I just started drinking gasoline.

[brooklynguy]

Mustachians don't suffer from inflation because we readily switch to substitute goods.  For example, when the price of beef went up earlier this year, I just started drinking gasoline.

You may not suffer from inflation, but you will surely suffer from inflammation.

[forummm]

Medical care is the other big one. Even if prices don't go up, you getting older can cause your costs to go up (obviously ACA makes this extra complicated).

Minor quibble. The ACA actually makes medical care dramatically less complicated. However, the partisan drama around the ACA makes it somewhat risky to rely on the continued existence of some of its provisions.

[forummm]

Mustachians don't suffer from inflation because we readily switch to substitute goods.  For example, when the price of beef went up earlier this year, I just started drinking gasoline.

You may not suffer from inflation, but you will surely suffer from inflammation.

Ooooh! Burn!

[arebelspy]

Mustachians don't suffer from inflation because we readily switch to substitute goods.  For example, when the price of beef went up earlier this year, I just started drinking gasoline.

You may not suffer from inflation, but you will surely suffer from inflammation.

Ooooh! Burn!

It was a premium insult.

[foobar]

Medical care is the other big one. Even if prices don't go up, you getting older can cause your costs to go up (obviously ACA makes this extra complicated).

Minor quibble. The ACA actually makes medical care dramatically less complicated. However, the partisan drama around the ACA makes it somewhat risky to rely on the continued existence of some of its provisions.

No ACA make the situation more complicated in predicting what will happen to your costs.. In the old days your rates would go up. It was a given. With ACA they might stay the same if the government subsidy takes care of the increase in premium. And yes trying to figure out what the healthcare situation will be in 5 years (much less 30 years)  is taking a huge leap of faith.  Early retirees are sort of exploiting a loophole (nobody really thinks that people with a million dollars in assets  who chooses not to work should be getting subsidized health care) but it will be one that is hard to close as adding asset based testing (see FASFA) is pretty complex.

[dragoncar]

Mustachians don't suffer from inflation because we readily switch to substitute goods.  For example, when the price of beef went up earlier this year, I just started drinking gasoline.

You may not suffer from inflation, but you will surely suffer from inflammation.

[forummm]

Medical care is the other big one. Even if prices don't go up, you getting older can cause your costs to go up (obviously ACA makes this extra complicated).

Minor quibble. The ACA actually makes medical care dramatically less complicated. However, the partisan drama around the ACA makes it somewhat risky to rely on the continued existence of some of its provisions.

No ACA make the situation more complicated in predicting what will happen to your costs.. In the old days your rates would go up. It was a given. With ACA they might stay the same if the government subsidy takes care of the increase in premium. And yes trying to figure out what the healthcare situation will be in 5 years (much less 30 years)  is taking a huge leap of faith.  Early retirees are sort of exploiting a loophole (nobody really thinks that people with a million dollars in assets  who chooses not to work should be getting subsidized health care) but it will be one that is hard to close as adding asset based testing (see FASFA) is pretty complex.

Gotta disagree here. I said that if the ACA stays as is, you have no complication. I don't think that can be disputed. As is, the tax credits explicitly limit your premium cost to a percent of your income. And out-of-pocket max is also limited to inflation. This makes healthcare very non-complicated to plan for under current law.

Without the ACA you could never save enough to be certain that you had medical expenses covered (recision, pre-existing conditions, lack of guaranteed issue, etc)--which makes your savings calculation incredibly calculated.

The political uncertainty is the problem.