Author Topic: Did the Great Resignation class of 21-22 just pick the worst time to retire?  (Read 110377 times)

Metalcat

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #550 on: September 30, 2022, 05:35:43 PM »

I quit working for high tech megacrops earlier this year

so.....the tech side on big agra?

He worked with @maizefolk obviously

I spent about five minutes reading through the posts on this thread trying to figure out what you guys were talking about because my mind automatically translated 'megacrops' to 'megacorps' several times, lol.

Lol!

maizefolk

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #551 on: September 30, 2022, 06:15:09 PM »
Giant corn plants make horrible bosses to work for. Unyielding. They lodge all sorts of complaints. Won’t lend you an ear even if your life depends upon it. Not a kernel of empathy or understanding. Will leaf you a husk of a human being if you succumb to OMY.
« Last Edit: September 30, 2022, 06:28:36 PM by maizefolk »

Metalcat

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #552 on: September 30, 2022, 06:21:25 PM »
Giant corn plants make horrible bosses to work for. Unyielding. The lodge all sorts of complaints. Won’t lend you an ear even if your life depends upon it. Not a kernel of empathy or understanding. Will leaf you a husk of a human being if you succumb to OMY.

NEEEEEEEEEEEEEEEEEEEEEEEEEERD

;)

mistymoney

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #553 on: September 30, 2022, 06:30:35 PM »
Giant corn plants make horrible bosses to work for. Unyielding. They lodge all sorts of complaints. Won’t lend you an ear even if your life depends upon it. Not a kernel of empathy or understanding. Will leaf you a husk of a human being if you succumb to OMY.

not to mention they have a lot of children of the corn running around with meyhem in mind...

Morning Glory

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #554 on: September 30, 2022, 06:32:37 PM »
Giant corn plants make horrible bosses to work for. Unyielding. They lodge all sorts of complaints. Won’t lend you an ear even if your life depends upon it. Not a kernel of empathy or understanding. Will leaf you a husk of a human being if you succumb to OMY.

Best post I've seen all day.

ATtiny85

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #555 on: September 30, 2022, 06:50:15 PM »
Giant corn plants make horrible bosses to work for. Unyielding. They lodge all sorts of complaints. Won’t lend you an ear even if your life depends upon it. Not a kernel of empathy or understanding. Will leaf you a husk of a human being if you succumb to OMY.

Best post I've seen all day.

It was silky smooth. Especially if you combine it.

bryan995

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #556 on: September 30, 2022, 09:27:20 PM »
Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

bacchi

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #557 on: September 30, 2022, 10:17:37 PM »
Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

Tanja Hester wrote a piece about this (that I can't find atm).

She created a narrative about an artist that painted for fun. An acquaintance saw one at a party and offered to buy a painting. Retired or not retired? The artist paints more paintings, in her own time, and more are sold through word-of-mouth. Retired or not retired? A gallery owner commissions 6 paintings over the next year. Retired or not retired?

The lack of obligation re:paid work is a big part of being "retired."

Or maybe US Justice Stewart's test is best: I know it when I see it.

Metalcat

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Re: Did the Great Resignation class of 21-22 just pick the worst time to retire?
« Reply #558 on: September 30, 2022, 10:47:26 PM »
Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

As I said, I don't feel I have the authority to judge. But I also don't have any kind of burning need to specifically define "retirement" I financial terms like some people do.

I come from a world where retirement is more attached to the profession, not to the income.

If Bill the retired military vet considers himself retired, then I'm not inclined to challenge him, he's an intimidating dude. Also, he doesn't just work at Home Depot for the discount, he works there because he likes the job and it gets him out of his house and talking to people.

Y'see, Bill is an intimidating widower and has a hard time socializing, but finds it easy to talk to people about toilets. He got the job because he was spending an awful lot of time at Home Depot talking to the staff and they suggested he apply.

Bill doesn't need the pay or the discount, but he definitely likes the discount, it makes him feel good and gives him cover for why he works at Home Depot.

Plenty of people would agree with Bill categorizing himself as "retired" even if it doesn't fit some people's definitions.

My definition is not at all based on how much income is made. If a doctor retires and picks up writing and unexpectedly writes a New York Times best seller, I still consider them retired.

I respect that others have a different definition, and I understand why they do, it's just not a definition shared by everyone. The fact of the matter is that the world at large is not going to universally accept that definition no matter how ardently some people demand that it is the only "logical" definition.

This is one of those concepts that is just legitimately subject to different interpretations and no amount of IRP is going to get everyone on one side.
« Last Edit: October 01, 2022, 07:58:58 AM by Malcat »

nereo

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Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

I am glad to hear you say that, but recall we have a thread in this forum called "Stop worrying about the 4% rule" and I really wouldn't trust even the average MMM forum reader to take on the an appropriate amount of pessimism and an appreciation for the risks involved (I work as an actuary).

A core reason that thread exists is precisely because there’s a groundswell of people who are overly pessimistic about the future, which in turn causes them to be absurdly conservative with their decision to retire. It’s all too easy to get ‘risk paralysis.’

As MalCat indicated, overwhelmingly most people who frequent this forum choose a WR that’s far smaller than 4%, and then add layers upon layers of safety (bloated budgets, umbrella insurance, buckets which “aren’t considered (e.g. SS), pre-payment of major expenses during the final working years, ignoring how their tax burden can decrease…).

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Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

I am glad to hear you say that, but recall we have a thread in this forum called "Stop worrying about the 4% rule" and I really wouldn't trust even the average MMM forum reader to take on the an appropriate amount of pessimism and an appreciation for the risks involved (I work as an actuary).

A core reason that thread exists is precisely because there’s a groundswell of people who are overly pessimistic about the future, which in turn causes them to be absurdly conservative with their decision to retire. It’s all too easy to get ‘risk paralysis.’

As MalCat indicated, overwhelmingly most people who frequent this forum choose a WR that’s far smaller than 4%, and then add layers upon layers of safety (bloated budgets, umbrella insurance, buckets which “aren’t considered (e.g. SS), pre-payment of major expenses during the final working years, ignoring how their tax burden can decrease…).

This is not really aimed specifically at your post, but more of a general post:

Of course everyone makes plan B, C, D & E.. and I hope they're executing them, because 2022 is turning into much more than just a bump in the road.


If you had retired around the peak of the market then your portfolio would now be down by almost a 1/3rd, no matter what SWR you chose and what backup plans you may or many not have put into action.  You now need a 50% real return to get back to peak - all while it has to pull double-duty to fund your lifestyle.

In financial markets things that have never happened happen all the time. Bonds were never supposed to be able to go to -6% real. Buffett indicator was never mean to go to >200% and 4 standard deviations above normal.  If your retirement portfolio has to deal with the return to norm from that during its firt 5 years while simultaneously funding your lifestyle then you might just be asking far too much of it.

In this article Kitces points out that on average a retirement account doesn't top out in real terms until 10-11years into retirement, and then down into principal around year 17-18

https://www.kitces.com/blog/consumption-gap-in-retirement-why-most-retirees-will-never-spend-down-their-portfolio/

I don't see now you can look at these average projections, then look at your own portfolio over the last year still think that everything is still going to be just fine.




quote from the article:
"Given the impact of inflation, it’s problematic to start digging into retirement principal immediately at the start of retirement, given that inflation-adjusted spending needs could quadruple by the end of retirement (at a 5% inflation rate). Accordingly, the reality is that to sustain a multi-decade retirement with rising spending needs due to inflation, it’s necessary to spend less than the growth/income in the early years, just to build enough of a cushion to handle the necessary higher withdrawals later!"

If you think you may want/need the extra safety blanket of another year or 2 then why not do it now? The job market is still in pretty good shape - it's unlikely to be so if we get another year of this, portfolios fall further the economy weakens further. If you ship has been torpedoed, sure it might survive and make it into shore, but why not jump onboard the safety raft before they're all gone?

And to address the argument that even plan B, C, D etc are better than having to go back to a sucky paid job -  I personally, and I suspect many others, don't hate my job at all - on the contrary I have a very good relationship with my work right now - I work with a fantastic team for a great company - we work hard and all put in a good shift, and there is a certain satisfaction from that.  If you have a sucky relationship with work then, fine - just look for a better job!
« Last Edit: October 01, 2022, 08:43:49 AM by vand »

Metalcat

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If you think you may want/need the extra safety blanket of another year or 2 then why not do it now? The job market is still in pretty good shape - it's unlikely to be so if we get another year of this, portfolios fall further the economy weakens further. If you ship has been torpedoed, sure it might survive and make it into shore, but why not jump onboard the safety raft before they're all gone?

And to address the argument that even plan B, C, D etc are better than having to go back to a sucky paid job -  I personally, and I suspect many others, don't hate my job at all - on the contrary I have a very good relationship with my work right now - I work with a fantastic team for a great company - we work hard and all put in a good shift, and there is a certain satisfaction from that.  If you have a sucky relationship with work then, fine - just look for a better job!

I actually agree with you. You may not have realized that all along, but I do actually agree with you and am ultra conservative myself and a big fan of backup plans. I just assume that almost everyone here who actually makes it to the point of pulling the trigger is financially literate enough to have built in adequate backup plans.

I also don't think OMY is a bad idea for people who don't hate their jobs. Had I been able to stay in my job, which I loved, I wouldn't have quit until I had a very solid amount of 'stache backup resiliency.

My advice has never, ever been to retire in a risky fashion. What I *have* been saying is exactly what you said at the end. If your job sucks, then leave and go find another one. Retrain if you have to.

Absolutely nobody should be dumb/foolish enough to retire with just enough to cover their expenses and never expect to run into trouble. That would be fucking insane.

I was forced to retire in 2020, I didn't have a choice. But like you, I'm not about to just shrug, think "well, my core expenses are covered, so I never have to work again because the internet said so." You read already, I'm doing a whole new graduate degree just to be able to harness the value of my human capital.

Whether someone harnesses their human capital through OMY or downshifting and coasting or retraining, people should be prepared to make far more money than 25X their core expenses, especially if they retire young and don't have enormous *comfortable* flexibility in their spend.

I have never disagreed with you on that.

I had my hand forced to figure out an alternative to OMY, which I would have done, several times over if I could have. I loved my job. But having been forced to figure out an alternative, I figured out that my new plan is actually MORE financially conservative, which is why I've made the points I have.

OMY is a great lever, but it's not the only one, and it's not even the most powerful one either. It depends on the circumstances, and those circumstances aren't well captured by a mathematical model.

If you want to say that everything I'm saying is irrelevant because we have different definitions of "retirement" and none should engage in any discussion about additional income after one declares themselves "retired" then...okay...but we're talking about risk, and I don't think ruling out one of the most conservative options is ideal when talking about hedges against risk.
« Last Edit: October 01, 2022, 09:23:29 AM by Malcat »

Metalcat

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Because we are not allowed to use any of our contingency plans without running foul of the IRP...

This whole thread is split between which part of FIRE you are focused on - FI or the RE (where RE is defined as never earning another cent again)
I'm kind of IRP-ish in that I view having back up plans as something you'll need to use only in extreme very unlikely situations in case SHTF badly once you quit rather then an income source that you plan to rely on as part of your FIRE strategy to provide "needed" income on a regular basis.  However S does HTF occasionally and having a back up plan outside the 100% 4% rule (if anyone actually does that once RE) to ride it out is wise imho. I chose to cut expenses others may choose to do a barista job for a few months. To me they are both valid ways to be FI and RE as long as they aren't  "normally" required.

I started out with the lean FIRE crowd but made a few non-working changes to make me chubby FIRE a few years in. So I haven't "had" to work at a paying job (except for a short term PT/on call period at my old job a couple of years after FIRE) or done anything to earn additional money since quitting. And I haven't had to (or wanted to) nor do I think I ever will. But I still have back up plans to my back up plans just in case. Most of them involve reducing expenses. But I have very low base expenses so cutting spending during recessions or even a depression isn't a big deal.
[/quote]

Yep, being able to comfortably cut spending, especially early on during the worst SORR years is a big deal. We actually plan to relocate to our LCOL house as soon as possible for a few years to benefit from that. We can drop our spending by almost half.

We would go now, but logistically can't, which sucks. That's also why I'm building the income resiliency in because my health logistics sometimes dictate that I can't be as flexible on cutting spending, and they dictate the timing. So a sudden bad inflation situation, combined with a sudden increase in medical expenses, and an inflexibility in lifestyle really makes it tricky to be spending-nimble.

Were I able bodied, cutting expenses would be a lever I could far more easily pull with greater efficacy.

But yeah, backup plans on top of backup plans on top of backup plans.

mistymoney

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Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

Tanja Hester wrote a piece about this (that I can't find atm).

She created a narrative about an artist that painted for fun. An acquaintance saw one at a party and offered to buy a painting. Retired or not retired? The artist paints more paintings, in her own time, and more are sold through word-of-mouth. Retired or not retired? A gallery owner commissions 6 paintings over the next year. Retired or not retired?

The lack of obligation re:paid work is a big part of being "retired."

Or maybe US Justice Stewart's test is best: I know it when I see it.

Well - your example brings up a lot of other issues. Being an artist IMO transends the workaday/retired nomenclature to a level of vocation that is really self-defining, soul defining, in ways that a career could - or should - never be.

OrangePill

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This probably has been discussed already and maybe I missed the point of you guys conversation on the meaning of retirement but felt like it might be going in circles. Anyways, I looked up the definition of retirement:

re·tire·ment

1.
the action or fact of leaving one's job and ceasing to work.
"a man nearing retirement"

re·tired
/rəˈtī(ə)rd/

1.
having left one's job and ceased to work.
"a retired teacher"

re·tire

1.
leave one's job and cease to work, typically upon reaching the normal age for leaving employment.
"he retired from the navy in 1966"

Am I wrong in thinking that the word retirement kinda isn't useful in the sense of the FIRE community? What I mean is that it seems like a relic of the past or maybe applies more directly to the traditionnal jobs: You work till you're 65, get your pension and then watch tv all day whilst you wait for your death?


mistymoney

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!








Metalcat

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Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

Tanja Hester wrote a piece about this (that I can't find atm).

She created a narrative about an artist that painted for fun. An acquaintance saw one at a party and offered to buy a painting. Retired or not retired? The artist paints more paintings, in her own time, and more are sold through word-of-mouth. Retired or not retired? A gallery owner commissions 6 paintings over the next year. Retired or not retired?

The lack of obligation re:paid work is a big part of being "retired."

Or maybe US Justice Stewart's test is best: I know it when I see it.

Well - your example brings up a lot of other issues. Being an artist IMO transends the workaday/retired nomenclature to a level of vocation that is really self-defining, soul defining, in ways that a career could - or should - never be.

100%, but this doesn't just apply to artists.

It's not a black and white categorization of this work is special and meaningful and that work is just a "career." It's more of a continuum.

I grew up surrounded by artists and musicians, and half of my family are writers. For the most part their work is no more meaningful or special than that of a dedicated social worker, or even a particularly passionate dog trainer.

The world of deeply gratifying work is enormous. Most people could find paid work that profoundly feeds their sense of purpose and meaning if they wanted to.

The meaning of work exists on a continuum, and I fundamentally disagree that other careers can't be the same as artists.

Successful artists are still running businesses that depend on being nimble to market demands, networking, and merchandising. Their product is just a more creative one, but there's still an enormously technical element to it.

I trained with professional artists for 9 years because my mom was desperate for me to become a painter. I then trained with professional chefs, and then professional researchers, and then medical professionals, and now mental health professionals.

I don't fundamentally see a difference between any of the above populations except that there were more unstable jackasses among the artists, more addicts among the chefs, more masochism among the researchers, more non masochistic self sacrifice among the medical professionals, and more quality of life focus among the health professionals.

Of all of the above, I think the chefs were actually the ones who were the most intensely passionate about their work and identity, but that might have just been all of the cocaine they were doing.

Metalcat

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non sequitur: no one uses the term semi-retired anymore?

I used it when I had downshifted to one day a week. I say "retired" now more because I've left my profession.

It's arbitrary, and I change it up depending on the context and what I want to communicate. As I said previously, I'm increasingly referring to myself as a grad student these days. But that really is incredibly misleading even though it's accurate.

mistymoney

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Is the military vet who has a job at Home Depot for the discount not retired? Where's the line? I certainly don't feel like I have the authority to draw that line.

How big is the project?  How long will they work?  How many total hours?

If they work full time, year after year then no, they are no longer retired.  They are unretired and now work at home depot.
If they work for a summer to get a 20% discount on a 200k remodel?  Maybe...  Just gaming the system. A quick break from retirement to become a temporary wageslave.  Though personally I would not trade 3 months of retail work for a $40k discount.

And speaking of @wageslave23 - they said it best here, this is the only logical definition of being 'retired'.

I think its pretty simple actually.  If you don't plan to work anymore then you are retired. If you plan to work in the future then you are taking a break. If you aren't planning to work ever and again but then decide later to go back to work for whatever reason the you unretired. Michael Jordan retired and unretired a couple of times.

Tanja Hester wrote a piece about this (that I can't find atm).

She created a narrative about an artist that painted for fun. An acquaintance saw one at a party and offered to buy a painting. Retired or not retired? The artist paints more paintings, in her own time, and more are sold through word-of-mouth. Retired or not retired? A gallery owner commissions 6 paintings over the next year. Retired or not retired?

The lack of obligation re:paid work is a big part of being "retired."

Or maybe US Justice Stewart's test is best: I know it when I see it.

Well - your example brings up a lot of other issues. Being an artist IMO transends the workaday/retired nomenclature to a level of vocation that is really self-defining, soul defining, in ways that a career could - or should - never be.

100%, but this doesn't just apply to artists.

It's not a black and white categorization of this work is special and meaningful and that work is just a "career." It's more of a continuum.

I grew up surrounded by artists and musicians, and half of my family are writers. For the most part their work is no more meaningful or special than that of a dedicated social worker, or even a particularly passionate dog trainer.

The world of deeply gratifying work is enormous. Most people could find paid work that profoundly feeds their sense of purpose and meaning if they wanted to.

The meaning of work exists on a continuum, and I fundamentally disagree that other careers can't be the same as artists.

Successful artists are still running businesses that depend on being nimble to market demands, networking, and merchandising. Their product is just a more creative one, but there's still an enormously technical element to it.

I trained with professional artists for 9 years because my mom was desperate for me to become a painter. I then trained with professional chefs, and then professional researchers, and then medical professionals, and now mental health professionals.

I don't fundamentally see a difference between any of the above populations except that there were more unstable jackasses among the artists, more addicts among the chefs, more masochism among the researchers, more non masochistic self sacrifice among the medical professionals, and more quality of life focus among the health professionals.

Of all of the above, I think the chefs were actually the ones who were the most intensely passionate about their work and identity, but that might have just been all of the cocaine they were doing.

our thoughts on artists differ, thinking of someone like grandma moses, think she just painted what she wanted to

Metalcat

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our thoughts on artists differ, thinking of someone like grandma moses, think she just painted what she wanted to

Yes, some artists are fortunate enough to just be able to produce masterful, meaningful art out of nowhere and have it become wildly successful.

But to generalize this to the majority of professional artists is like generalizing that the experience of musicians to Mozart.

I grew up in an artists' community. My mom desperately wanted me to be a painter, so I trained under highly respected, professional artists for 9 years.

The number one conversation topic among artists and musicians? Money.

One of my favourite musicians, who is a truly passionate poet and a very prolific song writer, has a great song all about how he can't get his music on the radio and that what is on the radio is shit.

I've seen plenty of art pieces that were a scathing commentary on the reality of quality art not being commercially viable.

So the market realities of the art world can be so important to artists that it works it's way into the very expression of their art.

EscapeVelocity2020

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... I looked up the definition of retirement:
re·tire

1.
leave one's job and cease to work, typically upon reaching the normal age for leaving employment.
"he retired from the navy in 1966"
[/sup]
Am I wrong in thinking that the word retirement kinda isn't useful in the sense of the FIRE community? What I mean is that it seems like a relic of the past or maybe applies more directly to the traditionnal jobs: You work till you're 65, get your pension and then watch tv all day whilst you wait for your death?
This is why discussions about the meaning of early "retirement", retirement "failure", financial independence, etc. are so important.  I think the non-FIRE world is pretty clear on what retirement means.  I also think that the FIRE world is clear on what 'early retirement' means, and in this case 'retirement' just means leaving traditional work. 

The fact that Pete could do better making these distinctions as opposed to trying to change a defined word is why I get my feathers ruffled.  Of all people, Pete is probably the clearest example of a small business owner (with his MMM HQ as his place of work) and entrepreneur (since he also dabbles in construction and other business ventures).  In fact, I highly doubt Pete could convince the IRS or social security that he is unemployed, which is the first step toward being retired.

On the other hand, if someone like Stephen King wanted to call himself retired, I wouldn't argue with him.  He probably knows better than anyone when he's taking a break, when he's retired, and when he's back in the working world.  But if Tom Brady wants everyone to call him retired, fans would be awfully confused.

Either way, my full time job as an IRPoliceman on Pete's beat is behind me, I think 8 years is enough.

Metalcat

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... I looked up the definition of retirement:
re·tire

1.
leave one's job and cease to work, typically upon reaching the normal age for leaving employment.
"he retired from the navy in 1966"
[/sup]
Am I wrong in thinking that the word retirement kinda isn't useful in the sense of the FIRE community? What I mean is that it seems like a relic of the past or maybe applies more directly to the traditionnal jobs: You work till you're 65, get your pension and then watch tv all day whilst you wait for your death?
This is why discussions about the meaning of early "retirement", retirement "failure", financial independence, etc. are so important.  I think the non-FIRE world is pretty clear on what retirement means.  I also think that the FIRE world is clear on what 'early retirement' means, and in this case 'retirement' just means leaving traditional work. 

The fact that Pete could do better making these distinctions as opposed to trying to change a defined word is why I get my feathers ruffled.  Of all people, Pete is probably the clearest example of a small business owner (with his MMM HQ as his place of work) and entrepreneur (since he also dabbles in construction and other business ventures).  In fact, I highly doubt Pete could convince the IRS or social security that he is unemployed, which is the first step toward being retired.

On the other hand, if someone like Stephen King wanted to call himself retired, I wouldn't argue with him.  He probably knows better than anyone when he's taking a break, when he's retired, and when he's back in the working world.  But if Tom Brady wants everyone to call him retired, fans would be awfully confused.

Either way, my full time job as an IRPoliceman on Pete's beat is behind me, I think 8 years is enough.

Fuck, I accidentally deleted an entire post.

But it was basically that "retirement" isn't nearly as universal or clearly defined as people want to think it is, except for a very specific subset of men in recent history.

The concept of retirement has largely been defined by union jobs with pensions. Of course it has a clear definition when looked at that way. Everyone knows when Bob retired, he got his pension and his watch. No one knows what the fuck to call it now that his wife Jill is no longer doing paid childcare, but is still offering piano lessons. And no one cares, so it's a moot point.

Also, seniors working during retirement has always been a thing and is increasingly common. There are even public health groups promoting that seniors take up lightly active jobs in retirement to keel them moving, like working in a store or library.

So it's not like the world of the conventionally retired is universally filled with people who never work again. It's actually not at all uncommon for conventionally retired seniors to do some degree of paid labor.

Remove the unionized jobs and pensions and we're just left with a word that doesn't quite fit the reality of the world, and has never actually encompassed the experience of many of the labourers of the 20th century who weren't company men in unionized jobs.

Labour participation rates in the 50s of people over the age of 70 was almost 50% for men. So it wasn't anywhere near the universal norm for people to just stop working.

The concept that everyone should just *stop* working altogether is a fairly recent concept, and again, intrinsically linked to pensions.
« Last Edit: October 01, 2022, 08:02:27 PM by Malcat »

BeanCounter

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Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

I am glad to hear you say that, but recall we have a thread in this forum called "Stop worrying about the 4% rule" and I really wouldn't trust even the average MMM forum reader to take on the an appropriate amount of pessimism and an appreciation for the risks involved (I work as an actuary).

A core reason that thread exists is precisely because there’s a groundswell of people who are overly pessimistic about the future, which in turn causes them to be absurdly conservative with their decision to retire. It’s all too easy to get ‘risk paralysis.’

As MalCat indicated, overwhelmingly most people who frequent this forum choose a WR that’s far smaller than 4%, and then add layers upon layers of safety (bloated budgets, umbrella insurance, buckets which “aren’t considered (e.g. SS), pre-payment of major expenses during the final working years, ignoring how their tax burden can decrease…).

This is not really aimed specifically at your post, but more of a general post:

Of course everyone makes plan B, C, D & E.. and I hope they're executing them, because 2022 is turning into much more than just a bump in the road.


If you had retired around the peak of the market then your portfolio would now be down by almost a 1/3rd, no matter what SWR you chose and what backup plans you may or many not have put into action.  You now need a 50% real return to get back to peak - all while it has to pull double-duty to fund your lifestyle.

In financial markets things that have never happened happen all the time. Bonds were never supposed to be able to go to -6% real. Buffett indicator was never mean to go to >200% and 4 standard deviations above normal.  If your retirement portfolio has to deal with the return to norm from that during its firt 5 years while simultaneously funding your lifestyle then you might just be asking far too much of it.

In this article Kitces points out that on average a retirement account doesn't top out in real terms until 10-11years into retirement, and then down into principal around year 17-18

https://www.kitces.com/blog/consumption-gap-in-retirement-why-most-retirees-will-never-spend-down-their-portfolio/

I don't see now you can look at these average projections, then look at your own portfolio over the last year still think that everything is still going to be just fine.




quote from the article:
"Given the impact of inflation, it’s problematic to start digging into retirement principal immediately at the start of retirement, given that inflation-adjusted spending needs could quadruple by the end of retirement (at a 5% inflation rate). Accordingly, the reality is that to sustain a multi-decade retirement with rising spending needs due to inflation, it’s necessary to spend less than the growth/income in the early years, just to build enough of a cushion to handle the necessary higher withdrawals later!"

If you think you may want/need the extra safety blanket of another year or 2 then why not do it now? The job market is still in pretty good shape - it's unlikely to be so if we get another year of this, portfolios fall further the economy weakens further. If you ship has been torpedoed, sure it might survive and make it into shore, but why not jump onboard the safety raft before they're all gone?

And to address the argument that even plan B, C, D etc are better than having to go back to a sucky paid job -  I personally, and I suspect many others, don't hate my job at all - on the contrary I have a very good relationship with my work right now - I work with a fantastic team for a great company - we work hard and all put in a good shift, and there is a certain satisfaction from that.  If you have a sucky relationship with work then, fine - just look for a better job!

This just feels off to me. Or overthought.
My portfolio is down 21.3% since last December. (not sure if that was exactly the peak but that's when I remember looking at the number and my eye balls popped out.
I FIRE'd in Aug of 2020. I knew then the market was way over valued so I anticipated in my FIRE planning that we'd see a drop of 30%. And when that happened I'd go from a 3% withdraw rate to a likely 4% withdraw rate. Looking at my portfolio value today and our expenses and it actually pencils out to going from a 2.9% withdraw rate to 3.7% this year. At the 3.7% withdraw rate for the next 50 years CFIREsim gives me a 94.12% success rate. (not to mention I'm statistically more likely to die before failure kicks in anyway)
But 94% is not safe as I'd like it to be and I'm still young and money is SUPER easy to come by right now (and we've still got kids at home) so I'm doing a little consulting to bring my withdraw rate down just a bit. We'll see how long it lasts.
If I can't (or chose not to) do a bit of paid work to bring in some cash, I'll just spend down my cash balance for the next two years.
It's just a waiting game until the market starts rebounding.

Or I guess this time could really be different and the market will NEVER rebound, I'll fail to continue to do some paid work, and inflation will continue and my 4% will go to 5%, then 6% and on and on until I'm planting potatoes out back and saving up for my next can of cat food.

I think it's too early to tell if I picked the worst time to retire ever or not.

tooqk4u22

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!

No, as I said in my other post here or another thread, I am a 2019 FIREee and did so with a 3.25-3.5%wr....it's now about 4% due to inflation, annual spending withdrawals. and bond part of AA getting whacked (thank goodness I wasn't in BND or longer bonds) .  If I had been 100% equities I would still have 3.5% AA.  He'll, I would have a slightly better wr if I had been in all cash.   

But the point is as  2019 my portfolio after all that and withdrawals is getting close to where I started....I will be fine.  (Have to check my balances when I get back home from.long weekend to be sure). 

But a 5-6%er then is probably fine.

But back on topic a 4%er in 2021 or early 2022 is probably screwed and has to quickly find some other income.  Good news is that they still have FU money and and can still make decisions best for them. 

« Last Edit: October 02, 2022, 07:39:51 AM by tooqk4u22 »

BeanCounter

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Remove the unionized jobs and pensions and we're just left with a word that doesn't quite fit the reality of the world, and has never actually encompassed the experience of many of the labourers of the 20th century who weren't company men in unionized jobs.

Labour participation rates in the 50s of people over the age of 70 was almost 50% for men. So it wasn't anywhere near the universal norm for people to just stop working.

The concept that everyone should just *stop* working altogether is a fairly recent concept, and again, intrinsically linked to pensions.

Exactly.
When I FIREd, I left a full time career of 20 years. Had I been military or a teacher that might have qualified me for a pension and maybe that would have meant I was really retired. But most people just saw me as quitting my job to stay home with my kids.
And now I find my self unexpectantly bringing in some part time income, so I guess I'm not REALLY retired anyway.

What I am though, is financially independent. I can choose if I work or not. But that could change too. My portfolio could erode more and fail to bring in enough income to cover my expenses or my expenses could rise such that my portfolio is not enough to support it long term. Everything is fluid.
« Last Edit: October 02, 2022, 07:47:02 AM by BeanCounter »

BeanCounter

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!

No, as I said in my other post here or another thread, I am a 2019 FIREee and did so with a 3.25-3.5%wr....it's now about 4% due to inflation, annual spending withdrawals. and bond part of AA getting whacked (thank goodness I wasn't in BND or longer bonds) .  If I had been 100% equities I would still have 3.5% AA.  He'll, I would have a slightly better wr if I had been in all cash.   

But the point is as  2019 my portfolio after all that and withdrawals is getting close to where I started....I will be fine.  (Have to check my balances when I get back home from.long weekend to be sure). 

But a 5-6%er then is probably fine.

But back on topic a 4%er in 2021 or early 2022 is probably screwed and has to quickly find some other income.  Good news is that they still have FU money and and can still make decisions best for them.

YES! Absolutely you and I are saying the same thing.

Metalcat

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Remove the unionized jobs and pensions and we're just left with a word that doesn't quite fit the reality of the world, and has never actually encompassed the experience of many of the labourers of the 20th century who weren't company men in unionized jobs.

Labour participation rates in the 50s of people over the age of 70 was almost 50% for men. So it wasn't anywhere near the universal norm for people to just stop working.

The concept that everyone should just *stop* working altogether is a fairly recent concept, and again, intrinsically linked to pensions.

Exactly.
When I FIREd, I left a full time career of 20 years. Had I been military or a teacher that might have qualified me for a pension and maybe that would have meant I was really retired. But most people just saw me as quitting my job to stay home with my kids.
And now I find my self unexpectantly bringing in some part time income, so I guess I'm not REALLY retired anyway.

What I am though, is financially independent. I can choose if I work or not. But that could change too. My portfolio could erode more and fail to bring in enough income to cover my expenses or my expenses could rise such that my portfolio is not enough to support it long term. Everything is fluid.


The concept of careers is rapidly evolving as well. With the growth of the gig economy, the precipitous drop in full time roles that provide benefits and therefore the sky rocketing use of contract/consultant work. The whole landscape of what a "career" even looks like is evolving as the unionized 'company man' phase of history, which was rather brief, fades more and more away from being seen as a "norm."
« Last Edit: October 02, 2022, 08:47:42 AM by Malcat »

BeanCounter

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Remove the unionized jobs and pensions and we're just left with a word that doesn't quite fit the reality of the world, and has never actually encompassed the experience of many of the labourers of the 20th century who weren't company men in unionized jobs.

Labour participation rates in the 50s of people over the age of 70 was almost 50% for men. So it wasn't anywhere near the universal norm for people to just stop working.

The concept that everyone should just *stop* working altogether is a fairly recent concept, and again, intrinsically linked to pensions.

Exactly.
When I FIREd, I left a full time career of 20 years. Had I been military or a teacher that might have qualified me for a pension and maybe that would have meant I was really retired. But most people just saw me as quitting my job to stay home with my kids.
And now I find my self unexpectantly bringing in some part time income, so I guess I'm not REALLY retired anyway.

What I am though, is financially independent. I can choose if I work or not. But that could change too. My portfolio could erode more and fail to bring in enough income to cover my expenses or my expenses could rise such that my portfolio is not enough to support it long term. Everything is fluid.


The concept of careers is rapidly evolving as well. With the growth of the gig economy, the precipitous drop in full time roles that provide benefits and therefore the sky rocketing use of contract/consultant work. The whole landscape of what a "career" even looks like is evolving as the unionized 'company man' phase of history, which was rather brief, fades more and more away from being seen as a "norm."
Yes absolutely! One of my clients has built a business run entirely on middle aged women (and a couple men) with 20 years experience in something that want to work for her on a 1099 basis. It's amazing. These are really talented people who can work very efficiently and want to get stuff done, make a little money and then go enjoy the rest of their day doing something more meaningful. Which is so much better trying to look busy in the office or going to meaningless meetings.
I'm basically making the same income as my director roll in half the hours doing consulting/gig work. I just don't give benefits and never know when it will dry up. At this point in my life, I'm totally ok with that.

Metalcat

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Remove the unionized jobs and pensions and we're just left with a word that doesn't quite fit the reality of the world, and has never actually encompassed the experience of many of the labourers of the 20th century who weren't company men in unionized jobs.

Labour participation rates in the 50s of people over the age of 70 was almost 50% for men. So it wasn't anywhere near the universal norm for people to just stop working.

The concept that everyone should just *stop* working altogether is a fairly recent concept, and again, intrinsically linked to pensions.

Exactly.
When I FIREd, I left a full time career of 20 years. Had I been military or a teacher that might have qualified me for a pension and maybe that would have meant I was really retired. But most people just saw me as quitting my job to stay home with my kids.
And now I find my self unexpectantly bringing in some part time income, so I guess I'm not REALLY retired anyway.

What I am though, is financially independent. I can choose if I work or not. But that could change too. My portfolio could erode more and fail to bring in enough income to cover my expenses or my expenses could rise such that my portfolio is not enough to support it long term. Everything is fluid.


The concept of careers is rapidly evolving as well. With the growth of the gig economy, the precipitous drop in full time roles that provide benefits and therefore the sky rocketing use of contract/consultant work. The whole landscape of what a "career" even looks like is evolving as the unionized 'company man' phase of history, which was rather brief, fades more and more away from being seen as a "norm."
Yes absolutely! One of my clients has built a business run entirely on middle aged women (and a couple men) with 20 years experience in something that want to work for her on a 1099 basis. It's amazing. These are really talented people who can work very efficiently and want to get stuff done, make a little money and then go enjoy the rest of their day doing something more meaningful. Which is so much better trying to look busy in the office or going to meaningless meetings.
I'm basically making the same income as my director roll in half the hours doing consulting/gig work. I just don't give benefits and never know when it will dry up. At this point in my life, I'm totally ok with that.

Lol, at one point my executive volunteer roles, my consulting roles, and.my social life were so intertwined it was impossible to say what "work" I was actually being paid for.

Metalcat

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I'm kind of IRP-ish in that I view having back up plans as something you'll need to use only in extreme very unlikely situations in case SHTF badly once you quit rather then an income source that you plan to rely on as part of your FIRE strategy to provide "needed" income on a regular basis.  However S does HTF occasionally and having a back up plan outside the 100% 4% rule (if anyone actually does that once RE) to ride it out is wise imho. I chose to cut expenses others may choose to do a barista job for a few months. To me they are both valid ways to be FI and RE as long as they aren't  "normally" required.

I started out with the lean FIRE crowd but made a few non-working changes to make me chubby FIRE a few years in. So I haven't "had" to work at a paying job (except for a short term PT/on call period at my old job a couple of years after FIRE) or done anything to earn additional money since quitting. And I haven't had to (or wanted to) nor do I think I ever will. But I still have back up plans to my back up plans just in case. Most of them involve reducing expenses. But I have very low base expenses so cutting spending during recessions or even a depression isn't a big deal.

Yep, being able to comfortably cut spending, especially early on during the worst SORR years is a big deal. We actually plan to relocate to our LCOL house as soon as possible for a few years to benefit from that. We can drop our spending by almost half.

We would go now, but logistically can't, which sucks. That's also why I'm building the income resiliency in because my health logistics sometimes dictate that I can't be as flexible on cutting spending, and they dictate the timing. So a sudden bad inflation situation, combined with a sudden increase in medical expenses, and an inflexibility in lifestyle really makes it tricky to be spending-nimble.

Were I able bodied, cutting expenses would be a lever I could far more easily pull with greater efficacy.

But yeah, backup plans on top of backup plans on top of backup plans.
  Yeah it would be tough to just assume you can cut expenses or go back to work if you are dealing with an already know big future expense. Not projecting enough money to cover those likely expenses is bad planning for sure.

For most of us it's kind of a crap shoot - we have enough to cover current and future "normal" FIRE expenses and some back up plans but hope nothing BIG will happen to change our retirement finance. Just assuming we can go back to work or cut expenses at some point doesn't mean we can.

This is why lean FIRE can implode on some people who, 10 or 20 years out of the work force, may suffer an injury or disability that not only costs ALOT but makes it hard to work. Plus they might be ineligible for disability benefits (in the USA) after being unemployed for so long but still decades away from traditional retirement age. Having those back up plans to the back up plans can be huge even if you never need to use them.

Yeah, no shit.

I'm already disabled, it's already raised my cost of living, I can't ever go "back to work" at my old career, and I'm facing the very real possibility of even worse disability in the future.

That's why I don't feel safe banking on just some extra padding on my 'stache. Why I feel the need to have a source of income that I can tap into no matter how physically disabled I become.

mistymoney

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!

No, as I said in my other post here or another thread, I am a 2019 FIREee and did so with a 3.25-3.5%wr....it's now about 4% due to inflation, annual spending withdrawals. and bond part of AA getting whacked (thank goodness I wasn't in BND or longer bonds) .  If I had been 100% equities I would still have 3.5% AA.  He'll, I would have a slightly better wr if I had been in all cash.   

But the point is as  2019 my portfolio after all that and withdrawals is getting close to where I started....I will be fine.  (Have to check my balances when I get back home from.long weekend to be sure). 

But a 5-6%er then is probably fine.

But back on topic a 4%er in 2021 or early 2022 is probably screwed and has to quickly find some other income.  Good news is that they still have FU money and and can still make decisions best for them.

I don't understand what the beginning no of your reply is referring to here?

mistymoney

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I'm kind of IRP-ish in that I view having back up plans as something you'll need to use only in extreme very unlikely situations in case SHTF badly once you quit rather then an income source that you plan to rely on as part of your FIRE strategy to provide "needed" income on a regular basis.  However S does HTF occasionally and having a back up plan outside the 100% 4% rule (if anyone actually does that once RE) to ride it out is wise imho. I chose to cut expenses others may choose to do a barista job for a few months. To me they are both valid ways to be FI and RE as long as they aren't  "normally" required.

I started out with the lean FIRE crowd but made a few non-working changes to make me chubby FIRE a few years in. So I haven't "had" to work at a paying job (except for a short term PT/on call period at my old job a couple of years after FIRE) or done anything to earn additional money since quitting. And I haven't had to (or wanted to) nor do I think I ever will. But I still have back up plans to my back up plans just in case. Most of them involve reducing expenses. But I have very low base expenses so cutting spending during recessions or even a depression isn't a big deal.

Yep, being able to comfortably cut spending, especially early on during the worst SORR years is a big deal. We actually plan to relocate to our LCOL house as soon as possible for a few years to benefit from that. We can drop our spending by almost half.

We would go now, but logistically can't, which sucks. That's also why I'm building the income resiliency in because my health logistics sometimes dictate that I can't be as flexible on cutting spending, and they dictate the timing. So a sudden bad inflation situation, combined with a sudden increase in medical expenses, and an inflexibility in lifestyle really makes it tricky to be spending-nimble.

Were I able bodied, cutting expenses would be a lever I could far more easily pull with greater efficacy.

But yeah, backup plans on top of backup plans on top of backup plans.
  Yeah it would be tough to just assume you can cut expenses or go back to work if you are dealing with an already know big future expense. Not projecting enough money to cover those likely expenses is bad planning for sure.

For most of us it's kind of a crap shoot - we have enough to cover current and future "normal" FIRE expenses and some back up plans but hope nothing BIG will happen to change our retirement finance. Just assuming we can go back to work or cut expenses at some point doesn't mean we can.

This is why lean FIRE can implode on some people who, 10 or 20 years out of the work force, may suffer an injury or disability that not only costs ALOT but makes it hard to work. Plus they might be ineligible for disability benefits (in the USA) after being unemployed for so long but still decades away from traditional retirement age. Having those back up plans to the back up plans can be huge even if you never need to use them.

I'm having a hard time envisioning what this back up back up might look like?

So the only thing that comes to mind is that going back to work is the back up plan, and maybe selling a nice house and downsizing considerably is the back up if they become disabled and can't work. Since RE may be depressed as well as stocks, seems that a paid off house would likely be necessary, in case RE values plumet like it's 2008/2009.

Are their other examples? Would likely be of use to me and others trying to plan for contingencies.

Omy

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We FIREd in 2019 and have backup plans to our backup plans.

1) We have rental income that pays most of our bills.
2) We have an annuity that will replace the rental income when we're done being landlords. The annuity income will be doubled for up to 5 years if one of us should become unable to perform 2 of the 5 activities of daily living.
3) We have dividend income.
4) We have occasional passive income from my previous line of work.
5) We have social security that could start in as little as 2 years (but we plan to wait 5-7 years).
6) We have a good chunk in the stock market.
7) We have several years of cash on hand.
8) We can sell our house or get a reverse mortgage in our later years.
9) We can go back to work if enough of these other layers of protection fail.
10) We are likely to see a low 6 figure inheritance in the next decade.

We are regularly looking for ways to optimize our financial situation and can easily tighten the belt should we need to. I have been gently face punched for my contingency plans having so many contingency plans, but this approach has kept me from worrying about the stock market.
« Last Edit: October 02, 2022, 11:47:22 AM by Omy »

tooqk4u22

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!

No, as I said in my other post here or another thread, I am a 2019 FIREee and did so with a 3.25-3.5%wr....it's now about 4% due to inflation, annual spending withdrawals. and bond part of AA getting whacked (thank goodness I wasn't in BND or longer bonds) .  If I had been 100% equities I would still have 3.5% AA.  He'll, I would have a slightly better wr if I had been in all cash.   

But the point is as  2019 my portfolio after all that and withdrawals is getting close to where I started....I will be fine.  (Have to check my balances when I get back home from.long weekend to be sure). 

But a 5-6%er then is probably fine.

But back on topic a 4%er in 2021 or early 2022 is probably screwed and has to quickly find some other income.  Good news is that they still have FU money and and can still make decisions best for them.

I don't understand what the beginning no of your reply is referring to here?

I think the "No" is from that I misread your post....I read it as you were saying  that the 2017 to 2019 FIREees had such high returns that even those at 5-6% wr then are still sitting pretty now, which they probably aren't.   

But I think what you were saying was those 5-6% from that time turned into 4% and are now maybe back to 5-6% or worse.   Yes?

tooqk4u22

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We FIREd in 2019 and have backup plans to our backup plans.

1) We have rental income that pays most of our bills.
2) We have an annuity that will replace the rental income when we're done being landlords. The annuity income will be doubled for up to 5 years if one of us should become unable to perform 2 of the 5 activities of daily living.
3) We have dividend income.
4) We have occasional passive income from my previous line of work.
5) We have social security that could start in as little as 2 years (but we plan to wait 5-7 years).
6) We have a good chunk in the stock market.
7) We have several years of cash on hand.
8) We can sell our house or get a reverse mortgage in our later years.
9) We can go back to work if enough of these other layers of protection fail.
10) We are likely to see a low 6 figure inheritance in the next decade.

We are regularly looking for ways to optimize our financial situation and can easily tighten the belt should we need to. I have been gently face punched for my contingency plans having so many contingency plans, but this approach has kept me from worrying about the stock market.

I like this so I started a thread about specific back up plans or hedges or whatever you want to call it...

https://forum.mrmoneymustache.com/post-fire/post-fire-backup-plans/#new

mistymoney

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non sequitur: no one uses the term semi-retired anymore?

To me - I've only been here about 2-3 years? - talk about the 4% rule not being enough is kinda a new message. Seems like last years there was a lot of sentiment that edging up over 4% was really ok....people contemplating 4.5 up through 6% seemed to endorced and/or reported sucess. From about 2017 up through 2019 it sure would have been! Anyone retiring on a 6% WR in those years would have seen their WR decrease dramatically year to year with those juicy 18% returns coupled with low inflation.

Those were the days my friend, we thought they'd never end.....
https://www.youtube.com/watch?v=y3KEhWTnWvE

....aka this time it's different, lol! In the good way...

And now it is 4% - maybe?....but you need to be flexible and you need to be prepared to earn money/cut spending if things go south. And they are heading south.....further south slowly and surely month by month....wondering if a hard capitulation is going to hit any day...or how long the crazy inflation will last.....

....aka this time it's different.... In the bad way...

All any of us can do is deal with the hand we have now, of course. But it is sobering and souring for sure!!

Just one more year of 18% returns for me would have done the trick! And I would have made it too, if it wasn't for them kids!

https://www.youtube.com/watch?v=hXUqwuzcGeU

check out at 00:21!!

No, as I said in my other post here or another thread, I am a 2019 FIREee and did so with a 3.25-3.5%wr....it's now about 4% due to inflation, annual spending withdrawals. and bond part of AA getting whacked (thank goodness I wasn't in BND or longer bonds) .  If I had been 100% equities I would still have 3.5% AA.  He'll, I would have a slightly better wr if I had been in all cash.   

But the point is as  2019 my portfolio after all that and withdrawals is getting close to where I started....I will be fine.  (Have to check my balances when I get back home from.long weekend to be sure). 

But a 5-6%er then is probably fine.

But back on topic a 4%er in 2021 or early 2022 is probably screwed and has to quickly find some other income.  Good news is that they still have FU money and and can still make decisions best for them.

I don't understand what the beginning no of your reply is referring to here?

I think the "No" is from that I misread your post....I read it as you were saying  that the 2017 to 2019 FIREees had such high returns that even those at 5-6% wr then are still sitting pretty now, which they probably aren't.   

But I think what you were saying was those 5-6% from that time turned into 4% and are now maybe back to 5-6% or worse.   Yes?

yes, that is more what I was say. That temporarily, it seemed ok to fire on 6% in like 2017 through 2019, and it was looking good with a decreasing WR through until start of this year. I think that I felt there was a sense of "jump in! the waters warm" before the downturn. Sure there were voices of overvaluation too! But there always is.

Holocene

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I'm in the 2022 cohort.  I gave my notice a bit before this thread was started in April.  Things weren't looking great then with stocks and bonds already down, high inflation, and a war starting in Ukraine.  But I was mentally ready for a break and I'd already done at least OMY looking at the numbers alone although '22 was always my target year.  I always thought 4% WR was too high for a long retirement.  It was too risky for me, so my goal was initially 3.5% and went down to 3.25% as things were looking really frothy in 2021.  Things weren't looking great in March/April as I made my final decision, but still looked good enough to go for it.

I'm one of those people with tons of backup plans as well.  I suspect most here are.  And yes, one potential backup plan was paid employment.  I figured being in my early 30s, the chances were pretty high that I'd actually want to do some kind of paid work at some point in the future anyway.  And sure enough, before I even left, I talked myself into a part-time job with my company this fall.  Rather than quitting, I'm taking a 6 month leave of absence and will be working 20 hours a week in a new role doing solely the tiny part of my job I've enjoyed in the past.  I joke that I failed at FIRE before I even started.  But really, being FI allowed me to ask for what I wanted without fear.  And I still got my needed break out of it and a really wonderful summer off.  And the new job is something I think I could actually enjoy and maybe find a bit of purpose in.  I wouldn't want to go back to my old job and I'm glad I didn't just keep working when things didn't look perfect as I was trying to make my exit.  I trusted that I had enough safety margin and I could figure out how to make it work.

If you're just looking at the numbers, between high inflation and a large drop in stocks, then yeah, it's not looking like 21-22 were great years to retire.  My crystal ball is fuzzy though so who knows.  Who would've thought we'd recover from the COVID crash of 2020 as quickly as we did?  I sure didn't.  I'm also guessing most people in the 21-22 cohorts will be just fine.  Most probably didn't blindly retire as soon as they hit 25x.  And people adjust as they go.  Maybe it's considered a failure or poor planning if you have to cut discretionary spending a bit or work part-time for a bit.  But if the alternative is guaranteed working a job you don't like?  Well that seems worth it to me to take that chance.  And if you like your job, by all means save a bit more for extra safety margin.  Everyone's situation is unique.  I think people here are generally smart enough to do their due diligence and figure out the path that makes the most sense for them.

mistymoney

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I'm kind of IRP-ish in that I view having back up plans as something you'll need to use only in extreme very unlikely situations in case SHTF badly once you quit rather then an income source that you plan to rely on as part of your FIRE strategy to provide "needed" income on a regular basis.  However S does HTF occasionally and having a back up plan outside the 100% 4% rule (if anyone actually does that once RE) to ride it out is wise imho. I chose to cut expenses others may choose to do a barista job for a few months. To me they are both valid ways to be FI and RE as long as they aren't  "normally" required.

I started out with the lean FIRE crowd but made a few non-working changes to make me chubby FIRE a few years in. So I haven't "had" to work at a paying job (except for a short term PT/on call period at my old job a couple of years after FIRE) or done anything to earn additional money since quitting. And I haven't had to (or wanted to) nor do I think I ever will. But I still have back up plans to my back up plans just in case. Most of them involve reducing expenses. But I have very low base expenses so cutting spending during recessions or even a depression isn't a big deal.

Yep, being able to comfortably cut spending, especially early on during the worst SORR years is a big deal. We actually plan to relocate to our LCOL house as soon as possible for a few years to benefit from that. We can drop our spending by almost half.

We would go now, but logistically can't, which sucks. That's also why I'm building the income resiliency in because my health logistics sometimes dictate that I can't be as flexible on cutting spending, and they dictate the timing. So a sudden bad inflation situation, combined with a sudden increase in medical expenses, and an inflexibility in lifestyle really makes it tricky to be spending-nimble.

Were I able bodied, cutting expenses would be a lever I could far more easily pull with greater efficacy.

But yeah, backup plans on top of backup plans on top of backup plans.
  Yeah it would be tough to just assume you can cut expenses or go back to work if you are dealing with an already know big future expense. Not projecting enough money to cover those likely expenses is bad planning for sure.

For most of us it's kind of a crap shoot - we have enough to cover current and future "normal" FIRE expenses and some back up plans but hope nothing BIG will happen to change our retirement finance. Just assuming we can go back to work or cut expenses at some point doesn't mean we can.

This is why lean FIRE can implode on some people who, 10 or 20 years out of the work force, may suffer an injury or disability that not only costs ALOT but makes it hard to work. Plus they might be ineligible for disability benefits (in the USA) after being unemployed for so long but still decades away from traditional retirement age. Having those back up plans to the back up plans can be huge even if you never need to use them.

Yeah, no shit.

I'm already disabled, it's already raised my cost of living, I can't ever go "back to work" at my old career, and I'm facing the very real possibility of even worse disability in the future.

That's why I don't feel safe banking on just some extra padding on my 'stache. Why I feel the need to have a source of income that I can tap into no matter how physically disabled I become.
The disability thing was something I had never really thought about when I first quit. Like most healthy people in their 30s or early 40s who FIRE you just kind of assume nothing is going to happen in your younger years and if SHTF you'll be able to go back to work or maybe collect Soc Sec disability so many don't make back up plans for that.

That's probably unlikely to happen but many of us we're just one accident away from a life (and financial) changing disability. I've had some "near misses" and know a FIREed forum friend (a climber like me) who retired early and is currently under going some lengthy and probably very costly surgeries after a very bad fall. His recuperation will be long, costly and, as a single childless person like me, may have to hire some help while rehabilitating. He's too young, and has been out of the work force too long,  to go on SS disability so kind of SOL on any financial Gov help.

Not sure what kind of back up plan, other then having other money sources or using up some of your stash principle or carrying private disability insurance, you'd need for that kind of thing but if someone finds themselves unemployable at 40 or 50-something 10 or 20 years after RE then you probably need to think about it. I didn't think about it until I got injured badly early in my RE (fully recovered more or less) and always figured I could go back to work. The injury and the year I did rehab made me realize I probably need a back up plan "just in case" I can't go back to work easily and/or my expenses will be greater then I planned for. Even if it's just spend less or save more.

Thanks Spartana. things for us all to think about.

I'm not sure how private disability would work. I looked into those a while back when I worked a job without diability coverage. They were always based on your profession and your earnings, so you would buy a policy to replace 50 or 66% of your income.

For home-based assistance with illness or injury, seems a LTC would be the direction to go - not sure how that works if you are not in a rehab type facility. Then there is aflac that does pay cash monthly rather than provider reimbursement. When I looked into these, they all seemed prohibitively expensive to me. Looking at the monthly cost, the monthly benefit, and the likelihood of ever needing them.

I was a single parent and trying to be as responsible as I could with the "what ifs" due to the huge impact that those events would have on my kids, but it was just too much money for me at that time. I went without. Luckily, I did not have anything too negative occur.

AlanStache

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^^^ Most of those were too expensive for me too, and as a lower income earner I wasn't willing to work years (decades??) longer to save that huge amount or to pay for LTC insurance for many years when I might never need it. So the only thing I could do is set up my life to be as low cost for my needs, sustainable, and plan to spend down my assets if needed. Having a paid off house with low taxes and utilities meant I could easily cover my base expenses for well under $1000/month. After that??? Once older there's always SS or pensions etc but younger FIREees probably should work a small amount every few years just to keep SS disability benefits if ever needed. Apparently you c can't get those unless you've had some kind of paid employment within 10 years.

Related to that and all the above but has anyone given thought to paining to get a part time job every ~5years or so in FIRE?  Not having stupid long gaps in employment if one needed to make "real money" again or get SS disability as noted by spartana and some periodic employment might work well for reducing SORR. 

Metalcat

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If anyone wants to talk about unexpectedly dealing with disability earlier in life, feel free to PM me or participate in my journal.

My entire life has revolved around this very issue for years.

mspym

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My last four years of work were contracting with 3-6 months in between contracts. It was a really nice way to manage project stress. As far as accidents go, this is one of the things I am looking forward to about moving back to NZ. All the rehab and other services are covered by ACC so an accident doesn’t bankrupt you.

clifp

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This just feels off to me. Or overthought.
My portfolio is down 21.3% since last December. (not sure if that was exactly the peak but that's when I remember looking at the number and my eye balls popped out.
I FIRE'd in Aug of 2020. I knew then the market was way over valued so I anticipated in my FIRE planning that we'd see a drop of 30%. And when that happened I'd go from a 3% withdraw rate to a likely 4% withdraw rate. Looking at my portfolio value today and our expenses and it actually pencils out to going from a 2.9% withdraw rate to 3.7% this year. At the 3.7% withdraw rate for the next 50 years CFIREsim gives me a 94.12% success rate. (not to mention I'm statistically more likely to die before failure kicks in anyway)
But 94% is not safe as I'd like it to be and I'm still young and money is SUPER easy to come by right now (and we've still got kids at home) so I'm doing a little consulting to bring my withdraw rate down just a bit. We'll see how long it lasts.
If I can't (or chose not to) do a bit of paid work to bring in some cash, I'll just spend down my cash balance for the next two years.
It's just a waiting game until the market starts rebounding.

Or I guess this time could really be different and the market will NEVER rebound, I'll fail to continue to do some paid work, and inflation will continue and my 4% will go to 5%, then 6% and on and on until I'm planting potatoes out back and saving up for my next can of cat food.

I think it's too early to tell if I picked the worst time to retire ever or not.

Not to pick on you since several others have posted similar analysis, the fundamental assumption you are making is that market has pretty much bottomed and will soon bounce back.

The good news about early retirement is you have a long enough time frame to wait for the market to bounce back.   If It doesn't those of us with savings will be far better off than working stiff living paycheck to paycheck, cause they'll be unemployed.

Another market saying is "Markets can stay irrational longer than you can stay solvent."  I think when discussing future  WR, it would be prudent to say something along the lines, if my portfolio drops another 10,20,50% then my WR will be X%.   We can then discuss will it be safe or not.

BeanCounter

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This just feels off to me. Or overthought.
My portfolio is down 21.3% since last December. (not sure if that was exactly the peak but that's when I remember looking at the number and my eye balls popped out.
I FIRE'd in Aug of 2020. I knew then the market was way over valued so I anticipated in my FIRE planning that we'd see a drop of 30%. And when that happened I'd go from a 3% withdraw rate to a likely 4% withdraw rate. Looking at my portfolio value today and our expenses and it actually pencils out to going from a 2.9% withdraw rate to 3.7% this year. At the 3.7% withdraw rate for the next 50 years CFIREsim gives me a 94.12% success rate. (not to mention I'm statistically more likely to die before failure kicks in anyway)
But 94% is not safe as I'd like it to be and I'm still young and money is SUPER easy to come by right now (and we've still got kids at home) so I'm doing a little consulting to bring my withdraw rate down just a bit. We'll see how long it lasts.
If I can't (or chose not to) do a bit of paid work to bring in some cash, I'll just spend down my cash balance for the next two years.
It's just a waiting game until the market starts rebounding.

Or I guess this time could really be different and the market will NEVER rebound, I'll fail to continue to do some paid work, and inflation will continue and my 4% will go to 5%, then 6% and on and on until I'm planting potatoes out back and saving up for my next can of cat food.

I think it's too early to tell if I picked the worst time to retire ever or not.

Not to pick on you since several others have posted similar analysis, the fundamental assumption you are making is that market has pretty much bottomed and will soon bounce back

The good news about early retirement is you have a long enough time frame to wait for the market to bounce back.   If It doesn't those of us with savings will be far better off than working stiff living paycheck to paycheck, cause they'll be unemployed.

Another market saying is "Markets can stay irrational longer than you can stay solvent."  I think when discussing future  WR, it would be prudent to say something along the lines, if my portfolio drops another 10,20,50% then my WR will be X%.   We can then discuss will it be safe or not.
No. I think it could go down as much as 30% (or 50%- though unlikely). I planned for a 30% pull back. So it could drop further.
I don't know that it will bounce back soon, although historically it's two years from the bottom but we won't know that until we figure out where the bottom is.
Of course past results don't guarantee future results, but it's the best information we have.

Must_ache

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A new paper on the safe withdrawal rate:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets
33 Pages Posted: 28 Sep 2022

We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure rates under conventional withdrawal policies have important implications for individuals (e.g., savings rates, retirement timing, and retirement consumption), public policy (e.g., participation rates in means-tested programs), and society (e.g., elderly poverty rates).

dividendman

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A new paper on the safe withdrawal rate:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets
33 Pages Posted: 28 Sep 2022

We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure rates under conventional withdrawal policies have important implications for individuals (e.g., savings rates, retirement timing, and retirement consumption), public policy (e.g., participation rates in means-tested programs), and society (e.g., elderly poverty rates).

So, what this paper is saying is that a 65 year old couple who have an average life expectancy of 86 (i.e. 21 years), needs have 44 years worth of expenses saved... in order to have a 95% success rate (i.e. dying with money)?

Yeah... ok...


bryan995

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A new paper on the safe withdrawal rate:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets
33 Pages Posted: 28 Sep 2022

We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure rates under conventional withdrawal policies have important implications for individuals (e.g., savings rates, retirement timing, and retirement consumption), public policy (e.g., participation rates in means-tested programs), and society (e.g., elderly poverty rates).

So, what this paper is saying is that a 65 year old couple who have an average life expectancy of 86 (i.e. 21 years), needs have 44 years worth of expenses saved... in order to have a 95% success rate (i.e. dying with money)?

Yeah... ok...

Sounds about right to me.  Last I looked <3% SWR was the safe/sweet-spot for a US retiree.  Will need to read this paper.

Do you really want to be dealing with such a problem at the age of 85?  What's the problem with overshooting, enjoying stress/risk free retirement and leaving money to your heirs/charity? 
It is achievable for anyone + everyone.  You just need to balance your working years and expenses to arrive at a <3% SWR.

I am at a 3% SWR now, every year I continue to work my expenses can increase.  Right now I can afford to stop working and live in a LCOL 2/1 home for 1000 years.  No my ideal retirement - hence work shall continue.



2Birds1Stone

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This is pretty laughable.

I'm pretty conservative myself, October will be my 31st month with an actual WR <3%, not just in theory......and this is just nonsense.

Using return data for countries like Japan and Argentina to claim that it's wise for a 65 year old couple to ignore SS and use a 2.6% WR?

If you want to worship money to the point of excess, that's fine but admit that it's greed and not some scientific paper on WR failure rates.

For the rest of the sane people, go study ERN's SWR series and make your own mind up on whether you want to use this type of data to inform your decisions.


Arbitrage

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A new paper on the safe withdrawal rate:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets
33 Pages Posted: 28 Sep 2022

We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure rates under conventional withdrawal policies have important implications for individuals (e.g., savings rates, retirement timing, and retirement consumption), public policy (e.g., participation rates in means-tested programs), and society (e.g., elderly poverty rates).

Didn't read it, but those numbers don't even come close to passing the "smell" test.  Sounds like there are dubious assumptions somewhere. 

bryan995

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A new paper on the safe withdrawal rate:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets
33 Pages Posted: 28 Sep 2022

We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure rates under conventional withdrawal policies have important implications for individuals (e.g., savings rates, retirement timing, and retirement consumption), public policy (e.g., participation rates in means-tested programs), and society (e.g., elderly poverty rates).

So, what this paper is saying is that a 65 year old couple who have an average life expectancy of 86 (i.e. 21 years), needs have 44 years worth of expenses saved... in order to have a 95% success rate (i.e. dying with money)?

Yeah... ok...

Sounds about right to me.  Last I looked <3% SWR was the safe/sweet-spot for a US retiree.  Will need to read this paper.

Do you really want to be dealing with such a problem at the age of 85?  What's the problem with overshooting, enjoying stress/risk free retirement and leaving money to your heirs/charity?
It is achievable for anyone + everyone.  You just need to balance your working years and expenses to arrive at a <3% SWR.

I am at a 3% SWR now, every year I continue to work my expenses can increase.  Right now I can afford to stop working and live in a LCOL 2/1 home for 1000 years.  No my ideal retirement - hence work shall continue.
Umm...working thru some of your best years as a fit and healthy person? For what? Money you don't really need? Work related stress? A body that sits in a cube and stares at a screen all day? Time away from loved ones, friends and activities that you may enjoy? Watching yourself get older and more infirm as the years go by? If you're cool with that just to have a lot of extra money you don't need, then keep working. Why not work until 80? For many of us that's not a trade off we're willing to make.

You don't necessarily have to work longer, you can just reduce your expenses such that your SWR shifts lower (e.g. 4% -> 3%).  Then if the 3% is not enough for your intended lifestyle ... work longer.

Do you really believe that 3% vs 4% does not provide significant risk reduction of running out $ in your final years?  Think about the stress that would add.  Much worse than some added stress in your mid-30s/mid-40s working in a cubicle.

Kudos to those quitting at 4% or higher, balls of steel.
« Last Edit: October 04, 2022, 12:50:08 PM by bryan995 »

Metalcat

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You don't necessarily have to work longer, you can just reduce your expenses such that your SWR shifts lower (e.g. 4% -> 3%).  Then if the 3% is not enough for your intended lifestyle ... work longer.

Do you really believe that 3% vs 4% does not provide significant risk reduction of running out $ in your final years?  Think about the stress that would add.  Much worse than some added stress in your mid-30s/mid-40s working in a cubicle.

Kudos to those quitting at 4% or higher, balls of steel.

Most of them have other hedges built into their risk management plan.

As has been said many times and many ways, I've never seen someone here who retired at exactly 25X and withdrew exactly 4% plus estimated inflation, year over year, with no regard for the actual behaviour of the market.

Check out the simulators and put in 5-6% WR with a substantially variable spend rate.

We have people here who quite literally spend more than half of their retirement budget on international travel.

You have said in another thread that you don't mind continuing to work, which makes working a few more years a GREAT option for you.

But it's not the ideal option for everyone, nor is it necessarily risky for people who have different options for hedging risk.