Did the Great Resignation class of 21-22 just pick the worst time to retire?

[EscapeVelocity2020]

I think we're talking past each other Malcat.  I'm not saying that this forum has no use, it's bar none great when it comes to FI and ER discussions for example, I'm just finding one area where the forum isn't providing good answers.  Knowing where the limits are is useful.

[Metalcat]

I think we're talking past each other Malcat.  I'm not saying that this forum has no use, it's bar none great when it comes to FI and ER discussions for example, I'm just finding one area where the forum isn't providing good answers.  Knowing where the limits are is useful.

I must have misinterpreted.

[maizefolk]

Getting back to easier to answer questions:

So far December of 2021 doesn't look like the WORST month in history to have retired. It is certainly closer to the actual worst months to have retired in history than I would have guessed. But it'll be a few more years before we can say anything with confidence about the question in the thread's title.



Assumes, retiring with a 4% withdrawal rate, spending adjusting with inflation, and a 100% stock portfolio (because that's the easiest investment mix to calculate from the Shiller dataset).

[vand]

Getting back to easier to answer questions:

So far December of 2021 doesn't look like the WORST month in history to have retired. It is certainly closer to the actual worst months to have retired in history than I would have guessed. But it'll be a few more years before we can say anything with confidence about the question in the thread's title.

Very interesting chart. Is there a link?
2nd worst 8 month starting period on record is certainly a stretch you would rather sidestep if you could

My concern is that if you look at the SWR over time, although 1966 defines the historic datapoint from which we derive the 4% rule, the SWR was mired down below 5% for a good few years - markets were not good in those times and no one’s portfolio fared particularly well.


When you look at the stock market after the 1929 crash and how the Dow went from 450 down to 50 and wonder how as it turns out that wasn’t the worst period on the simulation - two things are not obvious from the raw chart:

- Deflation cushioned the fall in real terms
- Dividend yields were very strong, 4.5% 1929, 6.3% 1930, 9.7% 1931, 7.3% 1932

So between deflation and a dividend tailwind retirement portfolios survived better than the 68-74 period. Today’s economic conditions and dividend payouts much more resemble the stagflation era than the depression era.

[wageslave23]

Getting back to easier to answer questions:

So far December of 2021 doesn't look like the WORST month in history to have retired. It is certainly closer to the actual worst months to have retired in history than I would have guessed. But it'll be a few more years before we can say anything with confidence about the question in the thread's title.

Very interesting chart. Is there a link?
2nd worst 8 month starting period on record is certainly a stretch you would rather sidestep if you could

My concern is that if you look at the SWR over time, although 1966 defines the historic datapoint from which we derive the 4% rule, the SWR was mired down below 5% for a good few years - markets were not good in those times and no one’s portfolio fared particularly well.


When you look at the stock market after the 1929 crash and how the Dow went from 450 down to 50 and wonder how as it turns out that wasn’t the worst period on the simulation - two things are not obvious from the raw chart:

- Deflation cushioned the fall in real terms
- Dividend yields were very strong, 4.5% 1929, 6.3% 1930, 9.7% 1931, 7.3% 1932

So between deflation and a dividend tailwind retirement portfolios survived better than the 68-74 period. Today’s economic conditions and dividend payouts much more resemble the stagflation era than the depression era.

If you click on the chart, it'll bring you to the website.

Yeah back on track!  Let's keep this analysis going 👍

[vand]

Getting back to easier to answer questions:

So far December of 2021 doesn't look like the WORST month in history to have retired. It is certainly closer to the actual worst months to have retired in history than I would have guessed. But it'll be a few more years before we can say anything with confidence about the question in the thread's title.

Very interesting chart. Is there a link?
2nd worst 8 month starting period on record is certainly a stretch you would rather sidestep if you could

My concern is that if you look at the SWR over time, although 1966 defines the historic datapoint from which we derive the 4% rule, the SWR was mired down below 5% for a good few years - markets were not good in those times and no one’s portfolio fared particularly well.


When you look at the stock market after the 1929 crash and how the Dow went from 450 down to 50 and wonder how as it turns out that wasn’t the worst period on the simulation - two things are not obvious from the raw chart:

- Deflation cushioned the fall in real terms
- Dividend yields were very strong, 4.5% 1929, 6.3% 1930, 9.7% 1931, 7.3% 1932

So between deflation and a dividend tailwind retirement portfolios survived better than the 68-74 period. Today’s economic conditions and dividend payouts much more resemble the stagflation era than the depression era.

If you click on the chart, it'll bring you to the website.

Yeah back on track!  Let's keep this analysis going 👍

I meant was there an accompanying article with it :D
Well never mind..

We already have 13 months of data from Sept 2021 (which just happens to have been a particularly bad starting month the way things have gone) where the current stash size now stands at just a smidge over 17, so that dotted red line can be further extended to almost the end of the chart on its rough trajectory.

You have to be a bit care with these simulations - often changing the starting date by just a month or two can have a big impact the portfolio's survivability and just picking a starting year covers a multitude of sins. The Bravado portfolio has been depleted to a 5.95 stash multiple if you take Jan 2000 as your start point, however shift it to just a couple of months earlier back to Nov 1999 and your are currently sitting on an stash almost twice as large at 11.67 times

[maizefolk]

I realized the Shiller dataset I'm using currently stops in July. We have three more months of stock market return data and one more month of CPI data since the last update of the spreadsheet. I futzed around a little with the data, assumed the absolute value of dividends paid by the S&P remained constant in nominal terms (declined relative to inflation, increased when calculated as percent yield since prices have been dropping) and also assumed that inflation has been constant the last two months we don't have official numbers for yet. Makes it possible to extend the numbers out to October.

The current peak of the market was December of 2021 (I believe even in inflation adjusted terms) so I think it makes sense to be using this as the strongest test of the assertion "Did the Great Resignation class of 21-22 NOT pick the worst time to retire?" The vast majority (23/24 or ~96% assuming random retirement dates) of people who retired in '21 or '22 will have retired at much better times, but December of 2021 is as bad as it gets. But as a one-time bonus I'm including vand's proposed September 2021 retirement as an additional track. It looks a lot less scary than the December retirement although it is also true that the worst retirement intervals of the 1960s also didn't look so bad initially, it was the long and sustained slump that ultimately made those the years that defined the lower bound of safe withdrawal rates.

[mistymoney]

Getting back to easier to answer questions:

So far December of 2021 doesn't look like the WORST month in history to have retired. It is certainly closer to the actual worst months to have retired in history than I would have guessed. But it'll be a few more years before we can say anything with confidence about the question in the thread's title.

Very interesting chart. Is there a link?
2nd worst 8 month starting period on record is certainly a stretch you would rather sidestep if you could

My concern is that if you look at the SWR over time, although 1966 defines the historic datapoint from which we derive the 4% rule, the SWR was mired down below 5% for a good few years - markets were not good in those times and no one’s portfolio fared particularly well.


When you look at the stock market after the 1929 crash and how the Dow went from 450 down to 50 and wonder how as it turns out that wasn’t the worst period on the simulation - two things are not obvious from the raw chart:

- Deflation cushioned the fall in real terms
- Dividend yields were very strong, 4.5% 1929, 6.3% 1930, 9.7% 1931, 7.3% 1932

So between deflation and a dividend tailwind retirement portfolios survived better than the 68-74 period. Today’s economic conditions and dividend payouts much more resemble the stagflation era than the depression era.

I'm confused about the chart on SWR you provided. It seems to indicate that 1966 was the worst year, with the lowest sustainable WR - but that that rate was 4%. Based on that, I would assume that there are no fails at 4% - yet all the models show some percent of fails at 4%. So How?

[mistymoney]

I realized the Shiller dataset I'm using currently stops in July. We have three more months of stock market return data and one more month of CPI data since the last update of the spreadsheet. I futzed around a little with the data, assumed the absolute value of dividends paid by the S&P remained constant in nominal terms (declined relative to inflation, increased when calculated as percent yield since prices have been dropping) and also assumed that inflation has been constant the last two months we don't have official numbers for yet. Makes it possible to extend the numbers out to October.

The current peak of the market was December of 2021 (I believe even in inflation adjusted terms) so I think it makes sense to be using this as the strongest test of the assertion "Did the Great Resignation class of 21-22 NOT pick the worst time to retire?" The vast majority (23/24 or ~96% assuming random retirement dates) of people who retired in '21 or '22 will have retired at much better times, but December of 2021 is as bad as it gets. But as a one-time bonus I'm including vand's proposed September 2021 retirement as an additional track. It looks a lot less scary than the December retirement although it is also true that the worst retirement intervals of the 1960s also didn't look so bad initially, it was the long and sustained slump that ultimately made those the years that defined the lower bound of safe withdrawal rates.

Just a shout out to thank you for putting this together!

[mistymoney]

These last two paragraphs sum things up nicely.  I always smirk when I see people on this forum and ERN trying to get too specific with calculations based on historical returns which may or may not have much predictive value and future withdrawal predictions which are probably even harder to estimate. Just save up a crap ton of money and then be willing to be flexible going forward.

I agree with this... mostly.  The main tweak I'd make is to "save up a crop ton of money and establish your layers of flexibility well in advance", and then be willing to be flexible going foward

It's very difficult and/or absurdly costly to deal with threats after they have occurred. But you can set up "layers of safety' fairly easily and often with minimal expense if you choose to do it well in advance.

Is anyone who is retiring early not doing this? I find it hard to believe someone being prudent/skilled enough to have 25x their projected yearly spend at an early age is just going to do a 4%+inflation withdrawal blindly and YOLO it.

That being said, they probably could. It just seems the self-selected sample of people here just won't. It's in our nature to plan, analyze, be productive, etc. Even the thread about flexibility shows that.

It's a lot different than someone winning the lotto for 25x expenses.

This is all easy enough to say in light of the last few years as FIRE math has become ingrained in personal finance, but actually when you go back just a little further it was generally the case - in my home country at least - that "retirement" absolutely meant you could put your feet up and not worry about managing your pot and being assured a certain inflation adjust living standard for the rest of your days. How? Because retirement usually meant swapping your nestegg for an annuity that would be index linked.   That annuity rates have been pushed way down so that self-managed drawdown strategies effectively replaced them tells you everything you need to know about the tail end risk inherent in drawdown strategies over the last few years. 

Note that I am not advocating for annuities here - but they do present a good yardstick of what is a prudent withdrawal rate if you are self-managing.

I'll add in here that until relatively recently there really wasn't a lot of contract work, higher paid "consultants" that were just doing the work that a FT employee would do. There was not a lot of competition for employees - it was dealers choice - and the person who could carve out something not minimum wage as a PT endeavor after quitting a "good job" was rare.

There was no gig economy, and IT didn't exist. You weren't working unless you were on site in 99% of the time, and getting FT people was way too cheap and easy.

And without computers - higher skilled tasks were usually highly interpersonal. And the majority of office workers were typing and filing and filling in forms....in triplicate! and usually had to rip out the paper and start over at if make a mistake.

I have very vague (thankfully!) memories of forms with 3/4/5 copies that you put in a typewriter and all the sheets were different colors that went to different people. Like - one goes to the production floor for order fulfillment, one goes to accounting for billing, one goes to shipping, mayb an archive copy? so that all those efforts/planning can start at once. Anyhoo - so you are filling out this form and you make a mistake. So maybe you can toss and start over, but some places had permanent order numbers embosed on the forms, usually because of a history of shananigan where someone could put an order in for theft to the production floor, not send to others, and intercept the merch somehow.

So - embossed order numbers that are a huge stink to throw away. So you type a mistake, and you take a 5 sheet form out of your typewriter and then you have 5 different colors of whiteout! So you have to use that on each sheet, let each sheet dry completely, then do the next color.....crazy times....finally after every thing is dry you try again, but since those areas already used up the intervening carbon sheet, you are ripping up little pieces of carbon paper in areas not typed on and trying to float them into position so that when you put that form back into the typewriter that the new info would ttransfer.....

Ok all set.....don't make another typo....

And these kinds of jobs were considered a pretty decent career for a smart and creative woman.....and no, no man ever did this kind of work. Not that I ever saw anyway!

But something part time, and on your own terms? not very likely. And there were people (women) waiting in the wings to snap up this great job.

[maizefolk]

I'm confused about the chart on SWR you provided. It seems to indicate that 1966 was the worst year, with the lowest sustainable WR - but that that rate was 4%. Based on that, I would assume that there are no fails at 4% - yet all the models show some percent of fails at 4%. So How?

The chart Vand is showing comes from Wade Pfau's summary of a 1994 paper by Willian Bengen (a precursor to the trinity study that first popularized the concept of the 4% rule in 1998). Pfau uses a proprietary set of historical return data (the SBBI dataset) which tracks returns of different financial assets since 1926.

Almost everyone in the FIRE community and the public calculators built to help people test their own scenarios use the Shiller dataset. Unlike SBBI, Shiller is 1) publicly available 2) provides monthly resolution instead of yearly 3) goes back to 1871 instead of 1926.

The bond returns recorded in the SBBI dataset appear to be substantially more optimistic than the bond data in the Shiller dataset. That's why vand's chart shows the 4% rule never failing with a 50/50 stock/bond mix, but most people on the forum talk about it almost never failing and doing best with a substantially higher allocation to stocks and less than 50% of assets in bonds/gold/cash.

Just a shout out to thank you for putting this together!

Feels good to hear. Thank you!

[vand]

Yes, thanks maizefolk for the explanation. I just grabbed the chart from the first page on this thread.

In a way though it just highlights the perils of what you think you know may be one particular version of events that happens to have the survivorship bias in its favour. For example, 60/40 is often used discussed in the common literature but as ERN points out they sneakily like to change the bond component between long term, US 10y and total bond market depending on whose research you are looking at.

[mistymoney]

I'm confused about the chart on SWR you provided. It seems to indicate that 1966 was the worst year, with the lowest sustainable WR - but that that rate was 4%. Based on that, I would assume that there are no fails at 4% - yet all the models show some percent of fails at 4%. So How?

The chart Vand is showing comes from Wade Pfau's summary of a 1994 paper by Willian Bengen (a precursor to the trinity study that first popularized the concept of the 4% rule in 1998). Pfau uses a proprietary set of historical return data (the SBBI dataset) which tracks returns of different financial assets since 1926.

Almost everyone in the FIRE community and the public calculators built to help people test their own scenarios use the Shiller dataset. Unlike SBBI, Shiller is 1) publicly available 2) provides monthly resolution instead of yearly 3) goes back to 1871 instead of 1926.

The bond returns recorded in the SBBI dataset appear to be substantially more optimistic than the bond data in the Shiller dataset. That's why vand's chart shows the 4% rule never failing with a 50/50 stock/bond mix, but most people on the forum talk about it almost never failing and doing best with a substantially higher allocation to stocks and less than 50% of assets in bonds/gold/cash.

Ah this makes perfect sense, thanks! Thought I was missing something really key about all these - but no, just a different dataset :) Puts my mind at ease, that I am really starting to understand it all.

[Nords]

... or a badly-made decision (made while my thinking was still clouded by the heavy "fog of work," as Nords put it.)

Thanks for mentioning it, @eyesonthehorizon.  That post is now over 13 years old.  I'm astounded by its long-tail effects.

Also just throw this out there, is there any way you could take a leave of absence of 3 to 12 months?  I did it and it greatly reduce my fear of making a mistake.

Long time, @clifp! 

I'm coaching another military veteran through a six-month leave of absence (unpaid) from their job, and after only a month they're already experiencing two effects:
1.  Their boss is tactfully yet persistently inquiring whether they'd like to come back to work now, and
2.  They're feeling guilty about how much they're enjoying their time off.  Even without the boss's e-mails & phone calls.  They were already more interested in quitting than in unpaid leave, and this time off is making them even more confident in their FI lifestyle.

It makes me think of a question.  When you took your sabbatical and returned to work, did you immediately quit to go back to your FI retiree life?  Or did you stay for a certain amount of time to help the team, or finish a project, or collect just one more bonus?

Did you and your fellow sabbaticants resign frequently enough that Intel eventually killed the program?  Or did enough people return to work for many more years that the execs felt it was still worth doing?

[mistymoney]

... or a badly-made decision (made while my thinking was still clouded by the heavy "fog of work," as Nords put it.)

Thanks for mentioning it, @eyesonthehorizon.  That post is now over 13 years old.  I'm astounded by its long-tail effects.

Also just throw this out there, is there any way you could take a leave of absence of 3 to 12 months?  I did it and it greatly reduce my fear of making a mistake.

Long time, @clifp! 

I'm coaching another military veteran through a six-month leave of absence (unpaid) from their job, and after only a month they're already experiencing two effects:
1.  Their boss is tactfully yet persistently inquiring whether they'd like to come back to work now, and
2.  They're feeling guilty about how much they're enjoying their time off.  Even without the boss's e-mails & phone calls.  They were already more interested in quitting than in unpaid leave, and this time off is making them even more confident in their FI lifestyle.

It makes me think of a question.  When you took your sabbatical and returned to work, did you immediately quit to go back to your FI retiree life?  Or did you stay for a certain amount of time to help the team, or finish a project, or collect just one more bonus?

Did you and your fellow sabbaticants resign frequently enough that Intel eventually killed the program?  Or did enough people return to work for many more years that the execs felt it was still worth doing?

hey nords, great to see a forum legend checking in. A lot of your posts are referenced to frequently, and as someone who never knew you back in the day, I can attest your influence is still alive.

And although I am on the side of - maybe lean towards a little more security in this environment - the siren song of FI is pulling me very strongly, and your example - and photo op! - is a lot of food for thought.

[clifp]

... or a badly-made decision (made while my thinking was still clouded by the heavy "fog of work," as Nords put it.)

Thanks for mentioning it, @eyesonthehorizon.  That post is now over 13 years old.  I'm astounded by its long-tail effects.

Also just throw this out there, is there any way you could take a leave of absence of 3 to 12 months?  I did it and it greatly reduce my fear of making a mistake.

Long time, @clifp! 



I'm coaching another military veteran through a six-month leave of absence (unpaid) from their job, and after only a month they're already experiencing two effects:
1.  Their boss is tactfully yet persistently inquiring whether they'd like to come back to work now, and
2.  They're feeling guilty about how much they're enjoying their time off.  Even without the boss's e-mails & phone calls.  They were already more interested in quitting than in unpaid leave, and this time off is making them even more confident in their FI lifestyle.

It makes me think of a question.  When you took your sabbatical and returned to work, did you immediately quit to go back to your FI retiree life?  Or did you stay for a certain amount of time to help the team, or finish a project, or collect just one more bonus?

Did you and your fellow sabbaticants resign frequently enough that Intel eventually killed the program?  Or did enough people return to work for many more years that the execs felt it was still worth doing?

I see your submarine training is still there.  Silently observing the world, hidden from view, only occasionally rising to the surface, to provide a good question, and an important point or a well aimed torpedo as needed!

My first sabbatical (8 weeks of vacation+ regular vacation after 7 seven years), worked as intended. I came back refreshed, and re-energized and grateful to the company for providing such great benefit. Intel still has the program, even slightly enhanced.  Intel new CEO, the best CEO since Andy Grove, is old time Intel guy and has brought back many traditions, so I don't see it disappearing.

The second sabbatical, was great for me, less so for the company. It caused me to re-evaluate my life. Especially after meeting a number of Brits and Aussie, who were younger and poorer but much better traveled. I realized that working more was actually optional and question did I really want to return to the Silicon Valley lifestyle?

I got back to Intel, my former boss had different idea of what my new role should be. I looked for other jobs within the company.  Eventually, a friend let me work for her, in position that would be called quiet quitting today. I "worked" for her about four months until my next tranche of stock options vested. I then asked for an got a year leave of absence.  No pay, or benefits, and stock options stopped vesting. I sold my house in Silicon Valley (it took a while), put most stuff in storage. I packed couple suitcases, a cat, and my computer, and tried my experiment of not working in Hawaii.   As the leave  was ending, April 2000, I had serious discussion with my girlfriend should I go back. I estimated because of stock options, working another 3 years would increase my stache by $1 million, roughly 30% increase, but a big decrease to my happiness. So I quit instead. As turns out the dot.com bust started just months latter. None of my stock options would have been worth a dime. I would have spent the next three year, either being laid off or laying off staff. 

When I think about it, my severance would have been pretty big, and my attitude pretty shitty.  When you are FI, you tolerance of bad working conditions is quite low.  So maybe even my second sabbatical was good for the company.

[mistymoney]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

[Villanelle]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job. 

[2Birds1Stone]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

Happily. I would take 30% cut for 10 weeks.

[Metalcat]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

I'm not an American, but long holidays are not standard in Canada, so we're not all that different on this front.

My industry is entirely self employed, so we don't get paid holidays, any time we take off costs us 4 figures a day AND it's very hard to take time off because of the nature of patient care.

However, even then, every colleague I know who can afford to takes at least 4 weeks off every year, many of them even longer. I know surgeons giving up over 100K each year to take time off.

I also know civil servants doing what's called leave with income averaging. So they take unpaid time off and then have their salary averaged throughout the year. We have one member here who does (did?) that.

[clifp]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

On this forum, I'm sure the answer is yes, but judging from how many Americans don't even use their vacation. I suspect not.

It ain't just Americans.  Back in the late 1980s when Japanese competitiveness was a big concern for the US, the Japanese government was also concerned about the health effects of chronic hard work and lack of vacations.  So the government commissioned a study and appointed a vacation committee to prepare of a report and make suggestions.  A year later the detailed report was released and yes there were numerous bad health effects and many suggestions were recommended to encourage the Japanese to take their vacation.. 
A bit later a second report was issued that showed that the vacation committee worked an average of 60+ hours and 6 days a week to prepare the report. :-)

[Gremlin]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

At a previous employer we could self-select this, up to a maximum of 8 weeks annual leave.  I consistently took 6 to 7 weeks.  No brainer of a decision for me.  Out of a workforce of just under a thousand, I once got told that there were five of us using this benefit.

Now I work for myself on my own terms.  Which amounts to roughly three to four days a week for 38 to 42 weeks a year.

[Metalcat]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

On this forum, I'm sure the answer is yes, but judging from how many Americans don't even use their vacation. I suspect not.

It ain't just Americans.  Back in the late 1980s when Japanese competitiveness was a big concern for the US, the Japanese government was also concerned about the health effects of chronic hard work and lack of vacations.  So the government commissioned a study and appointed a vacation committee to prepare of a report and make suggestions.  A year later the detailed report was released and yes there were numerous bad health effects and many suggestions were recommended to encourage the Japanese to take their vacation.. 
A bit later a second report was issued that showed that the vacation committee worked an average of 60+ hours and 6 days a week to prepare the report. :-)

Yeah, there's a big difference between being willing to take a pay cut to take more time off and feeling allowed to take time off.

That's why US companies that offer unlimited vacation tend to see a drop in vacation time.

[Wolfpack Mustachian]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

On this forum, I'm sure the answer is yes, but judging from how many Americans don't even use their vacation. I suspect not.

It ain't just Americans.  Back in the late 1980s when Japanese competitiveness was a big concern for the US, the Japanese government was also concerned about the health effects of chronic hard work and lack of vacations.  So the government commissioned a study and appointed a vacation committee to prepare of a report and make suggestions.  A year later the detailed report was released and yes there were numerous bad health effects and many suggestions were recommended to encourage the Japanese to take their vacation.. 
A bit later a second report was issued that showed that the vacation committee worked an average of 60+ hours and 6 days a week to prepare the report. :-)

Yeah, there's a big difference between being willing to take a pay cut to take more time off and feeling allowed to take time off.

That's why US companies that offer unlimited vacation tend to see a drop in vacation time.

The concept of unlimited vacation makes no sense in any job I've had. The way it's always been described is to take time off that doesn't interfere with your duties. I've never been in a job where I didn't have a long list of things to do that needed to be done. In bad jobs, they yelled at me for not getting it all done. In good ones, they had reasonable expectations, but there was still a long list and plenty of things (duties?) to be done at all times. I couldn't imagine using an indeterminate amount of vacation and feeling good about it in any job, because I never got "the job done"....but maybe I'm looking at it wrong.

[Metalcat]

The concept of unlimited vacation makes no sense in any job I've had. The way it's always been described is to take time off that doesn't interfere with your duties. I've never been in a job where I didn't have a long list of things to do that needed to be done. In bad jobs, they yelled at me for not getting it all done. In good ones, they had reasonable expectations, but there was still a long list and plenty of things (duties?) to be done at all times. I couldn't imagine using an indeterminate amount of vacation and feeling good about it in any job, because I never got "the job done"....but maybe I'm looking at it wrong.

I don't think it's you, I think it's more of a top down management structure kind of thing. Scandinavian companies expect their staff to take full holidays, so they plan for it in management structure.

US companies (or any companies where people don't take a lot of vacation) seem to depend on people feeling like vacation is a privilege, not a right, so handling vacations isn't built into the management plan. Vacations just seem to be this horrible inconvenience that needs to be dealt with, not a normal part of day to day function of a business.

I went from a clinic that depended on me never taking time off, when I did take even a week, the owner would send me desperate emails about how we were in the red as a result. I never took vacation unless I had to.

I switched to a clinic where the owner was taking on associated specifically to be able to take more time off, and she built mutual support for time off into the structure of the practice. So it was easy for all of us to take time (unpaid, as I said, we were all self employed), and all 4 of us took ample time off, at least 6 weeks each per year.

So it comes down to time off being built into the function of the system.

[Nords]

I'm coaching another military veteran through a six-month leave of absence (unpaid) from their job, and after only a month they're already experiencing two effects:
1.  Their boss is tactfully yet persistently inquiring whether they'd like to come back to work now, and
2.  They're feeling guilty about how much they're enjoying their time off.  Even without the boss's e-mails & phone calls.  They were already more interested in quitting than in unpaid leave, and this time off is making them even more confident in their FI lifestyle.

Not @clifp but I took what ended up being a 2 year work break and my old government agency asked me to come back. I did go back after those 2 years off to keep my security clearance active as well as my various job-related licenses and certificates, as well as for personal reasons. It was suppose to be a part time/on call gig but kept morphing into full time. I REALLY wanted out to go back to my FIRE life badly but made a commitment that I felt obligated to ride out - as well as was going thru a divorce after seperating. Eventually I took what I thought was going to be another long work break but never went back - to any job.

So my experience with my first work break/FIREbattical was that I didn't spend anywhere near what I planned to spend (which was pretty eye opening) and that even though my former boss wanted me back, and if I wanted to keep my clearances and licenses I would have to go back within 2 years, and I was lean FIRE (divorce does that too you ;-)), I wish I had not gone back to work.  I really learned I loved the FIRE life and learned not worry so much about finances. I got to normal/slightly chubby FIRE by selling my house and moving to a better location and I still, a couple of decades after my first work break, have no regrets about FIREing - and no need to go back to work financially or emotionally.

Coincidentally this friend is in the civil service too. 

He’s aware that he is not identified by his job, and he’s built a successful side hustle during his full-time employment.  We’re talking through any possible feelings of survivor guilt & Stockholm Syndrome. 

We met at a CampFI, so he already understands the concepts.  I think he’s doing fine, and he seems to enjoy checking in every 3-4 weeks.

hey nords, great to see a forum legend checking in. A lot of your posts are referenced to frequently, and as someone who never knew you back in the day, I can attest your influence is still alive.

And although I am on the side of - maybe lean towards a little more security in this environment - the siren song of FI is pulling me very strongly, and your example - and photo op! - is a lot of food for thought.

Thank you!  I log in every weekend to search for my name and the military keyword, so if someone tags me then I usually catch it within a week. 

I won’t go all 4% Safe Withdrawal Rate on your feeling for security, but if it’s any consolation you’re dealing with a very common emotion.  Several members of the Millionaire Money Mentors forum are pushing the high seven figures of net worth and they’re still not confident they can afford health insurance or have enough in their travel & entertainment budgets.  These people can already do math... yet they’re still dealing with behavioral financial psychology.

As the leave was ending, April 2000, I had serious discussion with my girlfriend should I go back. I estimated because of stock options, working another 3 years would increase my stache by $1 million, roughly 30% increase, but a big decrease to my happiness. So I quit instead. As turns out the dot.com bust started just months latter. None of my stock options would have been worth a dime. I would have spent the next three year, either being laid off or laying off staff. 

When I think about it, my severance would have been pretty big, and my attitude pretty shitty.  When you are FI, you tolerance of bad working conditions is quite low.  So maybe even my second sabbatical was good for the company.

Holy cow.  I never appreciated your timing!

I’m glad that Intel has rebuilt the Grove culture.  I heard a lot of people were leaving after their sabbaticals, while the ones who were staying were either tied to their options (and were miserable) or were never going to quit working in the first place.

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

As you know, during relatively peaceful times the U.S. military allows servicemembers to carry over their leave of 30 days/year until their balance exceeds 60 days. 

For those who don’t know, at the end of the fiscal year it’s cut back to 60 days and resumes rising at 30 days/year.  You don’t get paid for unused leave, either, except under very specific re-enlistment or separation circumstances.  The excess leave balance is just whacked off of the statement.

In most of my commands, if you took more than a (grudging) two weeks of leave per year then you were a wimp.  (Well, that’s the family-friendly term.)  Even then you’d get phone calls for “just one question” or “just to touch base on this project.”

In the back half of my career, I had an executive officer who bucked the trend.  They said that if you didn’t take your 30 days of leave every year while you were on shore duty, then you sucked at time & career management and would be graded accordingly. 

That message got through loud and clear to me, and I did my best to push the XO’s policy down the ranks.  I think the culture shift made a huge morale difference. 

[nereo]

The concept of unlimited vacation makes no sense in any job I've had. The way it's always been described is to take time off that doesn't interfere with your duties. I've never been in a job where I didn't have a long list of things to do that needed to be done. In bad jobs, they yelled at me for not getting it all done. In good ones, they had reasonable expectations, but there was still a long list and plenty of things (duties?) to be done at all times. I couldn't imagine using an indeterminate amount of vacation and feeling good about it in any job, because I never got "the job done"....but maybe I'm looking at it wrong.

I’ve felt that way too about every job I’ve held, but now as I move into “senior management” I’ve come to believe this is a fault with how the company is set up more than anything. With infrequent exceptions, if your workplace cannot function with an employee being gone for a few weeks, a couple times each year it’s not a particularly resilient workplace. If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. It’s also particularly bad for the health and long term longevity of the employees if they must plan months in advance for the five days they are permitted to be away.

[Metalcat]

The concept of unlimited vacation makes no sense in any job I've had. The way it's always been described is to take time off that doesn't interfere with your duties. I've never been in a job where I didn't have a long list of things to do that needed to be done. In bad jobs, they yelled at me for not getting it all done. In good ones, they had reasonable expectations, but there was still a long list and plenty of things (duties?) to be done at all times. I couldn't imagine using an indeterminate amount of vacation and feeling good about it in any job, because I never got "the job done"....but maybe I'm looking at it wrong.

I’ve felt that way too about every job I’ve held, but now as I move into “senior management” I’ve come to believe this is a fault with how the company is set up more than anything. With infrequent exceptions, if your workplace cannot function with an employee being gone for a few weeks, a couple times each year it’s not a particularly resilient workplace. If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. It’s also particularly bad for the health and long term longevity of the employees if they must plan months in advance for the five days they are permitted to be away.

Exactly. Companies in countries with robust vacation culture manage just fine because vacation isn't treated like an inconvenience.

It's the same way that here in Canada, we just expect women to disappear for 12-18 months as a normal course of their employment. We just manage it. I ran several all-female small businesses and it was often a great opportunity for growth. 

Point being, if you treat staff absence as normal, you can build systems that can manage it or even turn those absences into advantages. At my vacation-friendly clinic we treated vacations as opportunities to cross train staff. At my vacation-angry clinic, none of the staff were cross trained and any one of them being even sick for a single day was chaos.

Businesses that depend on staff *not* looking out for their own well being are, as you said, vulnerable business models.

[RWTL]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

[Metalcat]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

In my personal experience it's been less that only one person can do a job, and more that everyone is pushed to their limits of production that losing even a single cog critically over burdens the system every time someone is missing. So even when an easily replaceable person is missing, the whole system suffers.

I see this a lot in businesses where the executive management believes that all of their staff could be wildly more productive if they were just more motivated.

It usually means key "hard workers" always end up picking up the slack and then burning out, acting like poison apples on their way out, and taking a bunch of corporate memory with them.

Yeah, shitty leadership and terrible management design.

[tooqk4u22]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

If only one person can do my job then I am immensely valuable.....but then stressed that I can't take vacation without being bothered.

[tooqk4u22]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

In my personal experience it's been less that only one person can do a job, and more that everyone is pushed to their limits of production that losing even a single cog critically over burdens the system every time someone is missing. So even when an easily replaceable person is missing, the whole system suffers.

I see this a lot in businesses where the executive management believes that all of their staff could be wildly more productive if they were just more motivated.

It usually means key "hard workers" always end up picking up the slack and then burning out, acting like poison apples on their way out, and taking a bunch of corporate memory with them.

Yeah, shitty leadership and terrible management design.

The workhorse always gets more work, and typically the workhorse is bored without it bc the workhorse can usually get things done quicker and more efficiently.   The workhorse is also typically the one to get promoted more and make more money.....and eventually experience burnout. 

It all goes hand in hand.   

[Metalcat]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

In my personal experience it's been less that only one person can do a job, and more that everyone is pushed to their limits of production that losing even a single cog critically over burdens the system every time someone is missing. So even when an easily replaceable person is missing, the whole system suffers.

I see this a lot in businesses where the executive management believes that all of their staff could be wildly more productive if they were just more motivated.

It usually means key "hard workers" always end up picking up the slack and then burning out, acting like poison apples on their way out, and taking a bunch of corporate memory with them.

Yeah, shitty leadership and terrible management design.

The workhorse always gets more work, and typically the workhorse is bored without it bc the workhorse can usually get things done quicker and more efficiently.   The workhorse is also typically the one to get promoted more and make more money.....and eventually experience burnout. 

It all goes hand in hand.

That's a different breed from what I'm talking about. My personal anecdotes involve seeing a lot of workhorses who don't take on the kind of extra work that gets them promoted, they take on the kind of extra work that keeps them where they are.

The folks who get promoted are often the ones strategically taking on more senior tasks whenever possible, always looking for more challenges and opportunities to shine. The workhorses I'm talking about are the ones who step up and carry the load for the folks adjacent and below them. The kind of work that makes them too valuable *in that role* but not recognized for their skills and talents.These are hard workers, but not folks who have learned the skill of how to get recognized for their hard work. 

[StarBright]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

^^^ Yes! Usable vacation time (meaning I'm not "on call" on vacation) was the thing I asked of my boss last year. He gave me a bonus and kept contacting me on "vacation".

Because my job is pretty niche and location dependent this is what has had me focusing on FIRE for the last 5 years. If I actually had down time I don't know that I would feel compelled to escape.

[SpareChange]

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

That wouldn't move my needle. I'd take the money. I suspect I'd be in the minority though.

[mistymoney]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

In my personal experience it's been less that only one person can do a job, and more that everyone is pushed to their limits of production that losing even a single cog critically over burdens the system every time someone is missing. So even when an easily replaceable person is missing, the whole system suffers.

I see this a lot in businesses where the executive management believes that all of their staff could be wildly more productive if they were just more motivated.

It usually means key "hard workers" always end up picking up the slack and then burning out, acting like poison apples on their way out, and taking a bunch of corporate memory with them.

Yeah, shitty leadership and terrible management design.

The workhorse always gets more work, and typically the workhorse is bored without it bc the workhorse can usually get things done quicker and more efficiently.   The workhorse is also typically the one to get promoted more and make more money.....and eventually experience burnout. 

It all goes hand in hand.

unless of course the workhorse is taken for granted and no can be bothered to see the value in everything they are doing. Sometimes, they only get it when the workhorse leaves.

then there are those super crappy places where mgmt see the value of workhorse, and "can't afford" to lose them in their current role. This may be less an issue currently as the work force is changing jobs like musical underwear.

[maizefolk]

...then there are those super crappy places where mgmt see the value of workhorse, and "can't afford" to lose them in their current role. This may be less an issue currently as the work force is changing jobs like musical underwear.

Yup. If there is a person who "we couldn't replace" it means:

1) That person is being dramatically under compensated for the set of skills and effort they bring to their job and/or
2) If we genuinely cannot afford to pay that role enough to get a qualified person to refill it if the current employee left, our business model isn't actually viable in the long term, which is a scary problem we should be working on now, not waiting until we're forced to confront it by a key irreplaceable employee leaving.

[AlanStache]

I get 5 weeks vacation per year and can carry over 200hr per year.  Typically I will take a few days here and there and a few half days for dr apts etc then get paid out for 1-2 unused weeks at the end of the year, the pay out rate is 100% so is a nice little bump in January. When I have traveled more for work I would take a few more days here and there either at the work destination or book a layover somewhere I wanted to go on the way to or from the job site.  I have never really learned to take vacations and go somewhere, never really learned that type of plaining.  Or there is a level of frugal/cheapness of why should I pay thousands of dollars to sit on my ass somewhere else when I can do that at home, or do what I want to do at home?  Probably does not help that from work travel I have seen that most places are pretty much the same at the tourist level.  I guess it is nice having the flexibility of more vacation time that I can convert to money if I dont want the time. 

workhorse / single point of failure: We have a good number of people like that, we are a small engineering company with a lot of different specialties and have not made the effort to cross train people.  There is talk of fixing this but not sure I can see any actual actions from the talk. 

[Villanelle]

@clifp

I likely wouldn't be that keen on fire if we in the US routinely had 6 weeks annual vacation like a lot of other countries have, and were able to take of 4 or 5 weeks at a go yearly, as I am very fond of my profession.

The entire country would be healthier mentally and physically. Particularly the children.

But better we work ourselves into early graves to save the soc sec system?

I wonder if the average American would take a 1/12 pay cut in order to have 6 weeks of truly usable vacation time. (Not a rhetorical question.  I genuinely wonder.)  I certainly would have when I had professional level job.

On this forum, I'm sure the answer is yes, but judging from how many Americans don't even use their vacation. I suspect not.

It ain't just Americans.  Back in the late 1980s when Japanese competitiveness was a big concern for the US, the Japanese government was also concerned about the health effects of chronic hard work and lack of vacations.  So the government commissioned a study and appointed a vacation committee to prepare of a report and make suggestions.  A year later the detailed report was released and yes there were numerous bad health effects and many suggestions were recommended to encourage the Japanese to take their vacation.. 
A bit later a second report was issued that showed that the vacation committee worked an average of 60+ hours and 6 days a week to prepare the report. :-)

Yeah, there's a big difference between being willing to take a pay cut to take more time off and feeling allowed to take time off.

That's why US companies that offer unlimited vacation tend to see a drop in vacation time.

Right.  They aren't even really the same question. That's why I specified "truly usable" vacation time in the question.  My spouse (military) technically gets 30 days of leave per year.  (It's less than it sounds because he has to take off weekends and holidays if we travel. Depending on how it is taken, it's probably about +/- 3 weeks).  But actually being able to take it is an entirely different matter.  And then not getting critical phone calls, working on paperwork, etc., is yet another.  If he went from 30 days of leave accrued per year to 100, it would make zero difference because he couldn't use it.  (Note that he is not paid out for it, except when he quits, and even then I believe there is a limit.  He is also not allowed to carry over more than 60 days per fiscal year.) 


The main reason I asked was that it seems like if businesses offered 10% more vacation time (again, that people could actually reliably use with sufficient notice) and then hired 10% more employees, roughly the same amount of work would get done for roughly the same cost.  (Yes, I know there is overheard with having an additional employee.  So maybe they'd have to pay 12% less for people to work 10% less.  But I bet plenty of people would still take them up on that.  I'm sure many wouldn't, or wouldn't feel able to because of their debt and other obligations.  Heck, some people here might not because they'd prefer to quit completely sooner, so they'd grind it out.    And yes, it wouldn't work in all positions because one new employee likely can't do 10% of 10 other people's varied jobs.  But it seems like it could work at many companies for many employees/jobs.

[Metalcat]

Right.  They aren't even really the same question. That's why I specified "truly usable" vacation time in the question.  My spouse (military) technically gets 30 days of leave per year.  (It's less than it sounds because he has to take off weekends and holidays if we travel. Depending on how it is taken, it's probably about +/- 3 weeks).  But actually being able to take it is an entirely different matter.  And then not getting critical phone calls, working on paperwork, etc., is yet another.  If he went from 30 days of leave accrued per year to 100, it would make zero difference because he couldn't use it.  (Note that he is not paid out for it, except when he quits, and even then I believe there is a limit.  He is also not allowed to carry over more than 60 days per fiscal year.) 


The main reason I asked was that it seems like if businesses offered 10% more vacation time (again, that people could actually reliably use with sufficient notice) and then hired 10% more employees, roughly the same amount of work would get done for roughly the same cost.  (Yes, I know there is overheard with having an additional employee.  So maybe they'd have to pay 12% less for people to work 10% less.  But I bet plenty of people would still take them up on that.  I'm sure many wouldn't, or wouldn't feel able to because of their debt and other obligations.  Heck, some people here might not because they'd prefer to quit completely sooner, so they'd grind it out.    And yes, it wouldn't work in all positions because one new employee likely can't do 10% of 10 other people's varied jobs.  But it seems like it could work at many companies for many employees/jobs.

Well, the best comparison I can make is the one I made previously about parental leave. Countries that have robust parental leave policies tend to have a public that pretty reliably takes parental leave, even though it usual results in a substantial pay cut for 12-18 months. Recent research even found that when paternity leave is made to be "take it or lose it," men also tend to take that leave, even in cultures where it's never been the norm for men to take leave.

So if companies suddenly started organizing themselves to not be punitive to vacation-takers, people would likely opt for taking more vacation.

[nereo]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

We have an expression here - "the work can always get done". 
The meaning behind it is that regardless of who calls out or quits - we can still shift around to get the necessary work completed. It may not be optimal or even pretty, but "the work can always get done".

[RWTL]

...If “only one person can really do my job” thats a huge vulnerability and a big flashing red light. I

If only one person can really do a job, I have failed as a leader in my place of work.

If only one person can do my job then I am immensely valuable.....but then stressed that I can't take vacation without being bothered.

Yep...exactly.  That's why leadership has failed.

1. Too much reliance on one person setting the company up for risk.
2. Burns the individuals out by not having backup in place for vacations, or causes people to work on vacation - another sin I tell all my direct reports not to do.
3. For the post that said "The work always gets done."  True, but it is usually the critical tasks IMHO not all the work. 

[vand]

Everyone hopefully knows that the years in and around the late 1960s were not a great time to retire - the era of stagflation was very difficult for retirement portfolios.

However, we may not be aware that the 1906-07 period was probably just as bad.

Using cfiresim 75/25 stock/bond @ 4% for 40yrs, the ~10% of failures as well as all the "skin of your teeth" outcomes all cluster either around the beginning of stagflation era, or in 1906-07.

Here are the 20 worst outcomes:

ending outcome	starting year	After no. years
$0	1966	23
$0	1965	25
$0	1969	25
$0	1968	26
$0	1967	29
$0	1964	30
$0	1973	31
$0	1906	32
$0	1962	34
$0	1972	38
$0	1907	39
$3,993	1967	28
$6,049	1968	25
$12,219	1973	30
$13,681	1906	31
$20,816	1969	24
$22,776	1907	38
$29,339	1972	37
$30,724	1966	22

I've circled these two periods on the chart here.  Just eyeballing it (sorry, it can be quite hard to distinguish amongst all the other outcomes), you can see almost from the outset that these portfolios are going to struggle, as they start to bleed losses almost from the off, and never manage to get their total value much above their starting principal.

If you believe that markets tend to be cyclical then its worth noting that we have a very similar number of years between 1907 to 1966 to 2021

[vand]

...
But it will suck between now and then.

aka be a good time to buy the market if you can.

No doubt.    SP500 at 3000 would be about 38% down from peak and for someone who fired at peak with 4% wr would be 6.4%/15x at that level and back up to 3500 would be 5.6%/18x....neither are good.

It's potentially even worst when you factor in inflation- as well as the 38% fall in the market, you would have had to sell some of your portfolio along the way in order to fund your lifestyle, and with inflation so high the real declines are going to be considerably worse.

Just running the numbers, if you have an orderly 38% decline over 2 years (-21%pa), 6% inflation and an initial 4% starting WR, after 24 months your remaining portfolio will be almost cut in half in real terms and you will be sitting on roughly a stack of 12.75 current expenditure.



In the performance measurement world we usually talk in terms of time weighted returns (ie irrespective of cashflows) because that is the fairest basis for professional money managers to measure themselves against each other and as well as to their benchmarks.

However, in the personal finance world your actual money weighted returns are also incredibly important - ie, the actual amount of money you have from one year to the next, taking on board all net cashflows. If you are pulling money out while the market is doing a swandive then you are exacerbating your own money weighted returns, not only is the market dropping, buy you are selling off your portfolio too. That may be a handicap that is too much for it to recover from even if the market turns around. 

[mistymoney]

If you believe that markets tend to be cyclical then its worth noting that we have a very similar number of years between 1907 to 1966 to 2021

Spoooky!  But I can't even begin to imagine what would be cyclical outside of just a rough number of years.

So we have high inflation and no stock market gains now which mirrors the stagflation years - but what was going on in 1907? 

[RWTL]

If you believe that markets tend to be cyclical then its worth noting that we have a very similar number of years between 1907 to 1966 to 2021

Spoooky!  But I can't even begin to imagine what would be cyclical outside of just a rough number of years.

So we have high inflation and no stock market gains now which mirrors the stagflation years - but what was going on in 1907?

Sounds like chaos....and establishment of the Fed

https://www.federalreservehistory.org/essays/panic-of-1907

[mistymoney]

If you believe that markets tend to be cyclical then its worth noting that we have a very similar number of years between 1907 to 1966 to 2021

Spoooky!  But I can't even begin to imagine what would be cyclical outside of just a rough number of years.

So we have high inflation and no stock market gains now which mirrors the stagflation years - but what was going on in 1907?

Sounds like chaos....and establishment of the Fed

https://www.federalreservehistory.org/essays/panic-of-1907

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

[mistymoney]

If you believe that markets tend to be cyclical then its worth noting that we have a very similar number of years between 1907 to 1966 to 2021

Spoooky!  But I can't even begin to imagine what would be cyclical outside of just a rough number of years.

So we have high inflation and no stock market gains now which mirrors the stagflation years - but what was going on in 1907?

Sounds like chaos....and establishment of the Fed

https://www.federalreservehistory.org/essays/panic-of-1907

from the linked article:

The Panic of 1907 had many elements in common with the financial crisis of 2007-09.4 Both crises started among New York City financial institutions and markets, and both affected the economy of the United States and the rest of the world. Examining the sequence of events in 1907 makes the parallels clear.

[vand]

The panic of 1907 defined that period, but as always there's a bit more to it than that. I don't profess to be an expert on this, but the markets went sideways for a long time starting around then - as they tend to do.  Obviously they had to navigate WWI too.

Things were a bit different back then as there was still a gold standard, so inflation as we know it today wasn't really a thing. Nonetheless, stock returns kinda sucked for a long time until you got to to the 1920 (and even then you had to get past the meltdown of the early 1920s)

The most famous book by far from this period is Reminiscences of a Stock Operator, which is the biography of Jesse Livermore, the greatest trader of that era.  Although it's not an "investment" book it well describes those times how you still had bull markets and bear markets, just as you do today.  It's a great read and I would recommend it.

[maizefolk]

Hopefully after a 23% decline in the market in '06 our hypothetical retiree would already have made some lifestyle adjustments (pursued additional income, changed lifestyle to cut spending) and would have done better than blind adherence to 4% inflation adjusted withdrawals per year would suggest. Even if they didn't, the '06/'07 retiree would probably have been living on the edge but still okay if it wasn't for the impact of word war I on the US economy.

Four out of five years of negative real (post-inflation) stock market returns from '16-'20, including -31% in '17 and -16% in '20 and cumulative inflation of 83% (~12.3% annually). It was much much worse for people who lived through world war I in Europe (although poor investment returns were the least of their worries in that era.)

Wars are bad.