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Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: Bumperpuff on March 22, 2020, 09:43:00 AM

Title: Why the concept of retiring early could disappear due to Coronavirus
Post by: Bumperpuff on March 22, 2020, 09:43:00 AM
https://www.cnbc.com/2020/03/20/why-the-concept-of-retiring-early-could-disappear-due-to-coronavirus.html

Apparently the economic downturn will scare everyone away from FIRE.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Kazyan on March 22, 2020, 11:44:16 AM
I'd certainly be far more discouraged if this happened later than 10% of the way to my FIRE goal. My stash took a beating, but it's a mini-stash right now.

Quote
But that wouldn’t necessarily be a bad thing, he says. “I think that idea of retiring early is, thankfully, disintegrating — in the sense that, work is an important part of life. Work is healthy,” he explains. “Doing something that you’re passionate about is healthy. And money is often a byproduct of the things that we do to create value in the world.”

Lots of self-made-millionaire types say this sort of thing when their driving reason for existence, the core of their very being, is something that happens to pay $150,000 a year. The 'often a byproduct' line shows how incomplete and Silicon Valley-like this idea is--what if the thing you want to do doesn't pay? It's like that for many of us.

Incidentally: "Grant Sabatier says building a relationship with your money is the key to having more of it." This reads like the editor put [insert deep wisdom here before publishing -ed] and had 1 minute left before it went live to come up with something vaguely profound-sounding.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: bacchi on March 22, 2020, 12:20:03 PM
I'd certainly be far more discouraged if this happened later than 10% of the way to my FIRE goal. My stash took a beating, but it's a mini-stash right now.

Quote
But that wouldn’t necessarily be a bad thing, he says. “I think that idea of retiring early is, thankfully, disintegrating — in the sense that, work is an important part of life. Work is healthy,” he explains. “Doing something that you’re passionate about is healthy. And money is often a byproduct of the things that we do to create value in the world.”

Lots of self-made-millionaire types say this sort of thing when their driving reason for existence, the core of their very being, is something that happens to pay $150,000 a year. The 'often a byproduct' line shows how incomplete and Silicon Valley-like this idea is--what if the thing you want to do doesn't pay? It's like that for many of us.

Yep. No one is willing to pay me for hiking or kayaking when I want, for how long I want, with breaks in between for playing computer games.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: RetiredAt63 on March 22, 2020, 02:20:14 PM
And for the vast majority of people their job is just a job, and they put it out of their head when they leave work.

I liked my job, and I wouldn't have done it for free. 
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: The_Big_H on March 22, 2020, 03:12:20 PM
If anything this absolutely proves the validy of the principles of Mustashiasm/FIRE , ESPECIALLY in a downturn / panic like this:

1) we are as a group more able to handle a change in lifestyle and expenditures.  So If all of a sudden we are stuck eating PBJ and canned beans for 3 months, we'll deal with it.  We are already used to saying "no" / "deal with it" to ourselves.
2) having a lot of money in savings and little or no debt (you got to do this before you even begin to build your stash) means we can weather temporary financial storms.
3) maintain healthy balance in diet / exercise which in turn keeps ones mental health strong
4) this requires rational and logical thinking, without making rash panicky decisions.  A level head comes in very very handy in times like this.
5) when life gives you lemons... we make lemonade.  stuck in the house?:  well lets organize it better, work on it, clean stuff.  Big ol spring cleaning.
6) in order to save FIRE type money, most of us already cook a lot (heavy restaurant eating is EXPENSIVE), so now all of a sudden being 'forced' to cook at home is no big deal.
7) people like this plan ahead for when they have kids... They just don't pop them out without planning for how to take care of them.  Many of us seek FIRE in order to be able to be home with kids more.... so forced working at home is a blessing in disguise (truly amazing how many people hate taking care of their own kids, as evidenced by all the schools closing).
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: dividendman on March 22, 2020, 11:39:03 PM
Also... this downturn makes it way MORE possible for everyone starting their journey. It just makes it harder for people near the end.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 23, 2020, 06:55:46 AM
Yes, a large reduction in the value of investments stinks, however if you're debt free and still have an income this is definitely the time to buy. Over the long term things that produce money do tend to continue to do so. I think it will be better for Mustachians overall because we are used to tightening the belt.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Gone Fishing on March 23, 2020, 07:00:09 AM
For the fortunate that do not get laid off, this is the buying opportunity they have been waiting for, don't waste it!
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on March 23, 2020, 08:06:56 AM
Also... this downturn makes it way MORE possible for everyone starting their journey. It just makes it harder for people near the end.

I just paid off the house and was about to start on a bond tent since I had the equity side of my portfolio done.  Pretty good timing and a safeish job, but I wish I had a bit more in safer assets right now just in case, but adding to those when the market is on sale feels wrong.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: pomegranatemom on March 23, 2020, 09:25:44 AM
I don’t think this will kill the FIRE movement but I think it will affect how people plan for FIRE. Pretty sure geo-arbitrage will lose a lot of its appeal, since access to medical care in some countries is tricky. Plus people might be fearful about not being able to get back home in an emergency.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: martyconlonontherun on March 23, 2020, 10:11:53 AM
I don’t think this will kill the FIRE movement but I think it will affect how people plan for FIRE. Pretty sure geo-arbitrage will lose a lot of its appeal, since access to medical care in some countries is tricky. Plus people might be fearful about not being able to get back home in an emergency.

Midwest and suburbs look better than major cities, so domestic geo-arbitrage stays. The idea of traveling the world any time soon really went down the drain, though.

I'm still working but having that stress on top of the normal life stress in a pandemic is numbing. Went for a walk in the woods with my pregnant wife and it was so nice. But immediately came back thinking about work today.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: SwordGuy on March 23, 2020, 12:30:48 PM
I don’t think this will kill the FIRE movement but I think it will affect how people plan for FIRE. Pretty sure geo-arbitrage will lose a lot of its appeal, since access to medical care in some countries is tricky. Plus people might be fearful about not being able to get back home in an emergency.

Medical care in many countries is absolutely excellent and usually better than that in the USA -- unless they get swamped by a major epidemic or other natural disaster.   Same here except the US did a piss-poor job of managing this epidemic early on and other countries did not.

And if I *was* going to be sick for 2 months in the hospital, I sure as hell would want to do it where I didn't end up impoverished afterwards.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: ysette9 on March 23, 2020, 02:26:04 PM
Amen.

I’m afraid that something like this will crack open the fallacy that healthcare-for-the-rich is a good way to run a country. This is one time when having everyone around you be healthy and have access to healthcare is a benefit.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: American GenX on March 23, 2020, 05:40:30 PM
I don’t think this will kill the FIRE movement but I think it will affect how people plan for FIRE.

It won't kill it, certainly, but it's going to sure put a kink in a lot of plans, delaying FIRE.  I'm down about 4 years of retirement expenses yet I was hoping to FIRE in about a year.  I really doubt I'll recover all that in the next year.  So, I'll have to kick the can down the road.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Bloop Bloop on March 24, 2020, 12:56:01 AM
It won't kill the FIRE movement but it might change people's mindsets that an after-tax 8% return year on year is a guaranteed thing.

I'm happy with my conservative assumptions (2% SWR and 4% return on average yearly). I had these assumptions before the virus hit and I'll keep them for the time being.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Ozstache on March 24, 2020, 02:28:56 AM
It won't kill the FIRE movement but it might change people's mindsets that an after-tax 8% return year on year is a guaranteed thing.

Agreed. I have noticed in the last couple of years, especially last year, an air of smugness in this forum that the good times were just going to keep on rolling on. There's nothing like experiencing a decent market drop for real to see how you react to a whittling away of your stash before your very eyes. 
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: mies on March 24, 2020, 03:46:45 AM
Incidentally: "Grant Sabatier says building a relationship with your money is the key to having more of it." This reads like the editor put [insert deep wisdom here before publishing -ed] and had 1 minute left before it went live to come up with something vaguely profound-sounding.

Grant did a deepity :D
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: jinga nation on March 24, 2020, 11:05:47 AM
yeah, another one along the same vein: https://www.marketwatch.com/story/a-recession-wont-end-the-fire-movement-but-it-will-change-it-for-the-better-2020-03-24
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Hunny156 on March 24, 2020, 03:33:22 PM
This is a great time to stick to a low-information diet.  Stick to knowing the basics and what you need to know, like a shelter in place order being issued, but for all the rest, digest as much as you can without going crazy.  I'm skipping all the Marketwatch articles in my feed, they are all people guessing that the markets are at the bottom already, or they are going to fall another 30%, or we'll rebound in a year.  All guesses, and other than selling and locking in your losses, aren't going to help a damn bit!

People have been asking me how I'm changing my plans, am I taking advantage w/the sale?  The truth is, no, I'm not.  If you planned correctly, this is part of the plan, so it shouldn't change your plans.  Am I still investing in the market?  Yes, via ESPP, 401k, and HSA.  I exceeded my FI goals last year, so I switched to stretch goals, one of which is for this very situation, having several years of expenses in cash.  So I'm saving cash, not b/c i'm scared of the market, but b/c that happens to be my stage in the plan.  Was it tempting to throw a bunch of $$ into the market?  YES!  But it's not part of the plan, so I won't.

Hubby is still scheduled to retire around this time next year, and maybe I'll hang on an extra year over plan, but only b/c I like my job, I can work remote (half the time sounds right to me now), it's one year less I need to pay for the full cost of insurance OOP, and most importantly, I have no idea how many of my tenants will lose their jobs and not pay rent.  That's really the only thing I didn't plan for in FIRE - having a slew of them lose their jobs at the same time.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 24, 2020, 04:28:23 PM
In my opinion, the greatest threat to FIRE posed by COVID-19 will be the medical expenses for the people who get sick enough to require hospitalization. Nobody carries that much insurance, and all it takes is for one family member to fall gravely ill. That will wipe out even a sizable 'stash. Testing costs might be covered, but not treatment.

In my state, the patient's portion of an emergency room visit generally starts at over $500 if you're insured. The first day in the ICU costs more than $10,000 although subsequent days are billed at a lower rate. If a very sick person requires four weeks in the ICU the bill will easily run into six figures. But you have to add on all the extra charges for various tests and equipment, and hospitals are great at hiring contractors who bill separately and who find ways to not be covered by whoever your insurance company might be.

Most FIRE people are not old enough to qualify for government assistance in the form of Medicare or Medicaid.

If a six-figure medical bill for just one sick family member is more than can be paid for in cash flow, especially when the markets are down, and if loans are unavailable due to not having "a paycheck", the 'stash is going to be in danger.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: ctuser1 on March 24, 2020, 05:38:53 PM
Doesn't all Obamacare insurance plans have an OOP max?

https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/

Quote
For the 2020 plan year: The out-of-pocket limit for a Marketplace plan can’t be more than $8,150 for an individual and $16,300 for a family.
For the 2019 plan year: The out-of-pocket limit for a Marketplace plan couldn’t be more than $7,900 for an individual and $15,800 for a family.

So it isn't quite possible to rake up hundred thousand+ in hospital cost. No?
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: The_Big_H on March 24, 2020, 09:49:15 PM
In my opinion, the greatest threat to FIRE posed by COVID-19 will be the medical expenses for the people who get sick enough to require hospitalization. Nobody carries that much insurance, and all it takes is for one family member to fall gravely ill. That will wipe out even a sizable 'stash. Testing costs might be covered, but not treatment.

In my state, the patient's portion of an emergency room visit generally starts at over $500 if you're insured. The first day in the ICU costs more than $10,000 although subsequent days are billed at a lower rate. If a very sick person requires four weeks in the ICU the bill will easily run into six figures. But you have to add on all the extra charges for various tests and equipment, and hospitals are great at hiring contractors who bill separately and who find ways to not be covered by whoever your insurance company might be.

Most FIRE people are not old enough to qualify for government assistance in the form of Medicare or Medicaid.

If a six-figure medical bill for just one sick family member is more than can be paid for in cash flow, especially when the markets are down, and if loans are unavailable due to not having "a paycheck", the 'stash is going to be in danger.

So... don't pay, or pay some nominal trivial amount per month to keep them off your back.
Your stash is very very well protected if its in retirement accounts or (at least in Florida) the equity of your home.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: less4success on March 24, 2020, 10:08:14 PM
That's a clickbait article title. Don't click on it.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: OtherJen on March 25, 2020, 01:59:33 AM
Doesn't all Obamacare insurance plans have an OOP max?

https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/

Quote
For the 2020 plan year: The out-of-pocket limit for a Marketplace plan can’t be more than $8,150 for an individual and $16,300 for a family.
For the 2019 plan year: The out-of-pocket limit for a Marketplace plan couldn’t be more than $7,900 for an individual and $15,800 for a family.

So it isn't quite possible to rake up hundred thousand+ in hospital cost. No?

Wrong.

The out-of-pocket limits only apply to in-network care. Problem is, even if the hospital is in-network, not all staff are employed directly by the hospital. The nurses, techs, and even physicians may be contractors employed by agencies considered out-of-network. This doesn't have to be disclosed to the patient at the point of service. It's a filthy loophole that many insurers use to avoid paying for what should be covered services.

Also, it's usually up to the insurance provider to decide whether it thinks the hospital is charging a reasonable amount for services. If not, the patient is on the hook and the balance doesn't count toward out-of-pocket.

https://www.google.com/amp/s/newrepublic.com/amp/article/155334/grim-lottery-surprise-medical-bill-stories (https://www.google.com/amp/s/newrepublic.com/amp/article/155334/grim-lottery-surprise-medical-bill-stories)

https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/ (https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/)
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Imma on March 25, 2020, 03:01:04 AM
I can't even imagine how stressful it would be to live in the US right now and I'm not even talking about how your leader doesn't seem to live in the real world.

In my country I know I have access to excellent medical care with an out of pocket max of €400. Mr Imma hasn't been ill for years and is taking a gamble with the maximum possible deductible of €800. We have that money in our savings account. Whatever may happen, the financial side of health care is not the issue. Not is the fear of losing an income due to sickness because we get paid sick leave (everyone in our country, not just us)

We were young adults in 2008 and while this whole situation sucks we are exactly where I'd hoped we be when the next recession happens: in fairly steady jobs, different skills so we're not dependent on one type of work, with savings in the bank, a cheap home that we own and a mortgage payment of €300/month. As long as one of us can find a parttime minimum wage job we'll be fine. That's a great comfort. I expect that just like the FIRE movement originated after 2008 this time around more people will get interested in responsibly managing their income as well. Plus, I think in the long term this mandatory period at home will improve the work-life balance. I know quite a lot of people who really enjoy spending time with their family at home. When this is over they will be hesitant to enter the rat race again especially if they succesfully worked from home for months.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 25, 2020, 09:39:08 AM
Doesn't all Obamacare insurance plans have an OOP max?

https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/

Quote
For the 2020 plan year: The out-of-pocket limit for a Marketplace plan can’t be more than $8,150 for an individual and $16,300 for a family.
For the 2019 plan year: The out-of-pocket limit for a Marketplace plan couldn’t be more than $7,900 for an individual and $15,800 for a family.

So it isn't quite possible to rake up hundred thousand+ in hospital cost. No?

Obama care is for low-wealth and low-income people; I've met very few people who qualify for those plans and those who do tend to go without because they can't afford the premiums.

I've got what is supposedly a "platinum" employer based health plan and I am terrified. My 20-year-old daughter, last year, racked up tens of thousands of dollars in medical bills for essentially nothing. Every few months, she has a self inflicted problem or an imaginary problem and goes to urgent care centers or the ER and orders a laundry list of tests. Last September the bill for just one ER incident-- all out of network, of course-- was over $17,400 for just the ER services, without even an overnight stay. The tests were extra. The urgent care visits were extra. It turned out she had a mild case of the flu and an infected spider bite that she'd known about for a week but refused to treat through a walk-in clinic or her GP. I was able to negotiate the price down a lot, but it still costs me thousands every time she throws a tantrum. By the way she's also had Medicaid the entire time, because she applied for it after she moved out of my home. You'd think that Medicaid plus an employer plan would result in something besides a five figure surprise every few months, but it just isn't the case. I can't get my daughter off my plan and let her use her Medicaid or her own employer's plan, despite a great deal of continuing financial abuse, until the enrollment period. You'd better believe I'm counting down the days. I've also told her that she's responsible for her own copays from here on in, especially for self-inflicted medical problems. But that doesn't stop every cent being snatched out of my HSA because that's the first money the hospitals and insurance companies take. When (not if) my daughter contacts the coronavirus I may be financially wiped out.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on March 25, 2020, 10:09:26 AM
The out-of-pocket limits only apply to in-network care. Problem is, even if the hospital is in-network, not all staff are employed directly by the hospital. The nurses, techs, and even physicians may be contractors employed by agencies considered out-of-network. This doesn't have to be disclosed to the patient at the point of service. It's a filthy loophole that many insurers use to avoid paying for what should be covered services.

Also, it's usually up to the insurance provider to decide whether it thinks the hospital is charging a reasonable amount for services. If not, the patient is on the hook and the balance doesn't count toward out-of-pocket.

https://www.google.com/amp/s/newrepublic.com/amp/article/155334/grim-lottery-surprise-medical-bill-stories (https://www.google.com/amp/s/newrepublic.com/amp/article/155334/grim-lottery-surprise-medical-bill-stories)

https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/ (https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/)

Some states, like Illinois have laws against this: http://stepnowskilaw.com/BalanceBilling.html
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: bacchi on March 25, 2020, 10:10:36 AM
Kaiser did a writeup about the costs at https://www.healthsystemtracker.org/brief/potential-costs-of-coronavirus-treatment-for-people-with-employer-coverage/.

Even without complications, it'll likely run ~$10k unless your state allows surprise billing and then the sky's the limit.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: ctuser1 on March 25, 2020, 10:26:43 AM
My perspective is probably very skewed because I have never encountered the issue of surprise billing since I have been on *good* employer plans.

(There was just one tiny exception - my daughter was at the dentist and the laughing gas was not covered, and the dentist charged the rack rate for that - which was still only $150.)

We have definitely overused and abused the medical system a whole lot!! Think ER runs for when our newborn was back home from hospital and first threw up, or had a sniffle, or bumped her head, and so on and so forth. But no surprise billing (or out of network providers) ever from any of those episodes.

I have read about such surprise billing many times in the forums, however!! Is this more of a regional thing, where medically under-served areas has less providers so the few providers that are there can get away with doing such shenanigans? Is it more state specific?

I ask because I want to avoid ever encountering such nasty surprises, if possible.

<edited to add>
I've also seldom encountered the situation where a doctor was out of network. The *only* situation I ever remember is where a therapist for one of the kids doesn't take UHC (which is the insurance through DW's work). No problem - we use mine, where I have a choice of selecting from 4 different insurance companies.

FWIW - I have always been in big employer plans that are "self insured pools" and the insurance company only does administrative stuff.

<further edited to add>
I think I found my answer on googling. CT has a few separate laws that almost eliminates balance billing or surprise billing practices. There is also CUTPA that can be very punitive is a provider engages in "unfair trade practices". Most of our healthcare usage has been after I moved to CT. I must have been sheltered from these types of nasty surprises by the liberal laws of CT.

So, net net, this is probably state specific.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 25, 2020, 11:05:55 AM
My perspective is probably very skewed because I have never encountered the issue of surprise billing since I have been on *good* employer plans.

(There was just one tiny exception - my daughter was at the dentist and the laughing gas was not covered, and the dentist charged the rack rate for that - which was still only $150.)

We have definitely overused and abused the medical system a whole lot!! Think ER runs for when our newborn was back home from hospital and first threw up, or had a sniffle, or bumped her head, and so on and so forth. But no surprise billing (or out of network providers) ever from any of those episodes.

I have read about such surprise billing many times in the forums, however!! Is this more of a regional thing, where medically under-served areas has less providers so the few providers that are there can get away with doing such shenanigans? Is it more state specific?

I ask because I want to avoid ever encountering such nasty surprises, if possible.

<edited to add>
I've also seldom encountered the situation where a doctor was out of network. The *only* situation I ever remember is where a therapist for one of the kids doesn't take UHC (which is the insurance through DW's work). No problem - we use mine, where I have a choice of selecting from 4 different insurance companies.

FWIW - I have always been in big employer plans that are "self insured pools" and the insurance company only does administrative stuff.

<further edited to add>
I think I found my answer on googling. CT has a few separate laws that almost eliminates balance billing or surprise billing practices. There is also CUTPA that can be very punitive is a provider engages in "unfair trade practices". Most of our healthcare usage has been after I moved to CT. I must have been sheltered from these types of nasty surprises by the liberal laws of CT.

So, net net, this is probably state specific.

I don't know whether it's a question of "liberal" versus "conservative" laws, or a question of how much grease the insurance companies and health care companies apply to the palms of the legislators.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Hunny156 on March 25, 2020, 03:34:07 PM
@TheGrimSqueaker - I'm so sorry for the continued drama and expense that your daughter provides.  I'm actually surprised that she can take advantage of your plan like that - any time I've had even the whiff of coverage from my employer, while taking benefits from hubby's employer (better plan), at the first drop of trying to use his plan, the insurance immediately demands proof that I'm not insured elsewhere!  i would hope that your platinum employer plan would do the same, but perhaps they have asked her for proof, and she ignores them.  It seems like something she would do, based on what you have told us.  :(

I am curious what you mean by every cent being snatched out of your HSA.  I presume, that like me, you have a plan in concert w/the HDHP, and you keep the min required amount in cash, and the rest invested in the market.  Are you saying that the insurance and/or medical staff & services can help themselves to your account funds, without your approval?  if that is the case, please let us know, b/c that's a HUGE loophole that many of us would like to know about.  I've personally maxed it out for years, and have never paid a single claim out of those funds, but I can access the account through my insurance company portal, so they know what's in there.

@ctuser1 - Yes, state specific, and probably also plan specific.  Former NY-er here, always had good employer based insurance plans, almost always the self-insured pool kind.  The worst example we ever encountered of balance billing and out of network bull was when hubby had a major surgical procedure to cure his sleep apnea.  Two days before surgery, the surgeon dropped a bomb, there was a $5k balance that the insurance wasn't going to cover, and he wasn't about to perform the surgery without payment being made.  We quietly handed over a credit card, determined to handle it on the back end (huge mistake).  When the dust settled, we learned that the surgeon had called in a friend to assist in the 8 hour surgery, an out of network Dr who happened to be from CT!  Our insurance paid maybe $2K for his services, and the main surgeon refused to return our $5K for several reasons, including his determination that his friend hadn't been paid enough.

We did everything to fight it, complained repeatedly to our insurance company and had an insurance advocate, even challenged the charge w/our credit card company.  In the end, we got stuck w/the bill.  That was 12 years ago, and I have no doubt that things are far worse, and far more expensive today.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 26, 2020, 10:44:34 AM
@TheGrimSqueaker - I'm so sorry for the continued drama and expense that your daughter provides.  I'm actually surprised that she can take advantage of your plan like that - any time I've had even the whiff of coverage from my employer, while taking benefits from hubby's employer (better plan), at the first drop of trying to use his plan, the insurance immediately demands proof that I'm not insured elsewhere!  i would hope that your platinum employer plan would do the same, but perhaps they have asked her for proof, and she ignores them.  It seems like something she would do, based on what you have told us.  :(

I am curious what you mean by every cent being snatched out of your HSA.  I presume, that like me, you have a plan in concert w/the HDHP, and you keep the min required amount in cash, and the rest invested in the market.  Are you saying that the insurance and/or medical staff & services can help themselves to your account funds, without your approval?  if that is the case, please let us know, b/c that's a HUGE loophole that many of us would like to know about.  I've personally maxed it out for years, and have never paid a single claim out of those funds, but I can access the account through my insurance company portal, so they know what's in there.

@ctuser1 - Yes, state specific, and probably also plan specific.  Former NY-er here, always had good employer based insurance plans, almost always the self-insured pool kind.  The worst example we ever encountered of balance billing and out of network bull was when hubby had a major surgical procedure to cure his sleep apnea.  Two days before surgery, the surgeon dropped a bomb, there was a $5k balance that the insurance wasn't going to cover, and he wasn't about to perform the surgery without payment being made.  We quietly handed over a credit card, determined to handle it on the back end (huge mistake).  When the dust settled, we learned that the surgeon had called in a friend to assist in the 8 hour surgery, an out of network Dr who happened to be from CT!  Our insurance paid maybe $2K for his services, and the main surgeon refused to return our $5K for several reasons, including his determination that his friend hadn't been paid enough.

We did everything to fight it, complained repeatedly to our insurance company and had an insurance advocate, even challenged the charge w/our credit card company.  In the end, we got stuck w/the bill.  That was 12 years ago, and I have no doubt that things are far worse, and far more expensive today.

It's the way the plan is set up. The onus is on the customer (me) to prove that the person being taken off the plan has an alternate insurance provider, and I have only 30 days to do so between the qualifying event (her getting a different plan) and my request in which I furnish proof of the same. Now, my daughter doesn't live with me, and her medical documentation doesn't come to me, so if she doesn't give me the documentation then I have exactly zero legal means to get it. She chooses not to inform me, or my insurance, about any of the details related to her other insurance. I therefore cannot remove her from my plan except during the open enrollment period which is several months away. They have confirmed that I cannot remove this extremely financially abusive individual from my plan any other way, and that she is entitled to continue to use the services while I am legally forced to continue paying her premiums.

With the HSA, my HSA is tied to my health insurance. I get a few hundred dollars a year paid into it from my employer, which would be a nice little benefit if I ever got to use it on something real. It could be used to pay for real hearing aids, for example. Unfortunately, when a claim is submitted for whatever random self-inflicted emergency of the month is (pregging up, for example), is for the insurance company to snatch the funds to pay the claim out of my health savings account. They do this before I ever see the claim, and even if one of my daughter's other insurers ends up paying the co-pay, the money taken from my HSA is never refunded to me. So my HSA is basically worthless: instead of being able to save money for a legitimate emergency I would basically be shoving money into a giant rabbit hole. Whatever benefit is there is snatched away a few days after it accrues because the 20-year-old simply refuses to use in-network providers.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: spartana on March 26, 2020, 11:18:42 AM
Well this sucks for the Grim Squeaker. The Medicaid thing depends on your state and it sounds like @TheGrimSqueaker state doesn't have expanded Medicaid. Here in Calif, Medicaid is only taxable income dependent and they don't count assets so a person could have a VERY large stash and still be on Medicaid. Its also free.

As for the OP - I don't think this will eliminate the concept of FIRE or even change it too much. It might even convince people that the value of their time is worth more then working years longer to have a a fatter stash to buy all the shiny things. I saw in the recession amongst some friends (and experienced this myself) that reducing your consumption due to need often leads to the realization that you don't need much at all to be happy and fulfilled. And that you would rather spend what time you have left in your life doing something besides working decades longer just to have a larger stash to have more shiny things in the distant future.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 26, 2020, 12:30:03 PM
Well this sucks for the Grim Squeaker. The Medicaid thing depends on your state and it sounds like @TheGrimSqueaker state doesn't have expanded Medicaid. Here in Calif, Medicaid is only taxable income dependent and they don't count assets so a person could have a VERY large stash and still be on Medicaid. Its also free.

As for the OP - I don't think this will eliminate the concept of FIRE or even change it too much. It might even convince people that the value of their time is worth more then working years longer to have a a fatter stash to buy all the shiny things. I saw in the recession amongst some friends (and experienced this myself) that reducing your consumption due to need often leads to the realization that you don't need much at all to be happy and fulfilled. And that you would rather spend what time you have left in your life doing something besides working decades longer just to have a larger stash to have more shiny things in the distant future.

It's very temporary suckitude. I've resolved to boot my daughter off my health insurance policy during the next enrollment period, not as punishment but to prevent her from doing this to me ever again. Her decision making hasn't changed and I have no reason to expect her to start conducting herself with regard to my well-being in any way. She's 20 years old, not living with me (I kicked her out of the house on Valentine's Day) and she's free to continue living her life in her own way.

My decision to kick my daughter out after taking her in last summer to "get on her feet" was a considered response to some activities that I won't tolerate in my home.  These activities are not simply things that don't affect me (examples might be details of her appearance, religion, sexual orientation, and choice of major). They are criminal behaviors that put me at physical, legal, and financial risk simply by living under the same roof as someone who engages in them. Furthermore, she's failed to hold up her end of any of the commitments she made to me as a condition of moving in. These commitments involved basics such as cleaning up after herself, not having people over when I am not present, not disappearing for days at a time, participating in household chores and family activities, insuring and registering her vehicle, and treating me like a human being instead of like a doormat. I don't realistically expect her to change because she's hung out with lowlifes long enough for her to have officially turned into one. I did my best to prevent it, but she truly loves the druggie-thuggie culture and wants desperately to be a lowlife. At age 20 she's free to do it, just not in my home or at my expense.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Josiecat on March 28, 2020, 12:42:59 PM
Grim Squeaker - Can you suspend payments to your HSA for now so you don't continue to lose your money?  My employer allows us to save whatever amount we choose and turn it off.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Padonak on March 28, 2020, 12:59:15 PM
@TheGrimSqueaker - I'm so sorry for the continued drama and expense that your daughter provides.  I'm actually surprised that she can take advantage of your plan like that - any time I've had even the whiff of coverage from my employer, while taking benefits from hubby's employer (better plan), at the first drop of trying to use his plan, the insurance immediately demands proof that I'm not insured elsewhere!  i would hope that your platinum employer plan would do the same, but perhaps they have asked her for proof, and she ignores them.  It seems like something she would do, based on what you have told us.  :(

I am curious what you mean by every cent being snatched out of your HSA.  I presume, that like me, you have a plan in concert w/the HDHP, and you keep the min required amount in cash, and the rest invested in the market.  Are you saying that the insurance and/or medical staff & services can help themselves to your account funds, without your approval?  if that is the case, please let us know, b/c that's a HUGE loophole that many of us would like to know about.  I've personally maxed it out for years, and have never paid a single claim out of those funds, but I can access the account through my insurance company portal, so they know what's in there.

@ctuser1 - Yes, state specific, and probably also plan specific.  Former NY-er here, always had good employer based insurance plans, almost always the self-insured pool kind.  The worst example we ever encountered of balance billing and out of network bull was when hubby had a major surgical procedure to cure his sleep apnea.  Two days before surgery, the surgeon dropped a bomb, there was a $5k balance that the insurance wasn't going to cover, and he wasn't about to perform the surgery without payment being made.  We quietly handed over a credit card, determined to handle it on the back end (huge mistake).  When the dust settled, we learned that the surgeon had called in a friend to assist in the 8 hour surgery, an out of network Dr who happened to be from CT!  Our insurance paid maybe $2K for his services, and the main surgeon refused to return our $5K for several reasons, including his determination that his friend hadn't been paid enough.

We did everything to fight it, complained repeatedly to our insurance company and had an insurance advocate, even challenged the charge w/our credit card company.  In the end, we got stuck w/the bill.  That was 12 years ago, and I have no doubt that things are far worse, and far more expensive today.

It's the way the plan is set up. The onus is on the customer (me) to prove that the person being taken off the plan has an alternate insurance provider, and I have only 30 days to do so between the qualifying event (her getting a different plan) and my request in which I furnish proof of the same. Now, my daughter doesn't live with me, and her medical documentation doesn't come to me, so if she doesn't give me the documentation then I have exactly zero legal means to get it. She chooses not to inform me, or my insurance, about any of the details related to her other insurance. I therefore cannot remove her from my plan except during the open enrollment period which is several months away. They have confirmed that I cannot remove this extremely financially abusive individual from my plan any other way, and that she is entitled to continue to use the services while I am legally forced to continue paying her premiums.

With the HSA, my HSA is tied to my health insurance. I get a few hundred dollars a year paid into it from my employer, which would be a nice little benefit if I ever got to use it on something real. It could be used to pay for real hearing aids, for example. Unfortunately, when a claim is submitted for whatever random self-inflicted emergency of the month is (pregging up, for example), is for the insurance company to snatch the funds to pay the claim out of my health savings account. They do this before I ever see the claim, and even if one of my daughter's other insurers ends up paying the co-pay, the money taken from my HSA is never refunded to me. So my HSA is basically worthless: instead of being able to save money for a legitimate emergency I would basically be shoving money into a giant rabbit hole. Whatever benefit is there is snatched away a few days after it accrues because the 20-year-old simply refuses to use in-network providers.

Some health insurance plans have an option to disable automatic payment from HSA or similar accounts when insurance claims are submitted. You can check if yours has this option too.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 28, 2020, 01:17:14 PM
Grim Squeaker - Can you suspend payments to your HSA for now so you don't continue to lose your money?  My employer allows us to save whatever amount we choose and turn it off.
I shut down my voluntary contribution already so I don't continue to lose even more money, but that's not going to get the original savings back.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 28, 2020, 01:20:35 PM
@TheGrimSqueaker - I'm so sorry for the continued drama and expense that your daughter provides.  I'm actually surprised that she can take advantage of your plan like that - any time I've had even the whiff of coverage from my employer, while taking benefits from hubby's employer (better plan), at the first drop of trying to use his plan, the insurance immediately demands proof that I'm not insured elsewhere!  i would hope that your platinum employer plan would do the same, but perhaps they have asked her for proof, and she ignores them.  It seems like something she would do, based on what you have told us.  :(

I am curious what you mean by every cent being snatched out of your HSA.  I presume, that like me, you have a plan in concert w/the HDHP, and you keep the min required amount in cash, and the rest invested in the market.  Are you saying that the insurance and/or medical staff & services can help themselves to your account funds, without your approval?  if that is the case, please let us know, b/c that's a HUGE loophole that many of us would like to know about.  I've personally maxed it out for years, and have never paid a single claim out of those funds, but I can access the account through my insurance company portal, so they know what's in there.

@ctuser1 - Yes, state specific, and probably also plan specific.  Former NY-er here, always had good employer based insurance plans, almost always the self-insured pool kind.  The worst example we ever encountered of balance billing and out of network bull was when hubby had a major surgical procedure to cure his sleep apnea.  Two days before surgery, the surgeon dropped a bomb, there was a $5k balance that the insurance wasn't going to cover, and he wasn't about to perform the surgery without payment being made.  We quietly handed over a credit card, determined to handle it on the back end (huge mistake).  When the dust settled, we learned that the surgeon had called in a friend to assist in the 8 hour surgery, an out of network Dr who happened to be from CT!  Our insurance paid maybe $2K for his services, and the main surgeon refused to return our $5K for several reasons, including his determination that his friend hadn't been paid enough.

We did everything to fight it, complained repeatedly to our insurance company and had an insurance advocate, even challenged the charge w/our credit card company.  In the end, we got stuck w/the bill.  That was 12 years ago, and I have no doubt that things are far worse, and far more expensive today.

It's the way the plan is set up. The onus is on the customer (me) to prove that the person being taken off the plan has an alternate insurance provider, and I have only 30 days to do so between the qualifying event (her getting a different plan) and my request in which I furnish proof of the same. Now, my daughter doesn't live with me, and her medical documentation doesn't come to me, so if she doesn't give me the documentation then I have exactly zero legal means to get it. She chooses not to inform me, or my insurance, about any of the details related to her other insurance. I therefore cannot remove her from my plan except during the open enrollment period which is several months away. They have confirmed that I cannot remove this extremely financially abusive individual from my plan any other way, and that she is entitled to continue to use the services while I am legally forced to continue paying her premiums.

With the HSA, my HSA is tied to my health insurance. I get a few hundred dollars a year paid into it from my employer, which would be a nice little benefit if I ever got to use it on something real. It could be used to pay for real hearing aids, for example. Unfortunately, when a claim is submitted for whatever random self-inflicted emergency of the month is (pregging up, for example), is for the insurance company to snatch the funds to pay the claim out of my health savings account. They do this before I ever see the claim, and even if one of my daughter's other insurers ends up paying the co-pay, the money taken from my HSA is never refunded to me. So my HSA is basically worthless: instead of being able to save money for a legitimate emergency I would basically be shoving money into a giant rabbit hole. Whatever benefit is there is snatched away a few days after it accrues because the 20-year-old simply refuses to use in-network providers.

Some health insurance plans have an option to disable automatic payment from HSA or similar accounts when insurance claims are submitted. You can check if yours has this option too.

I can only change options during the annual open enrollment period. When that time comes around, I've decided to boot the brat off my health care plan completely. She supposedly has Medicaid plus whatever insurance package came with her job. For this reason she's already double-insured even without me. So, I have no problem booting her and the fetus off my plan this fall. That way I will no longer pay monthly premiums for the privilege of having my stash and my employer's contribution stolen from me and used to finance diagnostic services for imaginary and/or self-inflicted conditions. (The fetus I consider to be self-inflicted.)
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: John Galt incarnate! on March 28, 2020, 04:13:39 PM


As for the OP - I don't think this will eliminate the concept of FIRE or even change it too much. It might even convince people that the value of their time is worth more then working years longer to have a a fatter stash to buy all the shiny things.



I firmly agree.

This pandemic's death toll will concretize the finitude of life.

 The stark reality of ubiquitous death  out of the blue  will induce people the world over to reevaluate  their major life  priorities.

Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: ExitViaTheCashRamp on March 29, 2020, 06:06:19 AM
Not that Europe doesn't host a whole bunch of WTF issues... the concept of a medical event wiping out all your money or even sending you bankrupt totally blows my mind.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: John Galt incarnate! on March 29, 2020, 09:21:44 AM


As for the OP - I don't think this will eliminate the concept of FIRE or even change it too much. It might even convince people that the value of their time is worth more then working years longer to have a a fatter stash to buy all the shiny things.



I firmly agree.

This pandemic's death toll will concretize the finitude of life.

 The stark reality of ubiquitous death  out of the blue  will induce people the world over to reevaluate  their major life  priorities.

I've changed my mind.

I think my perspective unrealistically colored my post.

Now I think Psychstache and others who posted similarly are right.




Post  COVID, what things in life will be fundamentally different?
 Reply #50 on: March 28, 2020, 09:03:00 AM


Psychstache

I doubt we will see any long-term societal level behavior change. There will be some who choose to shift their habits, but most will be back to business as usual. It's like the old adage about a near-death experience changing you forever...for about 8 weeks.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Loren Ver on March 31, 2020, 09:20:04 AM
If the tech bubble didn't kill it, and 2008 didn't kill it, there is no way this is going to kill it.   If fact, in a few years there are going to be droves of people posting all over the internet that don't even remember it clearly, either from normal faded recall, or from being sub-adults at the time it happened.

And everything will just move forward.

Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: jeroly on March 31, 2020, 10:55:37 AM
It's not going to disappear, but people's planning for it will sure as hell change.

- Expected investment returns will probably drop, so people will either be saving more or deferring currently planned retirement dates, with the caveat that...

- People (not so much on the MMM forums I expect) will see that it's not as hard to not spend so much money as they had previously thought, so their estimated retirement expenses may drop leading to lower stash requirements / less savings needed / earlier retirement dates

- Some people who have been working at home for weeks and months may find that they're not really enjoying their work that much and realize that what they were mostly getting from their jobs were the social aspects - comraderie, people to talk to, etc. - or the opportunity to get away from their families on a daily basis.

- Some people who have been working at home for weeks and months may find that they're not really enjoying being at home and may make plans to not early retire in place, or not early retire at all, or to incorporate more travel in their retirement budgets.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: martyconlonontherun on March 31, 2020, 01:49:48 PM
The recent re-run of the ChooseFI podcast episode with Michael Kitces was encouraging for those pursuing or already FIRE'd.  Kitces reminded the hosts that the Great Depression was an 89% loss of stock market value, it lasted for more than a decade, and yet the 4% rule WORKED even if you retired at the start of it.  So wear a cup and stop freaking out.   

With some of the angst displayed on other threads it seems like this virus episode should be a reckoning and those who don't have the stoicism to weather this market downturn without panic-selling should probably turn in their FIRE cards.  They would be complete basket cases if such an event happened after they leave the cushy job so they might as well admit it now and pursue other hobbies.  FIRE is not for everyone, never has been.
What is the math on that? I have 3.5% annual withdrawal and the stock market returns for that decade. I run out of money by year 15?

Initial Investment    $1,200,000.00          
Withdrawal    $42,000.000    Return   Withdrawal   Ending Balance
             $1,200,000.00
   Year 1   -11.91%    $(42,000.000)    $1,146,566.40
   Year 2   -28.48%    $(42,000.000)    $778,024.29
   Year 3   -47.07%    $(42,000.000)    $369,808.26
   Year 4   -15.15%    $(42,000.000)    $271,782.31
   Year 5   46.59%    $(42,000.000)    $356,405.68
   Year 6   -5.94%    $(42,000.000)    $293,235.18
   Year 7   41.37%    $(42,000.000)    $372,546.58
   Year 8   27.92%    $(42,000.000)    $434,561.58
   Year 9   -38.59%    $(42,000.000)    $224,864.27
   Year 10   25.21%    $(42,000.000)    $239,552.55
   Year 11   -5.45%    $(42,000.000)    $184,496.94
   Year 12   -15.29%    $(42,000.000)    $114,287.36
   Year 13   -17.86%    $(42,000.000)    $51,875.63
   Year 14   12.43%    $(42,000.000)    $16,323.78
   Year 15   19.45%    $(42,000.000)    $(22,501.25)
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Villanelle on March 31, 2020, 04:21:01 PM
This thread makes me wonder if our FIRE location plans should include consideration of the state's policy on this surprise billing, out-of-network stuff.

We will have what is generally considered to be very good insurance in FIRE, but no insurance covers everything. Although we have a few ideas and a vague list of criteria, we don't have a final location set.  This could be another factor to consider, one which I'd never considered (and wasn't aware of) before this conversation. 
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on March 31, 2020, 04:28:28 PM
This thread makes me wonder if our FIRE location plans should include consideration of the state's policy on this surprise billing, out-of-network stuff.

We will have what is generally considered to be very good insurance in FIRE, but no insurance covers everything. Although we have a few ideas and a vague list of criteria, we don't have a final location set.  This could be another factor to consider, one which I'd never considered (and wasn't aware of) before this conversation.

I think part of the where-to-live post-FIRE calculation should include due regard to unpleasant surprises that can't be effectively mitigated or insured against. Natural disasters, which can be insured against, aren't the same as lack of access to reasonably priced medical care.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Maenad on April 01, 2020, 07:07:51 AM
He doesn't have the ability to balance the fact that 25 people have lost their job for every illness, mild to severe, and 1500 have lost their gig for every death.  The latest modeling suggested that most of the deaths were among those who probably would have passed away within the next 2 years anyway due to advanced age or fragile health.  The unemployed are not of concern compared to the fear of criticism on twitter. 

The big concern is the load on hospitals. They don't have infinite capacity and infinite staffing, and having people out of work for months, as sucky as that is, is preferable to the hospitals getting completely swamped and having way more people die. In MN, the current models given how the disease is progressing here is that if we just let the disease go without any mitigations, the ICUs would fill up in 6 weeks, and the pandemic peak wouldn't hit until week 9, so you'd have 3 weeks on the way up, and assuming a normal distribution, 3 weeks on the way down before we return to levels the hospitals could handle. So, 6 weeks of 20% of the people getting sick needing hospitalization, and unable to get it, and a large portion dying at home. That's far, FAR worse than high unemployment that will be a temporary problem.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on April 01, 2020, 08:30:44 AM
The big concern is the load on hospitals. They don't have infinite capacity and infinite staffing, and having people out of work for months, as sucky as that is, is preferable to the hospitals getting completely swamped and having way more people die. In MN, the current models given how the disease is progressing here is that if we just let the disease go without any mitigations, the ICUs would fill up in 6 weeks, and the pandemic peak wouldn't hit until week 9, so you'd have 3 weeks on the way up, and assuming a normal distribution, 3 weeks on the way down before we return to levels the hospitals could handle. So, 6 weeks of 20% of the people getting sick needing hospitalization, and unable to get it, and a large portion dying at home. That's far, FAR worse than high unemployment that will be a temporary problem.

It's hard to say whether "letting" people die needlessly would be good or bad for society in the long run.  Unexpected large inter-generational wealth transfers, reduced pension liabilities and social services costs, large openings in company hierarchies, and a true understanding of the need to be prepared would be great for those who would make it through.  On the other hand, massive government debt that will need to be paid back, continuing to encourage companies to run on shoestring reserves and margin, and encouraging people to rely on the government are all bad things.

We may save millions of lives today only to end up with a society that is even worse prepared for the future.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: lv2glrfy on April 01, 2020, 11:15:11 AM
- Some people who have been working at home for weeks and months may find that they're not really enjoying their work that much and realize that what they were mostly getting from their jobs were the social aspects - comraderie, people to talk to, etc. - or the opportunity to get away from their families on a daily basis.

- Some people who have been working at home for weeks and months may find that they're not really enjoying being at home and may make plans to not early retire in place, or not early retire at all, or to incorporate more travel in their retirement budgets.

^ Whew, yes. These are the two biggies. It's simultaneously hard for me to see some loved ones go through both of these realizations and annoying to see others, advanced in their careers, go through the same (why exactly haven't these toxic 45-year-old husbands realized by now that they "hate" housework and childcare and being with their wives so much? What they do they think they'll be DOING in retirement...? Ugh. I digress.)

On the other hand, this has all solidified my absolute commitment to chasing FIRE (and, additionally, to being a SAHM someday). Life is too short and too precious, and I'm truly loving every single second being here working at home with my DH and cats. It feels like I was born for this. 
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: ysette9 on April 01, 2020, 11:38:17 AM
He doesn't have the ability to balance the fact that 25 people have lost their job for every illness, mild to severe, and 1500 have lost their gig for every death.  The latest modeling suggested that most of the deaths were among those who probably would have passed away within the next 2 years anyway due to advanced age or fragile health.  The unemployed are not of concern compared to the fear of criticism on twitter. 

The big concern is the load on hospitals. They don't have infinite capacity and infinite staffing, and having people out of work for months, as sucky as that is, is preferable to the hospitals getting completely swamped and having way more people die. In MN, the current models given how the disease is progressing here is that if we just let the disease go without any mitigations, the ICUs would fill up in 6 weeks, and the pandemic peak wouldn't hit until week 9, so you'd have 3 weeks on the way up, and assuming a normal distribution, 3 weeks on the way down before we return to levels the hospitals could handle. So, 6 weeks of 20% of the people getting sick needing hospitalization, and unable to get it, and a large portion dying at home. That's far, FAR worse than high unemployment that will be a temporary problem.

I get this totally.  Bolded above is flaw in the thinking.  There are not only 2 options.  The choices are not either "depression level unemployment" vs. "go to a rave party with 100 of your groovy friends". 

Especially in states where the curve has flattened there needs to be creativity on how to get people back to work, with face masks, prolonged isolation of elderly and infirm, still restricting large gatherings, and being prepared to pull things back a bit if cases spike.  Again, there are vast square miles of people in the middle of the country - those dreaded flyover states - where the virus has caused zero disruption and zero overrun.     

All context has been lost.  In a neighboring county with a half million people that has fewer than 100 cases and zero deaths, there is not a single street sweeper running, roofers and tree trimmers can't work, and no one can even go fishing. 

A customized solution needs to be had for the widely varying geography of the country where no international flights have ever landed and where people are not crammed into a subway system.  I hope the western governors have the nerve to turn the economic spigot back on at the end of April in the face of hysterical Twitter randos who live 3000 miles away.  I am concerned they do not.             
I agree that we need to be thinking of customized solutions for the longer term,  it i disagree that just because flyover states don’t have a problem YET means they don’t need to practice social distancing now. The whole point of social distancing is to do it before there is a huge problem, not after.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Maenad on April 01, 2020, 11:42:05 AM
He doesn't have the ability to balance the fact that 25 people have lost their job for every illness, mild to severe, and 1500 have lost their gig for every death.  The latest modeling suggested that most of the deaths were among those who probably would have passed away within the next 2 years anyway due to advanced age or fragile health.  The unemployed are not of concern compared to the fear of criticism on twitter. 

The big concern is the load on hospitals. They don't have infinite capacity and infinite staffing, and having people out of work for months, as sucky as that is, is preferable to the hospitals getting completely swamped and having way more people die. In MN, the current models given how the disease is progressing here is that if we just let the disease go without any mitigations, the ICUs would fill up in 6 weeks, and the pandemic peak wouldn't hit until week 9, so you'd have 3 weeks on the way up, and assuming a normal distribution, 3 weeks on the way down before we return to levels the hospitals could handle. So, 6 weeks of 20% of the people getting sick needing hospitalization, and unable to get it, and a large portion dying at home. That's far, FAR worse than high unemployment that will be a temporary problem.

I get this totally.  Bolded above is flaw in the thinking.  There are not only 2 options.  The choices are not either "depression level unemployment" vs. "go to a rave party with 100 of your groovy friends". 

Especially in states where the curve has flattened there needs to be creativity on how to get people back to work, with face masks, prolonged isolation of elderly and infirm, still restricting large gatherings, and being prepared to pull things back a bit if cases spike.   

Oh, I absolutely agree. The actions taken need to be based on the data of what's actually going on, and adjusted as needed. We're in total agreement on that. I've just been hearing too many people lately act like it's totally fine to have church services with hundreds of people together, since this virus is a liberal plot, or something. Didn't realize viruses were political, but apparently that's what the world has become now.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Maenad on April 01, 2020, 11:46:26 AM
If the tech bubble didn't kill it, and 2008 didn't kill it, there is no way this is going to kill it.   If fact, in a few years there are going to be droves of people posting all over the internet that don't even remember it clearly, either from normal faded recall, or from being sub-adults at the time it happened.

And everything will just move forward.

Ending my own participation in the foam, this was my first thought as well. If the Global Financial Crisis didn't kill it, this won't either. I think it will weed out people who were blithe about how perfectly things were going to go for them, but in my experience, there's actually not that many of those around. They're a great straw man, but ultimately more of a stereotype than reality.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: bacchi on April 01, 2020, 01:18:04 PM
He doesn't have the ability to balance the fact that 25 people have lost their job for every illness, mild to severe, and 1500 have lost their gig for every death.  The latest modeling suggested that most of the deaths were among those who probably would have passed away within the next 2 years anyway due to advanced age or fragile health.  The unemployed are not of concern compared to the fear of criticism on twitter. 

The big concern is the load on hospitals. They don't have infinite capacity and infinite staffing, and having people out of work for months, as sucky as that is, is preferable to the hospitals getting completely swamped and having way more people die. In MN, the current models given how the disease is progressing here is that if we just let the disease go without any mitigations, the ICUs would fill up in 6 weeks, and the pandemic peak wouldn't hit until week 9, so you'd have 3 weeks on the way up, and assuming a normal distribution, 3 weeks on the way down before we return to levels the hospitals could handle. So, 6 weeks of 20% of the people getting sick needing hospitalization, and unable to get it, and a large portion dying at home. That's far, FAR worse than high unemployment that will be a temporary problem.

I get this totally.  Bolded above is flaw in the thinking.  There are not only 2 options.  The choices are not either "depression level unemployment" vs. "go to a rave party with 100 of your groovy friends". 

Especially in states where the curve has flattened there needs to be creativity on how to get people back to work, with face masks, prolonged isolation of elderly and infirm, still restricting large gatherings, and being prepared to pull things back a bit if cases spike.   

Oh, I absolutely agree. The actions taken need to be based on the data of what's actually going on, and adjusted as needed. We're in total agreement on that. I've just been hearing too many people lately act like it's totally fine to have church services with hundreds of people together, since this virus is a liberal plot, or something. Didn't realize viruses were political, but apparently that's what the world has become now.

We can't make good decisions without good data. If a city isn't testing, of course it won't have any cases. As I mentioned in another thread, Kansas City has a very low number of cases for such a large city but Missouri can't even test everyone in their infected nursing homes. Why would a city like that go back to business-as-usual?
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: bacchi on April 01, 2020, 02:34:56 PM
Business as usual was not suggested.

Even allowing people to get back to work with face masks and no mass gatherings seems premature if we don't have data.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: doggyfizzle on April 01, 2020, 06:32:37 PM
If the tech bubble didn't kill it, and 2008 didn't kill it, there is no way this is going to kill it.   If fact, in a few years there are going to be droves of people posting all over the internet that don't even remember it clearly, either from normal faded recall, or from being sub-adults at the time it happened.

And everything will just move forward.

Exactly!  Gyrations in publicly-traded equity valuations are really, really common.  Just in my "investing" lifetime, I can recall the meltdown of the LTCM Hedge Fund implosion (and Asian Financial Crisis) of 1997/1998, Dot-com bubble bursting in 2000-2003 (compounded by 9/11), Housing Bubble/Global Recession/Oil-Price Skyrocketing of 2007-2009 (and beyond) and now the COVID Apocalypse of 2020.  Every 5-10 years this is entirely normal and should be seen as an opportunity to rotate funds from bonds (if in the black) to take advantage of personal and institutional investor fear.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: jeroly on April 01, 2020, 08:30:23 PM
The recent re-run of the ChooseFI podcast episode with Michael Kitces was encouraging for those pursuing or already FIRE'd.  Kitces reminded the hosts that the Great Depression was an 89% loss of stock market value, it lasted for more than a decade, and yet the 4% rule WORKED even if you retired at the start of it.  So wear a cup and stop freaking out.   

With some of the angst displayed on other threads it seems like this virus episode should be a reckoning and those who don't have the stoicism to weather this market downturn without panic-selling should probably turn in their FIRE cards.  They would be complete basket cases if such an event happened after they leave the cushy job so they might as well admit it now and pursue other hobbies.  FIRE is not for everyone, never has been.
What is the math on that? I have 3.5% annual withdrawal and the stock market returns for that decade. I run out of money by year 15?

Initial Investment    $1,200,000.00          
Withdrawal    $42,000.000    Return   Withdrawal   Ending Balance
             $1,200,000.00
   Year 1   -11.91%    $(42,000.000)    $1,146,566.40
   Year 2   -28.48%    $(42,000.000)    $778,024.29
   Year 3   -47.07%    $(42,000.000)    $369,808.26
   Year 4   -15.15%    $(42,000.000)    $271,782.31
   Year 5   46.59%    $(42,000.000)    $356,405.68
   Year 6   -5.94%    $(42,000.000)    $293,235.18
   Year 7   41.37%    $(42,000.000)    $372,546.58
   Year 8   27.92%    $(42,000.000)    $434,561.58
   Year 9   -38.59%    $(42,000.000)    $224,864.27
   Year 10   25.21%    $(42,000.000)    $239,552.55
   Year 11   -5.45%    $(42,000.000)    $184,496.94
   Year 12   -15.29%    $(42,000.000)    $114,287.36
   Year 13   -17.86%    $(42,000.000)    $51,875.63
   Year 14   12.43%    $(42,000.000)    $16,323.78
   Year 15   19.45%    $(42,000.000)    $(22,501.25)
I believe that you are not factoring in dividends, which were fairly substantial in that era.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: BPA on April 01, 2020, 10:04:34 PM
Proud "hysterical rule keeper" here. I'd far rather be that than lacking in empathy/bordering on sociopathic when it comes to those who are older or have compromised immune systems like my brother-in-law who is 34 and lives in a nursing home. He is at very high risk to die from this because of living in a home and having a disorder that managed properly (ie not sacrificed for "the economy") will extend his generally very happy life for many years to come. He (and many others like him) were not destined to die within two years, but are made more vulnerable now by people who aren't taking social distancing and self-isolation seriously enough and/or seem to think that he's expendable.

But back to the real issue mentioned in the OP.

As for FIRE dying out because of Covid, I agree that some people are struggling with coming to terms with their investment losses, but I do think that being FIRE is what is helping my family cope with this crisis, so I hope that people don't turn away from the FIRE movement. Having no debt (including a paid off house), frugal habits, and a DIY mindset will help my family cope no matter what happens. Perhaps many people need to be more realistic about their risk tolerance, so I hope that changes going forward. However, I understand that it is hard to really imagine what one's risk tolerance might be if you haven't invested through a significant downturn.

I did the geo-arbitrage within my own country and glad I did. That may become more appealing as someone else pointed out.

Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: bendixso123 on April 01, 2020, 11:27:59 PM
I do think with FIRE, it is important to have a *reason* to FIRE, and so much of that is personality-driven.

I am interested in financial independence because I'm actually way more passionate about my field (software) than the majority of people who are in it and who I am usually forced to work with because "teamwork" is a thing people seem to care about. I question the dominant convenience-based way software is built, and I want to demolish vast swathes of currently accepted dogma and build something better from the ground up.

Of course *my* kind of thinking is heresy in most companies today. You can't find organizations with the means to take on projects as ambitious as the sorts of things I'm interested in, and no manager I've met can think on a long enough time horizon to make actual innovation happen.

Then you interview at some of these companies and you're just taken to cleaners over these bullshit toy programming challenges that emphasize how well you do under some contrived high pressure scenario.

I'm supposed to pretend to care about the latest pile 'o bullshit year after year. Like now we're all doing this Object Oriented thing. Oh wait. Now it's React. Oh wait. Now it's some other popular piece of shit web framework thingy.

Meanwhile, here I am, building a cross-platform video game completely from scratch and thinking up ways to stop companies from having to rewrite the same app two times in two totally different programming languages.

Of course, a truly well thought out video game doesn't just magically appear from nowhere. You have to invest some serious time and energy into it. It's very difficult to take on a project that ambitious while working a job, and you need to fund other aspects of its development like graphics, music, designers, that sort of thing.

You're probably looking at a minimum of three years full-time with at least a hundred grand invested, and it's a financial risk because you may not get the press you want or some other random event could sink it. Plus, it just takes time to create something worthwhile. You have to keep practicing at something before you get good enough at it to make waves.

FIRE, for me, has always been a way to jump into a career where I'm not constantly feeling dysphoria over holding certain beliefs about the right way to do things while pretending to like the bullshit to get jobs.

Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Maenad on April 02, 2020, 11:45:04 AM
The recent re-run of the ChooseFI podcast episode with Michael Kitces was encouraging for those pursuing or already FIRE'd.  Kitces reminded the hosts that the Great Depression was an 89% loss of stock market value, it lasted for more than a decade, and yet the 4% rule WORKED even if you retired at the start of it.  So wear a cup and stop freaking out.   

With some of the angst displayed on other threads it seems like this virus episode should be a reckoning and those who don't have the stoicism to weather this market downturn without panic-selling should probably turn in their FIRE cards.  They would be complete basket cases if such an event happened after they leave the cushy job so they might as well admit it now and pursue other hobbies.  FIRE is not for everyone, never has been.
What is the math on that? I have 3.5% annual withdrawal and the stock market returns for that decade. I run out of money by year 15?

Initial Investment    $1,200,000.00          
Withdrawal    $42,000.000    Return   Withdrawal   Ending Balance
             $1,200,000.00
   Year 1   -11.91%    $(42,000.000)    $1,146,566.40
   Year 2   -28.48%    $(42,000.000)    $778,024.29
   Year 3   -47.07%    $(42,000.000)    $369,808.26
   Year 4   -15.15%    $(42,000.000)    $271,782.31
   Year 5   46.59%    $(42,000.000)    $356,405.68
   Year 6   -5.94%    $(42,000.000)    $293,235.18
   Year 7   41.37%    $(42,000.000)    $372,546.58
   Year 8   27.92%    $(42,000.000)    $434,561.58
   Year 9   -38.59%    $(42,000.000)    $224,864.27
   Year 10   25.21%    $(42,000.000)    $239,552.55
   Year 11   -5.45%    $(42,000.000)    $184,496.94
   Year 12   -15.29%    $(42,000.000)    $114,287.36
   Year 13   -17.86%    $(42,000.000)    $51,875.63
   Year 14   12.43%    $(42,000.000)    $16,323.78
   Year 15   19.45%    $(42,000.000)    $(22,501.25)
I believe that you are not factoring in dividends, which were fairly substantial in that era.

Also, IIRC, there was deflation during some of those years, so the withdrawal amount would have been lower.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: martyconlonontherun on April 02, 2020, 11:52:49 AM
The recent re-run of the ChooseFI podcast episode with Michael Kitces was encouraging for those pursuing or already FIRE'd.  Kitces reminded the hosts that the Great Depression was an 89% loss of stock market value, it lasted for more than a decade, and yet the 4% rule WORKED even if you retired at the start of it.  So wear a cup and stop freaking out.   

With some of the angst displayed on other threads it seems like this virus episode should be a reckoning and those who don't have the stoicism to weather this market downturn without panic-selling should probably turn in their FIRE cards.  They would be complete basket cases if such an event happened after they leave the cushy job so they might as well admit it now and pursue other hobbies.  FIRE is not for everyone, never has been.
What is the math on that? I have 3.5% annual withdrawal and the stock market returns for that decade. I run out of money by year 15?

Initial Investment    $1,200,000.00          
Withdrawal    $42,000.000    Return   Withdrawal   Ending Balance
             $1,200,000.00
   Year 1   -11.91%    $(42,000.000)    $1,146,566.40
   Year 2   -28.48%    $(42,000.000)    $778,024.29
   Year 3   -47.07%    $(42,000.000)    $369,808.26
   Year 4   -15.15%    $(42,000.000)    $271,782.31
   Year 5   46.59%    $(42,000.000)    $356,405.68
   Year 6   -5.94%    $(42,000.000)    $293,235.18
   Year 7   41.37%    $(42,000.000)    $372,546.58
   Year 8   27.92%    $(42,000.000)    $434,561.58
   Year 9   -38.59%    $(42,000.000)    $224,864.27
   Year 10   25.21%    $(42,000.000)    $239,552.55
   Year 11   -5.45%    $(42,000.000)    $184,496.94
   Year 12   -15.29%    $(42,000.000)    $114,287.36
   Year 13   -17.86%    $(42,000.000)    $51,875.63
   Year 14   12.43%    $(42,000.000)    $16,323.78
   Year 15   19.45%    $(42,000.000)    $(22,501.25)
I believe that you are not factoring in dividends, which were fairly substantial in that era.

Also, IIRC, there was deflation during some of those years, so the withdrawal amount would have been lower.
Thanks. I was missing dividends and bonds. Obviously this is a bad/worst case scenario but a devils advocate could point out we won't be getting those bonds and dividends so in the worst depression scenario we would be screwed. That said, it would allow you to ride it out 20 years while you find additional sources of income.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on April 13, 2020, 07:19:12 AM
Because of articles like the one that started this thread (and the one I have below), a lot of podcasts are addressing the question of whether FIRE is dead.  The April 5th episode of Bigger Pockets had a few of our well-known names on to talk about how they are weathering these events.  All are several years into RE, are doing very well, and have good advice on how to prepare yourself in the run up to retirement so that you are well-positioned for the black swans.  MadFientist and Nords were among them. 

In other news, Financial Samurai is up to his usual look-at-me tripe: 
   
https://www.businessinsider.com/coronavirus-pandemic-might-end-fire-movement-early-retirement-2020-3

It's way too early to tell what the true SWR would be for very recent retirees, the 2000 cohort is not looking too good right now.  FIRE can't ever truly die, just get more difficult.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: SugarMountain on April 13, 2020, 02:47:54 PM
The recent re-run of the ChooseFI podcast episode with Michael Kitces was encouraging for those pursuing or already FIRE'd.  Kitces reminded the hosts that the Great Depression was an 89% loss of stock market value, it lasted for more than a decade, and yet the 4% rule WORKED even if you retired at the start of it.  So wear a cup and stop freaking out.   

With some of the angst displayed on other threads it seems like this virus episode should be a reckoning and those who don't have the stoicism to weather this market downturn without panic-selling should probably turn in their FIRE cards.  They would be complete basket cases if such an event happened after they leave the cushy job so they might as well admit it now and pursue other hobbies.  FIRE is not for everyone, never has been.
What is the math on that? I have 3.5% annual withdrawal and the stock market returns for that decade. I run out of money by year 15?

Initial Investment    $1,200,000.00          
Withdrawal    $42,000.000    Return   Withdrawal   Ending Balance
             $1,200,000.00
   Year 1   -11.91%    $(42,000.000)    $1,146,566.40
   Year 2   -28.48%    $(42,000.000)    $778,024.29
   Year 3   -47.07%    $(42,000.000)    $369,808.26
   Year 4   -15.15%    $(42,000.000)    $271,782.31
   Year 5   46.59%    $(42,000.000)    $356,405.68
   Year 6   -5.94%    $(42,000.000)    $293,235.18
   Year 7   41.37%    $(42,000.000)    $372,546.58
   Year 8   27.92%    $(42,000.000)    $434,561.58
   Year 9   -38.59%    $(42,000.000)    $224,864.27
   Year 10   25.21%    $(42,000.000)    $239,552.55
   Year 11   -5.45%    $(42,000.000)    $184,496.94
   Year 12   -15.29%    $(42,000.000)    $114,287.36
   Year 13   -17.86%    $(42,000.000)    $51,875.63
   Year 14   12.43%    $(42,000.000)    $16,323.78
   Year 15   19.45%    $(42,000.000)    $(22,501.25)

Part of it could be you're not adjusting your withdrawals for inflation (or in this case deflation for the first part of the depression).
1929 0%
1930 -7% $39,060
1931 -10% $35,154
1932 -10% $31,639
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Nords on April 18, 2020, 07:59:44 PM
Because of articles like the one that started this thread (and the one I have below), a lot of podcasts are addressing the question of whether FIRE is dead.  The April 5th episode of Bigger Pockets had a few of our well-known names on to talk about how they are weathering these events.  All are several years into RE, are doing very well, and have good advice on how to prepare yourself in the run up to retirement so that you are well-positioned for the black swans.  MadFientist and Nords were among them. 


It's way too early to tell what the true SWR would be for very recent retirees, the 2000 cohort is not looking too good right now.  FIRE can't ever truly die, just get more difficult.
You might be missing the point, @joleran

The 4% SWR is the *worst* case for the last century, including the period of 1966-82.
(EDIT, see the post below.) 

The 4% SWR is the *worst* case of 30-year portfolio survival for the last century, including the period of 1966-82.  You're presuming that the 2000 cohort has stumbled blindly along for the last 20 years, blissfully spending their CPI adjustments every year without ever paying attention to their true spending needs or any (American) possibility of Social Security or any possibility of variable spending.  For them to fail, the SWR would have to be less than 4%.

Mindy Jensen set up that BP Money podcast on a Thursday, we recorded on Friday, and she released it on a Monday.  More to the point, the following episode had Michael Kitces analyzing the latest reviews of the 4% SWR:
https://www.biggerpockets.com/blog/biggerpockets-money-podcast-120early-retirementasset-allocation-safe-withdrawal-rates-michael-kitces
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on April 20, 2020, 08:32:41 AM
It's way too early to tell what the true SWR would be for very recent retirees, the 2000 cohort is not looking too good right now.  FIRE can't ever truly die, just get more difficult.
You might be missing the point, @joleran

The 4% SWR is the *worst* case for the last century, including the period of 1966-82.  You're presuming that the 2000 cohort has stumbled blindly along for the last 20 years, blissfully spending their CPI adjustments every year without ever paying attention to their true spending needs or any (American) possibility of Social Security or any possibility of variable spending.  For them to fail, the SWR would have to be less than 4%.

Mindy Jensen set up that BP Money podcast on a Thursday, we recorded on Friday, and she released it on a Monday.  More to the point, the following episode had Michael Kitces analyzing the latest reviews of the 4% SWR:
https://www.biggerpockets.com/blog/biggerpockets-money-podcast-120early-retirementasset-allocation-safe-withdrawal-rates-michael-kitces

The 4% SWR is the worst case for portfolio depletion over 30 years, assuming people happily continued spending their CPI adjustments with depleted portfolios as you say.

Here's the thing for the 2000 cohort - they're doing really badly.  https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/

In order for them to recover and re-validate the 4% rule, we will need substantial outperformance in the next 10 years during a time when 1. even Vanguard has been urging caution about expected equity returns in this timeframe due to high valuations until recently and 2. this recent additional setback due to COVID-19 is likely to have long lasting knock-on effects.  That would be utterly amazing to observe, and I'm not saying it won't happen, but the 2000 cohort is right now at high risk for "breaking" the 4% rule.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Nords on April 20, 2020, 09:49:44 AM
It's way too early to tell what the true SWR would be for very recent retirees, the 2000 cohort is not looking too good right now.  FIRE can't ever truly die, just get more difficult.
You might be missing the point, @joleran

The 4% SWR is the *worst* case for the last century, including the period of 1966-82.  You're presuming that the 2000 cohort has stumbled blindly along for the last 20 years, blissfully spending their CPI adjustments every year without ever paying attention to their true spending needs or any (American) possibility of Social Security or any possibility of variable spending.  For them to fail, the SWR would have to be less than 4%.

The 4% SWR is the worst case for portfolio depletion over 30 years, assuming people happily continued spending their CPI adjustments with depleted portfolios as you say.
All right, I didn't anticipate that interpretation of my words, so let me rephrase for precision.

"The 4% SWR is the *worst* case of 30-year portfolio survival for the last century."

Here's the thing for the 2000 cohort - they're doing really badly.  https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/

In order for them to recover and re-validate the 4% rule, we will need substantial outperformance in the next 10 years during a time when 1. even Vanguard has been urging caution about expected equity returns in this timeframe due to high valuations until recently and 2. this recent additional setback due to COVID-19 is likely to have long lasting knock-on effects.  That would be utterly amazing to observe, and I'm not saying it won't happen, but the 2000 cohort is right now at high risk for "breaking" the 4% rule.
Right, I get that too.  (I've spent quite a bit of time with the 4% SWR.)  Let's stipulate that there's plenty of real-world and academic data that the 2000 cohort is doing really badly.   

Incidentally, it sort of proves the point that you can see a portfolio failure coming from a long way off.  People were talking about it over a decade before Karsten put the spotlight on it.
http://www.raddr-pages.com/forums/viewtopic.php?f=2&t=1208&hilit=Y2K

But that's not my point.  Here's my point.

People who retired at the 4% SWR don't have to recover over the next decade, because they've already recovered.  They either never blindly followed the 4% SWR's inflation increases or they've already varied the way they spend.  They might even start Social Security before 2030.  They used the 4% SWR, they saw failure coming, and they acted.  They're winning.

We don't have to "revalidate" anything about the 4% SWR. It's a very useful tripwire all by itself, just the way it stands.  Failures have already been identified for various asset allocations, and some people might feel uncomfortable with a portfolio value near zero at the end of their lives.  Yet we only have to avoid its failure rates by not blindly following the computer simulation.

If you really want to fix the 4% SWR then you'd add in annuities (SPIAs or deferred) or figure out when to implement variable spending (temporary or permanent), or get a few more centuries of data to extend the 4% SWR success rates past 30 years (Monte Carlo).  But people are already working on those enhancements.

Here's the really annoying issue with driving the 4% SWR to 100% success, or with revising it to the 3.47952% SWR, or with dismissing it for its other perceived flaws:
People stay in the workforce longer than necessary. 

They lock themselves into "Just One More Year" Syndrome, or they decide to gut it out for the pension, or they're afraid to negotiate a career change.  A few of them just want someone to tell them what to do, and when we claim that the 4% SWR doesn't work then they don't know what to do.

Instead of trying to optimize the math, we should be optimizing our lives. 

For that purpose, the 4% SWR keeps people from spending the rest of their lives trying to eliminate failures out of fear.

That podcast with Michael Kitces (who's also spent quite a bit of time with the 4% SWR) goes a long way toward replacing fear with optimism and confidence.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: joleran on April 20, 2020, 10:33:08 AM
For that purpose, the 4% SWR keeps people from spending the rest of their lives trying to eliminate failures out of fear.

All good points, especially this one.  4% rule messaging is generally helpful and the vast majority of people need to be saving much more to even allow for a 4% retirement, let alone early retirement.

For me though, it's a pretty big deal if we have (potentially multiple) violations of the 4% rule coming in the next 20 years.  Just because historically we've had a certain amount of growth fairly well-bounded on the lower end over a retirement timeframe, does not mean we couldn't, for example, have a 10 year global recession that blows all the historical data out of the water, which would rock many in the early retirement community hard.

"This time its different" is foolish and has been proven wrong many times in the past - bird flu, swine flu, SARS, MERS all had their impact on humanity but eventually became minor footnotes in history.  But this time it was different. 100 years from now it won't be anything more than the spanish flu is to us now, but that doesn't help the people it directly effects today.  An (entirely theoretical right now) unprecedented economic hit literally worse for an early retiree than anything we've seen in the last 150 years is likely going to be in that same boat.

When you're sitting there looking at giving up a high paying job with relatively little chance of being able to walk back into it after a few years out of the field and a couple of kids that will be directly impacted if you're wrong, the 4% rule for present-day people looking at FIRE seems imprudent until we understand what things are going to look like in the next year or two.

ERN covers this flexibility too, and sometimes it's really ugly what it would take: https://earlyretirementnow.com/2018/05/09/the-ultimate-guide-to-safe-withdrawal-rates-part-24-flexibility-myths-vs-reality/
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Nords on April 20, 2020, 02:07:35 PM
When you're sitting there looking at giving up a high paying job with relatively little chance of being able to walk back into it after a few years out of the field and a couple of kids that will be directly impacted if you're wrong, the 4% rule for present-day people looking at FIRE seems imprudent until we understand what things are going to look like in the next year or two.
It can be difficult to move from an attitude of scarcity to abundance.  Members of my military family audience are frequently reluctant to leave active duty (long after it stops being challenging or fulfilling) simply because they can't imagine that anyone will pay them enough to reach financial independence.  We call it the "military inferiority complex."

Speaking as someone who made that mistake over two decades ago, I hope people will start with the <good enough> of the 4% SWR instead of being stuck with paralysis analysis in pursuit of perfection.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: DadJokes on April 20, 2020, 02:15:07 PM
When you're sitting there looking at giving up a high paying job with relatively little chance of being able to walk back into it after a few years out of the field and a couple of kids that will be directly impacted if you're wrong, the 4% rule for present-day people looking at FIRE seems imprudent until we understand what things are going to look like in the next year or two.
It can be difficult to move from an attitude of scarcity to abundance.  Members of my military family audience are frequently reluctant to leave active duty (long after it stops being challenging or fulfilling) simply because they can't imagine that anyone will pay them enough to reach financial independence.  We call it the "military inferiority complex."

Speaking as someone who made that mistake over two decades ago, I hope people will start with the <good enough> of the 4% SWR instead of being stuck with paralysis analysis in pursuit of perfection.

I saw that fear a lot when I was in, and leadership causes a lot of it. First sergeants who want people to re-enlist would question whether or not separating soldiers would be able to find employment "in this economy" (it was 2015 when I got out and heard the spiel).
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: jeroly on April 20, 2020, 03:47:07 PM
For that purpose, the 4% SWR keeps people from spending the rest of their lives trying to eliminate failures out of fear.

All good points, especially this one.  4% rule messaging is generally helpful and the vast majority of people need to be saving much more to even allow for a 4% retirement, let alone early retirement.

For me though, it's a pretty big deal if we have (potentially multiple) violations of the 4% rule coming in the next 20 years.  Just because historically we've had a certain amount of growth fairly well-bounded on the lower end over a retirement timeframe, does not mean we couldn't, for example, have a 10 year global recession that blows all the historical data out of the water, which would rock many in the early retirement community hard.

"This time its different" is foolish and has been proven wrong many times in the past - bird flu, swine flu, SARS, MERS all had their impact on humanity but eventually became minor footnotes in history.  But this time it was different. 100 years from now it won't be anything more than the spanish flu is to us now, but that doesn't help the people it directly effects today.  An (entirely theoretical right now) unprecedented economic hit literally worse for an early retiree than anything we've seen in the last 150 years is likely going to be in that same boat.

When you're sitting there looking at giving up a high paying job with relatively little chance of being able to walk back into it after a few years out of the field and a couple of kids that will be directly impacted if you're wrong, the 4% rule for present-day people looking at FIRE seems imprudent until we understand what things are going to look like in the next year or two.

ERN covers this flexibility too, and sometimes it's really ugly what it would take: https://earlyretirementnow.com/2018/05/09/the-ultimate-guide-to-safe-withdrawal-rates-part-24-flexibility-myths-vs-reality/
That linked to article discusses how a 4% withdrawal rate won’t work for a fifty year retirement, which is something far different than the 4% ‘rule’ discusses.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: FIREsigns on May 13, 2020, 05:05:07 PM
@Grim Squeaker,

HR Director here. Check again---you should not have to wait to drop your daughter from your insurance plan. And her employer plan should be required to add her once she proves she's lost coverage elsewhere. While you CAN keep her in your subscription, to my knowledge you are NOT REQUIRED to do so. And since she has a job and access to coverage there, I'd cut her loose (especially since she's totally disrespecting you).
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: TheGrimSqueaker on May 14, 2020, 08:09:46 AM
@Grim Squeaker,

HR Director here. Check again---you should not have to wait to drop your daughter from your insurance plan. And her employer plan should be required to add her once she proves she's lost coverage elsewhere. While you CAN keep her in your subscription, to my knowledge you are NOT REQUIRED to do so. And since she has a job and access to coverage there, I'd cut her loose (especially since she's totally disrespecting you).

Hi. Unfortunately I checked with multiple plan administrators, begging for help at times, but the only time I am allowed to unilaterally drop her is during open enrollment. That is coming up in a few months. To drop her at any other time requires a "qualifying event" and I must have paperwork to prove she has coverage elsewhere within a certain number of days, after which point I lose the right to make changes. It is a very abuse-centric policy that was probably set up to prevent abusive spouses from dropping coverage on a vulnerable homemaker or child. Ironically it has had the opposite effect: it allows an abusive family member to drain the policy holder by deliberately running up gigantic bills for imaginary or self-inflicted medical problems.

I kicked my 20-year-old daughter out of the house on Valentine's Day for refusing to stop engaging in some illegal and dangerous activities that put me at risk. It was either that or become complicit in felony level crime by winking, nodding, and making it easier for her to continue while insulating her from the consequences. Furthermore she was not holding up her end of even one of the agreements she made when she moved in. Her behavior toward me has improved somewhat since I booted her out, but she's still not leading what I would consider to be an honest life. With her job she's gone to part-time. But since she has Medicaid I don't see a reason to keep her on when open enrollment arrives around the start of the fiscal year.

On the plan Web site there was a switch I could set to prevent automatic deduction from my HRA, which is too late this year but which would protect me next year if I still had her on the account (I don't plan to).
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Missy B on May 19, 2020, 12:48:05 AM
I keep seeing articles about how the COVID recession is going to delay retirement and whack the FIRE movement, and that millenials (its always the millenials) are going to be so badly sidetracked financially that they'll have to work til they die. (Their gig jobs are going to leave them repeatedly unemployed for months at a time, and then they'll get lousy market returns and low interest rates).

But even millenials cannot destroy the FIRE movement :)

In the short term I imagine there will be a lot of people who were about to retire who will delay for a year or two, just like in 2009. Longer term who can say what conditions will be. I don't think it will be easy like it was for the boomers, who were remarkably blessed by their timing and who could have the grace to be less smug about it. 
But I think that if it is as difficult as some are forecasting, it's going to be more motivating, not less, for a lot of people. And by that I don't mean that I think they'll going to work harder or hustle more, though some will. I think that people faced with treading water financially for decades are going to think a lot harder about what they really need and how they can make it work. I know for myself, when I looked at my portfolio, and at some of the changes to my work, skinny fire looked suddenly much more viable. Do I want more of a cushion? Oh, yeah. Would I drag myself through multiple stressful years to get there? No. And I really don't  expect that will be the case. But for others who are facing that situation who are already of the FIRE mindset I think it will encourage earlier retirement.
Title: Re: Why the concept of retiring early could disappear due to Coronavirus
Post by: Chris@TTL on May 21, 2020, 11:57:09 AM
...
But I think that if it is as difficult as some are forecasting, it's going to be more motivating, not less, for a lot of people.

I'm with you here. It seems like a pandemic is a great way to:
We decided to pull the trigger less than two weeks ago (well, admittedly, begin the slow transition from full-time to part-time consulting for special projects -- for one of us at least). Our finances were still above the ol' 4% rule so it seems like no better time than now (we'd been planning this for a while, it just happened to coincide with a pandemic).