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

[vand]

It seemed too easy.

Stocks doubled off their covid bottom, everyone's investment accounts took a giant leap forwardas the markets went into a epic meltup following an unprecedented monetary stimulus package. We got a once in generation tailwind that took a large amount of us over the x25 multiple, officially hitting their FIRE target and pulling the plug on the world of paid employment. 

They dubbed it the Great Resignation.

And indeed it was too easy - stocks have now gone sideways for the last year. The S&P today sits lower than it did a year ago. Bonds got crushed in the last year.  A hypothetical x25 pot from a year ago would be a x23 or x24 pot today depending on its particular asset allocation. But of course, with inflation officially 8.5%, that makes it a x21-22 pot in today's money. 

x21 and still 50 years of retirement to support. Not looking so good now, is it? It wasn't meant to be like that. The market was supposed to continue to go up 20% a year, and they assured us that inflation was only transitory, dammit!!

[Cranky]

Well, it’s certainly a bit unnerving. Dh’s pension has no COLA.

I think the market will recover and if it doesn’t we’ll all be in the same very, very leaky boat.

[vand]

Cherry picking a window nearer the recent peak, someone retiring around Oct-Dec, their portfolio would now:

Taken a -12% drop in nominal terms
Down another -5% in real terms
Be down by half a year's spending

I mean, pick whatever numbers you like and maybe I've presented a more extreme case here, making no adjustments for variable withdrawals etc, but it's easy to see how a x25 peak-pot is already facing the reality of now being a x20-21 pot barely 6 months later...

[dblaace]

It has been a little disconcerting. I have a pretty good cash buffer so I do not need to sell anything for a year or 2 unless high inflation continues. Plus my retirement plan was very conservative to begin with.

I just need to stop watching it so much.

[Mr. Green]

Its too early to tell. Statistically, someone who has FIREd within the last year running back to work now is seriously jumping the shark. 3 years from now this could look like a small bump on the road to a long and successful FIRE. I'm sure it's unnerving, though, especially with the possibility of a recession on the horizon. This is one of those moments when you actually find out what your risk tolerance is. All things considered, that's a lesson I'd be glad to learn just a year into FIRE versus a number of years in.

[vand]

It has been a little disconcerting. I have a pretty good cash buffer so I do not need to sell anything for a year or 2 unless high inflation continues. Plus my retirement plan was very conservative to begin with.

I just need to stop watching it so much.

In my world a x25 pot with a 2yr cash buffer is just a x27 pot with a 7.4% allocation to cash...

[bmjohnson35]

I retired at beginning of 2020 with higher buffer than x25 and we have built in income streams that kick in over the next 10 yrs, so I won't claim we match the criteria you have laid out, but it still seems a bit early to start worrying. 

[shureShote]

Surely anyone who retired would have had a couple years of expenses not in equities (or even normal bonds) and had a plan for just what is happening. Tighten the belt a tad, defer a vacation. Should be fine.

But yeah, there has to be a bunch of nervous folks who forgot the market goes down a lot quite often.

[vand]

Its too early to tell. Statistically, someone who has FIREd within the last year running back to work now is seriously jumping the shark. 3 years from now this could look like a small bump on the road to a long and successful FIRE. I'm sure it's unnerving, though, especially with the possibility of a recession on the horizon. This is one of those moments when you actually find out what your risk tolerance is. All things considered, that's a lesson I'd be glad to learn just a year into FIRE versus a number of years in.

You are of course right to say that only time will tell.  But risky assets like stocks were priced for perfection at the start of the year... but what is unfolding in the real world and the economy has been closer to a car crash as real incomes and living standards are squeezed and the US economy shrank by -1.4% in Q1.  At some point the financial engineering has to give way to reality, and the reality is that things are getting worse for a lot of people, so markets will eventually reflect that.

The other thing is, unlike the 2000s, we cannot rely on bonds to cushion the blow and carry our portfolios if stocks struggle. The 10yr note still only yields about 2.9%. Maybe that will beat inflation over the next 10 years, but even if it does it'll only be by a pathetic amount, and nowhere near enough to offset a lost decade in stocks if that is what unfolds.

[Telecaster]

Stocks have been very high priced lately and still are, but they aren't as crazy as the early 2000s.  I am fairly convinced--but have no way to know for sure--that the risk premium for US stocks is secularly lower than it used to be.  In other words, people are willing to buy stocks at higher prices.  And so stocks will continue to remain at historically high prices.  Remember how much you paid for this advice. 

Inflation is a retirement killer.  But we don't yet know if what we are seeing is lasting or not.  You're right, in that we will likely not see the Great Bond Tailwind of the 1980s and 1990s.  But we don't necessarily have to either. 

So 21-22 was probably not a historically great time to retire.  But I high doubt it was the worst time.  1929 and 1966 were epically shitty times.  This doesn't feel epically shitty to me. 

[EscapeVelocity2020]

It's easy to speculate after a month like April, but you are assuming that 'this time it's different'...  Over the many years leading up to April 2022, folks have opined on the 'Stop Worrying About the 4% Rule' thread that ER might require a more conservative SWR, and each time the market got back up and proved everyone wrong.  I guess we'll have some idea about the answer to your question in about 10 years...  20 years to be a little more certain...

[Villanelle]

If I were in that class, I'd be proceeding according to my layered plan, which would include cutting and delaying some spending, and potentially getting or scaling up a side hustle.  One fortunate thing is that currently, unlike with many downturns, the job market is incredible.  So finding a way to bring in some income to minimize withdraws should be fairly easy.  And since they are newly retired, networks and skills are still current.   

[Freedomin5]

Wise people who pulled the plug would not have cut it so close and retired the day they hit 25x expenses. They would have built in a cash buffer or yield shield. They would've also had multiple weakly/non-correlated income streams to tide them over. They would have a plan to cut expenses or a plan to increase income through part-time work/full-time work. From a different perspective, this time may be the best time to retire, because if your stash and drawdown plan can withstand this type of turmoil, you know you have a robust plan that is not likely to fail.

[Wolfpack Mustachian]

If I were in that class, I'd be proceeding according to my layered plan, which would include cutting and delaying some spending, and potentially getting or scaling up a side hustle.  One fortunate thing is that currently, unlike with many downturns, the job market is incredible.  So finding a way to bring in some income to minimize withdraws should be fairly easy.  And since they are newly retired, networks and skills are still current.

Great point. It seems there often a silver lining in these things. Not saying I wouldn't be nervous if i had just retired,
 but dang this is a perfect time if you needed to go back to work.

[clifp]

When I retired, in 99/2000, like today we were at tail end of the web 1.0 internet stock bubble.  The class of 2000 retiree is the worse off class since sometime in the mid-1960s.  By the time the great recession hit us right after the dot com bubble burst and the  bear market of 2000-2002. Someone with 25x portfolio and no cushion, was looking at their portfolio being cut in 1/2 at normal AA ratios and a current withdrawal rate of close to 8%. Now the great bull market of 2009-2021 helped a lot but the 2000 retiree portfolio is below (in real terms) their starting portfolio. If was a 30-year retirement, it is very likely they'll still have a bit money after 30 years.  However, if you were 39 like I was when I retireed. You are still looking at another 20-35 years of retirement.  At the start of bear market, running out of money before you die is a distinct possibility.

https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/

Luckily, in my experience, most people are disciplined enough to retirement early, has some slack in their budget. Even if that is not true, they are flexible.  One obvious thing to do is to skip the cost of living adjustment. If you retired this year with $1.3 million and planned to spend $50K/year.  Instead of giving yourself a cost of living raise next year to $54 or $55K, consider keeping spending flat or maybe only $1,000-2,000.  Then catch up during the next bull market.

[RedmondStash]

One of the most useful pieces of advice I got on this forum for managing my investments was to chart out projections assuming an average rate of return for my AA going out like 50 years. I did so in 2016, and planned my FIRE date around that more than actual market returns. (Sort of FIREd in 2017, went back to work part-time, FIREd again in 2019. We'll see if it sticks this time.)

My assets today are still about 14% above those averaged projections. Anyone retiring in '21-'22 likely also had the benefit of our recent boom years. And yeah, if you just hit your 25x number last year, you may not be at it anymore. But having those averaged projections shields me from taking any downs -- or ups -- too seriously. I definitely recommend that strategy for peace of mind.

Sometimes the sun shines; sometimes it rains. Neither means the other will never happen again.

Plus -- the future is as yet unwritten. The market could drop another 10% before year's end, or it could rebound up 20%.

[eyesonthehorizon]

Given how much of the strategy of RE is about attention to spending, I wouldn't be surprised if a lot of people in that cohort just streamlined their expenses & locked in cheap debt right in time for things to get complicated with the return of inflation & discussion of rate hikes.

It certainly never feels great to watch gains eroded by a pullback, but this followed soon enough after the covid crash that I can't imagine many retiring this or last year didn't have recent experience with greater volatility.

[mistymoney]

I guess I'm unclear about who we are talking about in this thread vs who the great resignation consisted of.

This thread seems to concern full FIRE people thinking they were done forever. I wonder how many of the GR were people who had had enough for right now - and had enough squirreled away or other resources enabling them to step away for a time.

While the job market is still great for the job seekers - how long that may last if a lot of these folks go back to work remains to be seen, something to consider for anyone who may be wanting a change and hasn't put themselves out there yet....

[mistymoney]

Given how much of the strategy of RE is about attention to spending, I wouldn't be surprised if a lot of people in that cohort just streamlined their expenses & locked in cheap debt right in time for things to get complicated with the return of inflation & discussion of rate hikes.

It certainly never feels great to watch gains eroded by a pullback, but this followed soon enough after the covid crash that I can't imagine many retiring this or last year didn't have recent experience with greater volatility.

true! the 2022 cohort thread in this forum shows those about to retire remains largely unperturbed. Maybe we should ask them :)

[FIRE 20/20]

I've been on this forum now for (checks profile) over 7 years and I still haven't seen one of the mythical people who hit 25x and pulled the plug with no plan to adjust if needed.  I may find one sometime, but so far I think they're in the same category as Santa Claus.  I hear they're going to be at the mall but if you look into it it turns out it's not really Santa, it's the guy who last rang you up at Home Depot. 
I think the people here tend to fall into two camps.  Some FIRE with a plan and a few options if they're in a bad luck group, and others who have a plan and lot of options.  Some have a side hustle, some do OMY to hit a lower withdrawal rate, some have a lot of fat to trim in the budget, and most have more than one of the above. 

Seriously, has anyone ever seen someone on this board FIRE with 25x expected spending and *zero* plan to implement if they fall into a bad-luck year? 

I do worry about the people who lost their jobs or quit during COVID and the concomitant economic downturn who aren't as well-informed as most people here.  They're probably going to have a rough time.  I hope for their sake they figure something out and make it through ok.  But people here?  I find it very implausible that anyone here FIREs without having given plenty of thought to what they would do if they FIREd into a high inflation / low return environment.  It isn't fun to start FIRE that way, but if you've planned for it you shouldn't have too much of a problem adapting. 

[clifp]

I do worry about the people who lost their jobs or quit during COVID and the concomitant economic downturn who aren't as well-informed as most people here.  They're probably going to have a rough time.  I hope for their sake they figure something out and make it through ok.  But people here?  I find it very implausible that anyone here FIREs without having given plenty of thought to what they would do if they FIREd into a high inflation / low return environment.  It isn't fun to start FIRE that way, but if you've planned for it you shouldn't have too much of a problem adapting.

s

I pretty much agree. In my 22-years posting on ER forums, I know of maybe 1/2 dozen people who retired early and went back to work primarily because they ran out of money.  Three had too concentrated stock positions, Apple, Intel and another tech company.  A couple of people ran into bad expenses, and one person was just crazy.

On the other hand the whole Lean-Fire movement started on this forum, and most of the people in it have not been through an ugly bear market.

[EscapeVelocity2020]

I've been on this forum now for (checks profile) over 7 years and I still haven't seen one of the mythical people who hit 25x and pulled the plug with no plan to adjust if needed.  I may find one sometime, but so far I think they're in the same category as Santa Claus.  I hear they're going to be at the mall but if you look into it it turns out it's not really Santa, it's the guy who last rang you up at Home Depot. 
I think the people here tend to fall into two camps.  Some FIRE with a plan and a few options if they're in a bad luck group, and others who have a plan and lot of options.  Some have a side hustle, some do OMY to hit a lower withdrawal rate, some have a lot of fat to trim in the budget, and most have more than one of the above. 
...

You probably also were not on FIRE boards during the 2008-9 Great Recession.  The ER boards were full of folks freaking out when the markets kept dropping all October, relentlessly.  I didn't ask everyone if they ER'ed at exactly 25x, but there were a lot of folks basically resigned to the fact that they were stuck riding it out and despondently hoping for the best. 

The last 13 years (basically since March of 2009) have been historically bullish and early retirement has been a been on easy mode.

[bryan995]

I though the great resignation was all about quitting and then going to work elsewhere for 40-60% more?  Not quitting and retiring!

For anyone that FIREd in the past 12 months… balls of steel! Too many unknowns for me (especially with inflation ramping).

[FIRE 20/20]

I've been on this forum now for (checks profile) over 7 years and I still haven't seen one of the mythical people who hit 25x and pulled the plug with no plan to adjust if needed.  I may find one sometime, but so far I think they're in the same category as Santa Claus.  I hear they're going to be at the mall but if you look into it it turns out it's not really Santa, it's the guy who last rang you up at Home Depot. 
I think the people here tend to fall into two camps.  Some FIRE with a plan and a few options if they're in a bad luck group, and others who have a plan and lot of options.  Some have a side hustle, some do OMY to hit a lower withdrawal rate, some have a lot of fat to trim in the budget, and most have more than one of the above. 
...

You probably also were not on FIRE boards during the 2008-9 Great Recession.  The ER boards were full of folks freaking out when the markets kept dropping all October, relentlessly.  I didn't ask everyone if they ER'ed at exactly 25x, but there were a lot of folks basically resigned to the fact that they were stuck riding it out and despondently hoping for the best. 

The last 13 years (basically since March of 2009) have been historically bullish and early retirement has been a been on easy mode.

Did you accidentally quote the wrong post?  I don't mean this negatively at all, I'm just not seeing anything in my post related to yours.  I agree 100% that there will be bad years and if you hit one the ride can be very rough!  And 2008 would have felt extraordinarily difficult to deal with.  I know I would have panicked and I would have felt like I made a horrible decision if I had FIREd then, even though my plans would have seen me through it.  So I totally agree with you.  Although, even a mythical 25x FIREe would be sitting pretty right now if they FIREd at the worst time in 2008.

In 2015, Kitces did an analysis of people who FIREd in 2000 and 2008 and they were doing better than the worst years ('29, '37, and '66), and they had huge equities growth coming after 2015 although of course they didn't know it at the time.  In 2015 a person who retired in 2008 would have seen a drop in 2009, but by 2015 they'd be 20% above their starting value.  By 2021 they would have had roughly double their starting 'stache after good returns in 2016, fantastic returns in '17, 19, '20, and '21.  The pullbacks in '18 and likely '22 don't change the fact that a 2008 retiree would be in great shape today if they blindly followed the 4%.  I'm not denying that they were probably in full-on panic mode - I fully believe that!  But they would be doing pretty well right now if they kept going. 

But that's all completely beside the point in my post.  My point isn't that there will be bad-luck years (there will be!) or that the ride is smooth and calming (it definitely wasn't in 2008!).  My point is that on this board, I don't see any people who just FIRE on 25x, have zero plan to deal with a downturn.  Everyone on here that I see actually FIRE has at least one but usually multiple backstops behind a blind 25x plan. 

But I agree the ride would have been really unpleasant in late 2008 / early 2009.

Here's a link to the Kitces post:
https://www.kitces.com/blog/how-has-the-4-rule-held-up-since-the-tech-bubble-and-the-2008-financial-crisis/

[vand]

It's easy to speculate after a month like April, but you are assuming that 'this time it's different'...  Over the many years leading up to April 2022, folks have opined on the 'Stop Worrying About the 4% Rule' thread that ER might require a more conservative SWR, and each time the market got back up and proved everyone wrong.  I guess we'll have some idea about the answer to your question in about 10 years...  20 years to be a little more certain...

This is true, but FIRE was only popularized in the context of a secular bull market, and MMM itself has only been going in that time. I personally regard 2009-2021 as one of the greatest bull markets in history, and in that context its easy to become complacent about tough times that we are warned about but seem so distant when the going is good.

But we all know that markets have done poorly for long stretches and will do so again, and eventually we will encounter a bad stretch. Whereas it's one thing to read about these stretches, it another to live through them with your whole nestegg on the line. As others have said, it's a real test of nerve, of knowing your current risk tolerance and how much faith you have in the process. The market giveth.. but it can easily taketh too.

[2sk22]

I started working in the early 1990s and retired in September 2020. We have been steadily investing in index funds since the mid 1990s. Having lived through such turbulent times, I fully expected this kind of volatility. This is a chart of the S&P during my working days.

[Cranky]

I guess I'm unclear about who we are talking about in this thread vs who the great resignation consisted of.

This thread seems to concern full FIRE people thinking they were done forever. I wonder how many of the GR were people who had had enough for right now - and had enough squirreled away or other resources enabling them to step away for a time.

While the job market is still great for the job seekers - how long that may last if a lot of these folks go back to work remains to be seen, something to consider for anyone who may be wanting a change and hasn't put themselves out there yet....

 Large proportion of the Great Resignation were Boomers who retired earlier than planned but are not overly dependent on investments. I know zero people interested in looking for a new job.

[reeshau]

So 21-22 was probably not a historically great time to retire.  But I high doubt it was the worst time.  1929 and 1966 were epically shitty times.  This doesn't feel epically shitty to me.

Not only is this true, but it was 1966 that actually defined the 4% rule, not 1929.  So, while stock crashes are bad, it is actually the decade of inflation that followed (aka the 1970's) that were the worst.  (And we, so far, have had a correction in 2022, not a crash.)

So, when mortgages hit high double-digit, we can talk about the worst.  To me, going to 6-8% mortgages is simply reverting to the mean.  (As a quick shorthand for all the adjustments to various financing rates)

The 21st century has simply been filled so far with such ideal conditions for stock investing that people have gotten used to them.

[Rdy2Fire]

I've been on this forum now for (checks profile) over 7 years and I still haven't seen one of the mythical people who hit 25x and pulled the plug with no plan to adjust if needed.  I may find one sometime, but so far I think they're in the same category as Santa Claus. 

HO HO HO!! LOL

I really had no plan in regards to 'retirement' as mine was unplanned as I left a position without one and then eventually decided (sort of) not to look for another. A combination of timing, some time off, covid hitting etc. Some days I still say (even in posts) and not sure I FIRE'd but it's been 3 years. I was saving $ I wanted to retire early but had no budget, hadn't tracked spending, didn't have a plan around healthcare (still an issue) but as reality set in on not working started to figure it out and still am.

[bmjohnson35]

For me personally, being debt free is also a factor in feeling comfortable during downturns. We are not FAT fired and knowing that we don't have any loans keeps income needs and stress down.  I suppose if you had factored in the cost of a mortgage and/or car loans into your FIRE numbers, it's a moot point.  Probably just another example of irrational human behavior.  Regardless, I have always been somewhat risk adverse.  This means planning for the best, while having plan b, c & d options in mind.

[Dicey]

I stopped working in 2012. DH continued, because he had a sweet Defined Benefit Pension with COLA coming. He stopped working in late March and is burning up vacation time until July 1, when he's officially "done". He could reverse that decision up to that date, but it's not going to happen.

In the olden days, they used to preach the three-legged stool approach to retirement. We have his pension, rental property,  retirement accounts and investment accounts. There's even an inheritance in our future. You might say we over engineered our three-legged stool.

I posted this on another thread, but I'll add some numbers here. After researching for years, we bought a gently used, low mileage,  luxury RV in March, 2020. We used some of the proceeds from a successful flip (aka Side Hustle) to buy it for around $60k. On a whim, we looked it up on RV Trader this week and we're shocked to discover a number of them with much higher mileage are selling for double what we paid. We never saw that coming.

Our real estate has doubled in value in the last decade, which we never counted on either. One of our rentals that used to get $1900/month is turning over. The market is so hot, we will easily get $2750/month now. Crazy.

One of my favorite Mustachian sayings is, "This shit works." Does it ever.

To answer the OP's original question: Maybe DH did, but it absolutely will not matter.

[Dictionary Time]

I guess I'm unclear about who we are talking about in this thread vs who the great resignation consisted of.

This thread seems to concern full FIRE people thinking they were done forever. I wonder how many of the GR were people who had had enough for right now - and had enough squirreled away or other resources enabling them to step away for a time.

While the job market is still great for the job seekers - how long that may last if a lot of these folks go back to work remains to be seen, something to consider for anyone who may be wanting a change and hasn't put themselves out there yet....

 Large proportion of the Great Resignation were Boomers who retired earlier than planned but are not overly dependent on investments. I know zero people interested in looking for a new job.

Or moms who have chosen or felt pushed into SAHM.

I don’t think fire is moving the needle on the Great Resignation.

[vand]

When I retired, in 99/2000, like today we were at tail end of the web 1.0 internet stock bubble.  The class of 2000 retiree is the worse off class since sometime in the mid-1960s.  By the time the great recession hit us right after the dot com bubble burst and the  bear market of 2000-2002. Someone with 25x portfolio and no cushion, was looking at their portfolio being cut in 1/2 at normal AA ratios and a current withdrawal rate of close to 8%. Now the great bull market of 2009-2021 helped a lot but the 2000 retiree portfolio is below (in real terms) their starting portfolio. If was a 30-year retirement, it is very likely they'll still have a bit money after 30 years.  However, if you were 39 like I was when I retireed. You are still looking at another 20-35 years of retirement.  At the start of bear market, running out of money before you die is a distinct possibility.

https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/

Luckily, in my experience, most people are disciplined enough to retirement early, has some slack in their budget. Even if that is not true, they are flexible.  One obvious thing to do is to skip the cost of living adjustment. If you retired this year with $1.3 million and planned to spend $50K/year.  Instead of giving yourself a cost of living raise next year to $54 or $55K, consider keeping spending flat or maybe only $1,000-2,000.  Then catch up during the next bull market.

Yep, the hypothetical Y2k retiree with a 100% stock portfolio is now in real danger of portfolio failure.

For a Jan 2000 retiree with a $1m portfolio and using a 4% SWR and 100% US stock allocation, they would now be down to $512k nominally, but only $300k in real terms, so you have depleted 70% of the portfolio capital after 22 years, so in real terms you would have a portfolio x7.5 your living expenses to support the rest of your retirement.



 

Is the same fate going to befall the 2021 retiree?  While its may be true that stock valuations may not be as extreme as 2000, bond valuations are even more extreme, whilst short/med term inflation looks like its going to be much more of a factor for today's retirees than it was back then... so its possible that unlike 2000, no combination of stock/bonds will be able to sustain the portfolio

[nick663]

I think the people here tend to fall into two camps.  Some FIRE with a plan and a few options if they're in a bad luck group, and others who have a plan and lot of options.  Some have a side hustle, some do OMY to hit a lower withdrawal rate, some have a lot of fat to trim in the budget, and most have more than one of the above. 

My thoughts as well.  The 4% rule is already pretty conservative and it has a few unrealistic assumptions built in (like blind spending for 30 years).  Pretty much every discussion I see around FIRE starts with the 4% rule and people layer contingencies on top of it.

[bacchi]

When I retired, in 99/2000, like today we were at tail end of the web 1.0 internet stock bubble.  The class of 2000 retiree is the worse off class since sometime in the mid-1960s.  By the time the great recession hit us right after the dot com bubble burst and the  bear market of 2000-2002. Someone with 25x portfolio and no cushion, was looking at their portfolio being cut in 1/2 at normal AA ratios and a current withdrawal rate of close to 8%. Now the great bull market of 2009-2021 helped a lot but the 2000 retiree portfolio is below (in real terms) their starting portfolio. If was a 30-year retirement, it is very likely they'll still have a bit money after 30 years.  However, if you were 39 like I was when I retireed. You are still looking at another 20-35 years of retirement.  At the start of bear market, running out of money before you die is a distinct possibility.

https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/

Luckily, in my experience, most people are disciplined enough to retirement early, has some slack in their budget. Even if that is not true, they are flexible.  One obvious thing to do is to skip the cost of living adjustment. If you retired this year with $1.3 million and planned to spend $50K/year.  Instead of giving yourself a cost of living raise next year to $54 or $55K, consider keeping spending flat or maybe only $1,000-2,000.  Then catch up during the next bull market.

Yep, the hypothetical Y2k retiree with a 100% stock portfolio is now in real danger of portfolio failure.

I know a hypothetical Y2k retiree and she panicked in March of that year and delayed a big vacation and a car purchase. She also didn't inflation adjust her withdrawals for a few years.

[mistymoney]

I started working in the early 1990s and retired in September 2020. We have been steadily investing in index funds since the mid 1990s. Having lived through such turbulent times, I fully expected this kind of volatility. This is a chart of the S&P during my working days.

This is interesting - looking at the chart, it seems that the high of 1999 wasn't seen again until 2015, so I'm wondering how this connects with the comments above that someone retiring in 1999 would be ok now if they stuck with 4%.

Is that assuming a 60/40 and bonds doing well during that time? Just based on the sp500 chart here, I'd think they were toasted.

[VanillaGorilla]

A retirement in Jan 2000 would be down 20% for a 60/40 portfolio and down 60% for 100/0 portfolio.

Anybody funding a 4% withdrawal off 100% equities starting in 2000 is pretty well screwed. The 60/40 portfolio isn't doing super hot either, but might be ok. Not really my ideal after 22 years.

Note: click the 'inflation adjusted' button

[reeshau]

For a Jan 2000 retiree with a $1m portfolio and using a 4% SWR and 100% US stock allocation, they would now be down to $512k nominally, but only $300k in real terms, so you have depleted 70% of the portfolio capital after 22 years, so in real terms you would have a portfolio x7.5 your living expenses to support the rest of your retirement.

This would be a case of theoretical "success," that doesn't translate to reality.   I would expect this retiree to indeed not go to zero at the end of 30 years, which was the length of time the 4% rule was developed to cover.

[Ron Scott]

I don't see any people who just FIRE on 25x, have zero plan to deal with a downturn.

I don’t know any either. To really be FI as a retiree you have to believe you’re going to hit recessions, tough inflation, and market downturns—sometimes concurrently. Independence connotes robustness and plans to deal with bad economic conditions can’t just be to cut back and pray…

[vand]

The impressive thing about the Y2k all-stock retiree is how they've been hanging onto the precipice almost from year 1. Those early years of the dotcom crash really screwed the portfolio's ability to participate in subsequent recoveries, taking a further alarming lurch down in the GFC and then has required one of the greatest recoveries and subsequent bull markets in history just for the portfolio to keep treading water since.

It's remarkable that it hasn't already failed, if you consider that it was alredy down by 2/3rds at the 2009 nadir, barely 10 years in!

[clifp]

I think the people here tend to fall into two camps.  Some FIRE with a plan and a few options if they're in a bad luck group, and others who have a plan and lot of options.  Some have a side hustle, some do OMY to hit a lower withdrawal rate, some have a lot of fat to trim in the budget, and most have more than one of the above. 

My thoughts as well.  The 4% rule is already pretty conservative and it has a few unrealistic assumptions built in (like blind spending for 30 years).  Pretty much every discussion I see around FIRE starts with the 4% rule and people layer contingencies on top of it.

It is conservative for a 30-year retirement, less so 40-year retirement and not conservative for 50.

[BeanCounter]

Surely anyone who retired would have had a couple years of expenses not in equities (or even normal bonds) and had a plan for just what is happening. Tighten the belt a tad, defer a vacation. Should be fine.

But yeah, there has to be a bunch of nervous folks who forgot the market goes down a lot quite often.

This.
We have 2.5 years expenses in cash. 3 to 3.5 if we would actually tighten our belts. And a few more in bonds.
Our portfolio lis back to April 2021 balances and while that’s a it disappointing, it’s not the end of the world.
Go do a model in Cfiresim. Dump the results into a CSV file so you can get a good look at each simulation set. You can see in the periods with the big drops 1929 for example , or 2008, how long it takes for the portfolio to recover.

[BlueHouse]

I pulled the plug in March 2021.  I had originally planned to work until Feb 2022 (which was considered a stretch even then) but the market did so well, that I jumped out early. 

I've now been fired for a year, and my investments are still in the okay zone, but I wouldn't have retired if this was all I had a year ago.  Fortunately, I still have 2+ years of cash buffer, so I'm really not that worried yet.  And so far, my house is still appreciating. I had a few lucky breaks and the increases over the past year made me giddy when I realized that I hadn't worked in a year and had more money than I retired with (until last week). 

Also, I caught a lucky break and through an accident of timing, rolled my 401k into an IRA in January of 2022 and they issued a check instead of just transferring the assets, so I've been reinvesting slowly and when the market started to tank, I still had $800K in my settlement account, which I've been buying up VTI over the past 2 days and hope to buy more on Monday. 

[wageslave23]

One of the most useful pieces of advice I got on this forum for managing my investments was to chart out projections assuming an average rate of return for my AA going out like 50 years. I did so in 2016, and planned my FIRE date around that more than actual market returns. (Sort of FIREd in 2017, went back to work part-time, FIREd again in 2019. We'll see if it sticks this time.)

My assets today are still about 14% above those averaged projections. Anyone retiring in '21-'22 likely also had the benefit of our recent boom years. And yeah, if you just hit your 25x number last year, you may not be at it anymore. But having those averaged projections shields me from taking any downs -- or ups -- too seriously. I definitely recommend that strategy for peace of mind.

Sometimes the sun shines; sometimes it rains. Neither means the other will never happen again.

Plus -- the future is as yet unwritten. The market could drop another 10% before year's end, or it could rebound up 20%.

This is great advice.  And something I have been contemplating.  Plan your FIRE 5-10 yrs out based on normal market gains and then stick to it even if the market outperforms. This way you are assuming the market is inflated and will mean revert in the future and not retiring at the peak of a bubble.  This approach had me thinking equities and housing were at least 20% over valued at the end of last year so I would have handicapped my FIRE stache by 20% to 30%.  Currently I put the market at 10% over valued.  So I base by hypothetical 25x expenses on my stache being only 90% of its current value.

[Cassie]

None of my friends who are retired are returning to work either. I semi retired at 57 which was 10 years ago. Slowly the 3 side hustles I had all ended within the past 2 years. My marriage ended 18 months ago which cut my income in half as well as my stash.  Luckily I know how to adjust but it’s not what I expected in my later years.

[vand]

A retirement in Jan 2000 would be down 20% for a 60/40 portfolio and down 60% for 100/0 portfolio.

Anybody funding a 4% withdrawal off 100% equities starting in 2000 is pretty well screwed. The 60/40 portfolio isn't doing super hot either, but might be ok. Not really my ideal after 22 years.

Note: click the 'inflation adjusted' button

Yeah, they have been "screwed" almost from day one, but somehow the portfolio has clung on up until now.

The remarkable datapoint imo is not where it is today, it's where it was at the end of Feb 2009 where it was $268k in real terms - that's a 73% real fall in just 10 years - it's absolutely terrifying.

At the nadir you have a x6.75 portfolio and are faced with selling a further 15% of the portfolio each year to meet living costs.  No one in their right mind is going to think their portfolio is going to survive under those conditions.

[KarefulKactus15]

I feel like this thread is aimed at me.

Resigned in Aug 2020 at age 29. Was worried at first cause I cut it close and knew the markets and inflation could erode my financial position.

However as frequently speculated, people aren't stupid and will adjust as needed. For whatever reason I got bored with 100% freedom at such a young age and started building income streams. In 18 months I've had 3 businesses and already sold one.  People are smart, running out of money isn't even really a concern once you commit to a goal.

You know what frightens the ever living shit out of me?

Health - I'm in perfect shape now at age 31, go to gym 5x weekly and ride my bikes all the time.  But I worry 5x about my health than I do my money. A bad turn in health is what could remove me from my perfect situation. I fear that more than any market situation.

[2Birds1Stone]

I would recommend OP finds a new hobby. Contrarian opinions are nice, but if you believe we're all doomed all the time then maybe find your tribe and get some fresh air once in a while. Life is short, arguing with people on the internet won't improve your chances of FIRE success.

[Arbitrage]

Just say that I'm glad that we went coast-FIRE instead of full FIRE at that time.  As others have noted, it's way too early to tell whether or not success is in the cards for that cohort, but it's much easier to stomach the loss of portfolio dollars when we're still bringing in enough to cover our expenses (and then some).  Our original plan was to work part-time for a year or so, then reevaluate.  The evaluation has come in after 9 months - keep working if we can!

[nereo]

“Was 2021-2022 the worst time to retire?”

Obviously only time will tell, but early indications are no - there have been several time periods which were worse, along with a few which seemed horrific at the time but wound up being pretty decent.