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

[GuitarStv]

It's incredibly easy with the benefit of hindsight to say "yeah, I would have stuck to US stocks all the way through" but if anyone thinks they saw that switcheroo coming then they are just kidding themselves.

I thought it kinda reinforced the futility of attempting to predict the future and the need to diversity.

[PhilB]

I think there are a few different points to be made and the thread is getting convoluted.

1. First point (I don't want to put words in anyone's mouth, but..) I think vand and others are saying, yes trying to time the market is bad, but on a macroeconomic scale it is easy to see when the market is grossly overinflated.  Their point is the last few years of the 90's and the most recent two years, the market was severely overvalued and everyone should have known this and planned accordingly.  Yes, you don't know when bottom will fall out, but you do know it is imminent.  This point is debateable, and I think posters should focus on this.

2. Blindly and strictly following the 4% rule is silly, either because the next 50 years may not reflect the last 100 years, or individual life circumstances could change.  You need to have some flexibility/cushion.  Whether that's a 3% withdrawal rate, or vacations and other expenses that could be cut if needed, or willingness to go back to work.  It seems like the consensus is that everyone agrees with some iteration of this point so there is no need to further discuss it.

3.  If you assume points 1 and 2 are correct (and this is an assumption), then retirees in 2021/2022 should have padded their cushion or be willing to cut expenses, go back to work if necessary.  They should always be "baking this in" but even more so the last two years.  For example if during an "average" market valuation time, you are comfortable with a 4% FIRE swr, then if you retired during the last two years, you should have foreseen that the markets were severely overpriced and more likelier than average to be among the few failure times in history and adjusted your stache accordingly or made sure you are willingly to make the changes likely necessary.

Spot on.  Every FIRE scenario is going to end up somewhere on a scale from 'will need some action to mitigate bad real returns' at one extreme to 'more money than you know what to do with' at the other.  You can't know with certainty where you will be, but you can make a pretty shrewd guess that recent FIRE-ees seem more likely to be at the left hand end of that scale.  Fine.  If you're happy with that, then it's no reason not to FIRE.  If you secretly want to be rich as Croesus, or can't bear the thought of taking any of the mitigatory steps, then bully for you if you want to OMY instead.  Neither option is wrong as long as you take it with your eyes open.

A more useful question might be 'Are the alarm bells ringing to start taking those mitigatory steps?'

[nereo]

I’ve yet to meet the automatronic early retiree who was not influenced by macroeconomic conditions and who ever altered their behavior accordingly. To become ER it takes a fair degree of being aware of one’s finances and optimizing accordingly. I just don’t see that going away, ever, and having the person spend on the same things, damn the cost or the markets or newly available alternatives.

Any attempt to model retirement in this way is going to run into this problem.

[Villanelle]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

I don't agree.  Because for most people, have to do a few of the things Mspym listed, for a few years (or longer) is still better than working FT another year or two.  So that means it was still the right choice to retire.

Anyone I know has contingencies built into their FIRE plan.  Having to use those doesn't mean it was a failure, or that they retired too early.  On the contrary.  It means they had a plan and it is working. 

You say they'd have been better off if they weren't compelled to do those things.  Better off than what?  Because the alternative isn't just "not doing those things".  It's *working another Many Months or years* in order to not do those things.  So when you are actually comparing the two options, suddenly it's not only not as clear a case as you try to make it, but for many or most people, the former is still going to be "far better". 

[vand]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

I don't agree.  Because for most people, have to do a few of the things Mspym listed, for a few years (or longer) is still better than working FT another year or two.  So that means it was still the right choice to retire.

Anyone I know has contingencies built into their FIRE plan.  Having to use those doesn't mean it was a failure, or that they retired too early.  On the contrary.  It means they had a plan and it is working. 

You say they'd have been better off if they weren't compelled to do those things.  Better off than what?  Because the alternative isn't just "not doing those things".  It's *working another Many Months or years* in order to not do those things.  So when you are actually comparing the two options, suddenly it's not only not as clear a case as you try to make it, but for many or most people, the former is still going to be "far better".

It's only better if you don't suffer catastrophic portfolio failure, isn't it?  At the moment you are framing this is the context of a 20% haircut and a few cutbacks and everything being shit but well within historical expectations, but what if the market keeps dropping for the next 2 years?   Are you going to keep cutting back and cutting back so your life sucks just so you can not have to get a job?

At some point working and bring in more income becomes a better option than worrying about your rapidly diminishing nestegg.

[mistymoney]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

I think you may be taking comments more personally than intended. I don't think anyone is rejecting your tactics for your path, but rather working through their own path and feeling that x or y or z isn't providing enough security for them if p or q or w occurs in the next 1/2/5/10 years. While the discussion is general, I think everyone is really most concerned about themselves.

So if I've said anything that made you think I was negating you or others, I do apologize. And I hope everyone does come out ok. And I certainly beleive that most will, as there are so many things a person can alter along the way, and maybe they just need to tweak 3-4 things out of a potential 12 things and they'll be fine.

And I am very happy about people sharing their mitigation/potential mitigation steps as that is informative and gives many of us increased ideas for future consideration. But I am also still trying identify pitfalls and scenarios that may trip me up, so that where I am coming from.

I may be too focused on coming up with something bulletproof, but I am concerned about the market and inflation and the LT view of things, and trying to ientify at least how close I can get to bulletproof.

[mistymoney]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

Of course it would be nice if things went perfectly and nobody had to think about or use contingency plans ever. @mspym had a plan to mitigate inflation and used it, which doesn’t mean she picked a bad time to retire.  We can all choose between going back to full time work vs picking up a part time gig and coasting vs reduce our expenses.  That doesn't mean we failed, just that we got some bad luck and dealt with it in the way we saw fit.

this is a good point. Simple info on these posts doesn't really give a good indication of anyones relative level of safety/how much redundancy they have built in when deciding to fire. Would take much more in depth/case study stuff to see it.

[mistymoney]

My wife is retiring on November 30.  Did she pick the worst time to retire?  Maybe, we will find out in the next couple of decades.  But here's the safety buffers we have in place...

• 3.7% withdrawal rate (as of a couple of months ago, probably higher now)
• A large lump sum pension buyout that we will get in January/February so its not changing in value due to market fluctuations until then
• I have some nice golden handcuffs that I get if I work 18 more months.  But I could work longer than that if the market is still down
• The 3.7% was based on neither of us working any after retirement.  My wife could easily consult for her current company without having the managerial responsibilities
• We have a FAT fire budget. 
• We have lots of equity in our house and in a vacation condo that could be tapped somehow in the future.

Being flexible is the key to our situation.

haha!! I'm going to refute this, because if in fact this is a "really bad/worst" time to retire, the "worst" would have been dec of last year right before the drawback started. She has since the "worst time" (if is that!)  already worked another whole year - not drawing down balances, assuming more credit to ss, pension, and/or retirement savings, and one less year to fund.....

[FIRE 20/20]

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

I'm curious, are any and all adjustments someone makes to their plan post-FIRE that are due to rising inflation or low returns indicative of choosing a bad time to retire?  Are you suggesting that if anyone makes any changes - reducing spending, replacing spending in an inflation-hit area for another (e.g. reducing meat consumption), or finding additional income that they chose the wrong time to FIRE?  That's what I think your posts suggest.  Am I misinterpreting your position or have I stated if reasonably?  I'm just trying to understand where you're coming from. 

[mistymoney]

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

I'm curious, are any and all adjustments someone makes to their plan post-FIRE that are due to rising inflation or low returns indicative of choosing a bad time to retire?  Are you suggesting that if anyone makes any changes - reducing spending, replacing spending in an inflation-hit area for another (e.g. reducing meat consumption), or finding additional income that they chose the wrong time to FIRE?  That's what I think your posts suggest.  Am I misinterpreting your position or have I stated if reasonably?  I'm just trying to understand where you're coming from.

Is this a semantic difference? Bad time economically vs bad time personally as if someone made an error or mistake in judgement?

I think people are just saying that the economic factors are worrying (bad time) rather than a judgement call for someone to individually with the suggestion that they shouldn't have done it.

[Villanelle]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

Not really... no one is denying that you can do things to help bring down living expensies, but just the fact that you have had to resort to inflation mitigating measures means that you chose a bad time to retire! You would still have been far better off if you weren't compelled into this following this course of action.

I don't agree.  Because for most people, have to do a few of the things Mspym listed, for a few years (or longer) is still better than working FT another year or two.  So that means it was still the right choice to retire.

Anyone I know has contingencies built into their FIRE plan.  Having to use those doesn't mean it was a failure, or that they retired too early.  On the contrary.  It means they had a plan and it is working. 

You say they'd have been better off if they weren't compelled to do those things.  Better off than what?  Because the alternative isn't just "not doing those things".  It's *working another Many Months or years* in order to not do those things.  So when you are actually comparing the two options, suddenly it's not only not as clear a case as you try to make it, but for many or most people, the former is still going to be "far better".

It's only better if you don't suffer catastrophic portfolio failure, isn't it?  At the moment you are framing this is the context of a 20% haircut and a few cutbacks and everything being shit but well within historical expectations, but what if the market keeps dropping for the next 2 years?   Are you going to keep cutting back and cutting back so your life sucks just so you can not have to get a job?

At some point working and bring in more income becomes a better option than worrying about your rapidly diminishing nest egg.

But that's not what you said.  You said that having to take those steps meant they picked a bad time to retire.  If their portfolio fails after the execute any contingencies that they had accounted for, then *that* would/might mean they picked a bad time to retire, based on their plan.  The reason I still add that "might mean" in there is somewhat philosophic--if you make the best choice you can based on the info you have and understand, was it a bad decision?  But until there is a failure, just having to do things that someone planed on potentially doing doesn't mean it was a bad decision.

As for whether working longer before quitting becomes a better option, even that is much fuzzier than you are making it sound. For plenty of people, taking a small gamble and quitting, and getting those years, is worth having to make even more drastic cuts or --gasp!--return to some form of work.  If someone told me there is a contest and my odds of winning $10,000 are 90%, and if I lose I have to mow my neighbor's lawn and walk their dog for a month, I'm going to take that bet.  great upside, and entirely not-unpleasant downside.    *For me*, that risk is worth it and if don't win, I won't be miserable.  For someone with grass allergies and a fear of dogs, it may not be worth it.   

  It's fine to say that *for you* any worry about money, or any deviations from the original plan without contingencies, will be a failure.  Cool.  But to say that it is a failure objectively for all people?  That makes no sense at all.

[clifp]

Yes and no.  People like to bring up the Y2K retiree - things looked dire the first couple years, then fine, then in 2008/9 dire again, then OK for a decade or so, and right now, not so good...  Still have 8 years to go on their 30 years (or 18 years to go if they ER'ed)...

Y2k retiree:

As of the end of April, 2022, those with a global stock portfolio would have $937k remaining in nominal dollars, which is $549k in year 2000 dollars. That represents 13.7 years of spending remaining with 0% real returns.

(bolded)

That's assuming that the Y2K retiree is an economic automaton and didn't reduce spending at any point, even during the pandemic when everyone else stopped traveling.

As of 8/31, there is still $511k of year 2000 dollars remaining; or, over 12 years of spending with 0% real returns. Buying TIPS would see the Y2k retiree through.

VTI is down another 10% this month, so that another years spending gone.  It looks like you can construct a 10 year TIPs ladder that will yield ~1.5% real return. So if the retiree suddenly switch from 80/20 to 40/60 put the money in TIPs

The problem is a 30-year retirement isn't really relevant to the forum.  My concerns would be different if I retired at age 65 back in 2000 as opposed to age 40, with good luck I'd be hoping that cute 80 year who moved in my assisted living home was single.  More likely I'd be worried about health issues.

I believe that the vast majority of the forum, aspire to retire before 55, the median is somewhere in the 40s and quite a few folks who want to retire in 30s.

The Y2K retiree is likely to be successful for 30 years retirement, but they will have very little money.  Enough that it will likely cause 55 year old retiree some, and certainly would have been stressful for this 40 year, I hadn't kept my WR at ~3% except for 2009/10 where briefly exceeded 4%.

[mistymoney]

Yes and no.  People like to bring up the Y2K retiree - things looked dire the first couple years, then fine, then in 2008/9 dire again, then OK for a decade or so, and right now, not so good...  Still have 8 years to go on their 30 years (or 18 years to go if they ER'ed)...

Y2k retiree:

As of the end of April, 2022, those with a global stock portfolio would have $937k remaining in nominal dollars, which is $549k in year 2000 dollars. That represents 13.7 years of spending remaining with 0% real returns.

(bolded)

That's assuming that the Y2K retiree is an economic automaton and didn't reduce spending at any point, even during the pandemic when everyone else stopped traveling.

As of 8/31, there is still $511k of year 2000 dollars remaining; or, over 12 years of spending with 0% real returns. Buying TIPS would see the Y2k retiree through.

VTI is down another 10% this month, so that another years spending gone.  It looks like you can construct a 10 year TIPs ladder that will yield ~1.5% real return. So if the retiree suddenly switch from 80/20 to 40/60 put the money in TIPs

The problem is a 30-year retirement isn't really relevant to the forum.  My concerns would be different if I retired at age 65 back in 2000 as opposed to age 40, with good luck I'd be hoping that cute 80 year who moved in my assisted living home was single.  More likely I'd be worried about health issues.

I believe that the vast majority of the forum, aspire to retire before 55, the median is somewhere in the 40s and quite a few folks who want to retire in 30s.

The Y2K retiree is likely to be successful for 30 years retirement, but they will have very little money.  Enough that it will likely cause 55 year old retiree some, and certainly would have been stressful for this 40 year, I hadn't kept my WR at ~3% except for 2009/10 where briefly exceeded 4%.

copper digger!

[Turtle]

The other theme in this thread that I have been finding maddening is the persistent refusal to listen to the people who *did* FIRE in 21-22 or to negate/reject their tactics for managing inflation*. Why on earth would I bother offering up what I am doing to an audience that isn't receptive? I'm just going to keep booping along, doing my own thing, and if it makes you feel better to think I am I dunno going to die in a gutter somewhere then off you pop. Have fun.

*My specifics:
- buying a house outright in my home country (-30% expenses, rent,)
- children moving out (-??? TBD)
- moving to our house where the exchange rate favours us (+5-15% income, currency, -$5k p.a. health insurance)
- plans to build out a garden & add solar
- already reduced meat and dairy consumption (due to health and climate change factors but helps with expenses)
- building a side hustle (+$6-8k p.a. income)
- option to pick up contract work if needed

Some of it is likely sour grapes from folks who are looking to feel better about continuing to work.     

There's also a big difference between a Mustachian who carefully considered their approach and their choices prior to leaving the workplace vs a person who at the height of the market impulse quit because they were temporarily a "millionaire" but knows nothing about safe withdrawal rates or even how much they actually have in fixed expenses.  The later probably accounts for some of the comments.

[mspym]

I realised while sleeping that the discussions are going past each other because it’s the IRP (internet/inflation retirement police) vs Mustachianism conversation all over again. I never thought i was never going to earn money again, that wasn’t my goal, I judged I have enough to opt for time over money and only consider work that I want to do. Some of it might be paid, some of it might not.

[LonerMatt]

"you assume you have insight to offer based on experience, but you're just offering an opinion rooted in temperament"

some people are so nervous they'll never leave work, but that doesn't mean their opinion is actually more than a reflection of their values

[habanero]

So to sum up the thread:

It's a lot easier to backtest your portfolio and choosen AA and see what the results turned out to be then having an actual portfolio and no idea what the next 2-5-10 years will bring in term of real returns on a given AA with a known nominal value today.

[Sandi_k]

I was listening to a podcast with Michael Kitces yesterday, that really resonated for me. He noted that the Trinity study was a *worst case scenario* of what it would take too not run out of money in 30 years, with a 60/40 portfolio. He noted that there are a lot of small changes that - over 30 years - would have profound effects.

- Using 3.3% instead of 4%.
- Not taking the inflation adjustment in any year that the market ended "down."
- Earning small amounts of money. If you earn just $1700 per month (~$20k/yr), that substitutes for $500k of savings in the portfolio.
- Downsizing the house.
- Moving to a lower cost of living area.
- Buying a small SPIA to make sure that you have the fixed expenses covered for sure.
- Delaying Social Security past FRA - even if not all the way to age 70.
- Lowering your investments costs below 1%, which was a normal fee structure in 1994.

In fact, there are so many levers, he noted that the outcome after 30 years of retirement if you did just a couple of these things meant that it was far more likely that you'd end up with MORE money than you started with.

We've all read these items before, but it really resonated for me, because he was blunt - in his analysis, and his research, using intermediate bond funds, TIPS, low cost Index funds, and the ability we all have to save with Roths, and increased 401(k) limits - we're gonna be fine.

Three more years....

[nereo]

I was listening to a podcast with Michael Kitces yesterday, that really resonated for me. He noted that the Trinity study was a *worst case scenario* of what it would take too not run out of money in 30 years, with a 60/40 portfolio. He noted that there are a lot of small changes that - over 30 years - would have profound effects.

- Using 3.3% instead of 4%.
- Not taking the inflation adjustment in any year that the market ended "down."
- Earning small amounts of money. If you earn just $1700 per month (~$20k/yr), that substitutes for $500k of savings in the portfolio.
- Downsizing the house.
- Moving to a lower cost of living area.
- Buying a small SPIA to make sure that you have the fixed expenses covered for sure.
- Delaying Social Security past FRA - even if not all the way to age 70.
- Lowering your investments costs below 1%, which was a normal fee structure in 1994.

In fact, there are so many levers, he noted that the outcome after 30 years of retirement if you did just a couple of these things meant that it was far more likely that you'd end up with MORE money than you started with.

We've all read these items before, but it really resonated for me, because he was blunt - in his analysis, and his research, using intermediate bond funds, TIPS, low cost Index funds, and the ability we all have to save with Roths, and increased 401(k) limits - we're gonna be fine.

Three more years....

One of the moar insightful posts Kirces made was where he dove into the actual spending of early retirees.  As a whole, following a few early years where spending increased, most decreased their spending y/y for decades overall.  Even late in life when health-care spending increased considerably the overall budget was far lower than at the initial retirement point, because almost every other category had decreased.

https://www.kitces.com/blog/estimating-changes-in-retirement-expenditures-and-the-retirement-spending-smile/

[RWTL]

I was listening to a podcast with Michael Kitces yesterday, that really resonated for me. He noted that the Trinity study was a *worst case scenario* of what it would take too not run out of money in 30 years, with a 60/40 portfolio. He noted that there are a lot of small changes that - over 30 years - would have profound effects.

- Using 3.3% instead of 4%.
- Not taking the inflation adjustment in any year that the market ended "down."
- Earning small amounts of money. If you earn just $1700 per month (~$20k/yr), that substitutes for $500k of savings in the portfolio.
- Downsizing the house.
- Moving to a lower cost of living area.
- Buying a small SPIA to make sure that you have the fixed expenses covered for sure.
- Delaying Social Security past FRA - even if not all the way to age 70.
- Lowering your investments costs below 1%, which was a normal fee structure in 1994.

In fact, there are so many levers, he noted that the outcome after 30 years of retirement if you did just a couple of these things meant that it was far more likely that you'd end up with MORE money than you started with.

We've all read these items before, but it really resonated for me, because he was blunt - in his analysis, and his research, using intermediate bond funds, TIPS, low cost Index funds, and the ability we all have to save with Roths, and increased 401(k) limits - we're gonna be fine.

Three more years....

Rather than say the GR class picked the worst time to retire, I will re-frame it and say that as a 2023 class member, I'm planning not to retire in January as I previously had planned for.  I was planning on some of the above already as part of my retirement strategy - but since the market is down, my flexibility is to keep working and pile money into the market while it is down and the unknowns are so significant:

1. What will happen with long term inflation?
2. Will a recession cause my kids to need some help?
3. How will the stock market respond - As Vand mentioned - What happens if the market is down for another two years?

Depending on how you look at it, it could be the best time to hold retirement and frankly I was hoping for a drop in the market before I retired to bring equity valuations down.  I'd rather have it drop before retiring than immediately after.

[bmjohnson35]

If I was still working over the past year, I would probably be nervous about pulling the pin on FIRE.  I have been guilty of being a bit too risk adverse in the past and leaning toward thriftiness over smart value-added spending.  I'm trying to change this.  Despite spending a bit more now than I would have historically, we are still spending less than 2%.  Shortly before I retired, I lost several colleagues/friends who died in their 50's.  I have also met several people over the past few years who lost loved one's just before or just after a traditional retirement age.  I'm about 2.5 yrs into early retirement at age 52 now and don't regret it one bit. Running out of money isn't your only future risk.

[mistymoney]

I was listening to a podcast with Michael Kitces yesterday, that really resonated for me. He noted that the Trinity study was a *worst case scenario* of what it would take too not run out of money in 30 years, with a 60/40 portfolio. He noted that there are a lot of small changes that - over 30 years - would have profound effects.

- Using 3.3% instead of 4%.
- Not taking the inflation adjustment in any year that the market ended "down."
- Earning small amounts of money. If you earn just $1700 per month (~$20k/yr), that substitutes for $500k of savings in the portfolio.
- Downsizing the house.
- Moving to a lower cost of living area.
- Buying a small SPIA to make sure that you have the fixed expenses covered for sure.
- Delaying Social Security past FRA - even if not all the way to age 70.
- Lowering your investments costs below 1%, which was a normal fee structure in 1994.

In fact, there are so many levers, he noted that the outcome after 30 years of retirement if you did just a couple of these things meant that it was far more likely that you'd end up with MORE money than you started with.

We've all read these items before, but it really resonated for me, because he was blunt - in his analysis, and his research, using intermediate bond funds, TIPS, low cost Index funds, and the ability we all have to save with Roths, and increased 401(k) limits - we're gonna be fine.

Three more years....

Rather than say the GR class picked the worst time to retire, I will re-frame it and say that as a 2023 class member, I'm planning not to retire in January as I previously had planned for.  I was planning on some of the above already as part of my retirement strategy - but since the market is down, my flexibility is to keep working and pile money into the market while it is down and the unknowns are so significant:

1. What will happen with long term inflation?
2. Will a recession cause my kids to need some help?
3. How will the stock market respond - As Vand mentioned - What happens if the market is down for another two years?

Depending on how you look at it, it could be the best time to hold retirement and frankly I was hoping for a drop in the market before I retired to bring equity valuations down.  I'd rather have it drop before retiring than immediately after.

I am/was also on the 2023 list. I'm not quite ready to give up the dream! I'll wait till we're at least past 1st quarter earnings 2023 to look at where the market is, where I am at, and recalibrate financials and other getting-ready-to-pull-the-plug dimensions. Being in the 2023 cohort was a surprise due to the upmarket, but even so, after living with thinking you are on your last year, it is hard to let go of it!!

There is an element of releif that the market did deflate before I pulled the plug, rather than after. Although I had been thinking about OLY to 2022 before the market started tanking!

Thinking back to a previous poster who noted the difference between needing to be careful about money throughout retirement and having more money than you could ever use, I think pinpointing the NW of invested assest between those two is like theading a needle with oven mitts on. It seems impossible to exactly hit that happy medium. And then, my next question is - how much does it take to move from the constant worry to more money than you would ever use category? Could just one additional month tip the balance? 6 months? 2 years? Likely varies extensively depending on individual circumstances, age at retirement, and ambient market conditions.

[mistymoney]

If I was still working over the past year, I would probably be nervous about pulling the pin on FIRE.  I have been guilty of being a bit too risk adverse in the past and leaning toward thriftiness over smart value-added spending.  I'm trying to change this.  Despite spending a bit more now than I would have historically, we are still spending less than 2%.  Shortly before I retired, I lost several colleagues/friends who died in their 50's.  I have also met several people over the past few years who lost loved one's just before or just after a traditional retirement age.  I'm about 2.5 yrs into early retirement at age 52 now and don't regret it one bit. Running out of money isn't your only future risk.

This is such an important point!

And as a companion piece to this: In the back of my head, I have this niggling thought that after I put everything into place and have it all covered, after careful and controlled fund management during my first decades of retirement, that I'm going to end up at about 80 years old able to cover all my needs and most extras with just my social security check! Only dipping into the stache for things like new roof, car, expensive travel, extravagant gifts, etc.

But the other side of that coin is worries about the potential for a very difficult - and expensive! - future. Climate change, food production difficulties, etc.

[mspym]

If I was still working over the past year, I would probably be nervous about pulling the pin on FIRE.  I have been guilty of being a bit too risk adverse in the past and leaning toward thriftiness over smart value-added spending.  I'm trying to change this.  Despite spending a bit more now than I would have historically, we are still spending less than 2%.  Shortly before I retired, I lost several colleagues/friends who died in their 50's.  I have also met several people over the past few years who lost loved one's just before or just after a traditional retirement age.  I'm about 2.5 yrs into early retirement at age 52 now and don't regret it one bit. Running out of money isn't your only future risk.

This is such an important point!

And as a companion piece to this: In the back of my head, I have this niggling thought that after I put everything into place and have it all covered, after careful and controlled fund management during my first decades of retirement, that I'm going to end up at about 80 years old able to cover all my needs and most extras with just my social security check! Only dipping into the stache for things like new roof, car, expensive travel, extravagant gifts, etc.

But the other side of that coin is worries about the potential for a very difficult - and expensive! - future. Climate change, food production difficulties, etc.

I ran the numbers on rich broke or dead and there was a 3x higher chance I was going to be dead instead of broke. Even if eventually we were living solely off the old age pension, we would still be better off than an awful lot of people just because we owned our own house instead of rented. I also don't think we can all individually *money* our way out of climate change or food production issues - these are collective problems that need to be solved collectively, in which case it's better to spend our time in creating and nurturing a solid community.

[clifp]

I am/was also on the 2023 list. I'm not quite ready to give up the dream! I'll wait till we're at least past 1st quarter earnings 2023 to look at where the market is, where I am at, and recalibrate financials and other getting-ready-to-pull-the-plug dimensions. Being in the 2023 cohort was a surprise due to the upmarket, but even so, after living with thinking you are on your last year, it is hard to let go of it!!

There is an element of releif that the market did deflate before I pulled the plug, rather than after. Although I had been thinking about OLY to 2022 before the market started tanking!

Thinking back to a previous poster who noted the difference between needing to be careful about money throughout retirement and having more money than you could ever use, I think pinpointing the NW of invested assest between those two is like theading a needle with oven mitts on. It seems impossible to exactly hit that happy medium. And then, my next question is - how much does it take to move from the constant worry to more money than you would ever use category? Could just one additional month tip the balance? 6 months? 2 years? Likely varies extensively depending on individual circumstances, age at retirement, and ambient market conditions.

It is a really good question, and my flippant answer is one bear market.

Pre Covid and then last year, I was focused on how could I make my niece/executor's life easier in disposing of some of my weird Angel investing, wondering if I'm being too frugal by not flying first class when the price was around $1,000-$1500, and trying to decide what subject I should have the endowed chair at my Alma mater teach.

Friday,at the bottom market I was looking at margin call, on my main account. I then read some more data on the slowing real estate market, which caused me to wonder what happens if the money I've been lending to real estate flippers doesn't get paid back. Am I really in a position to foreclose on these properties?  For the first time in many years, I wonder "have I really screwed up I'm in danger of running out of money?
"
Here is the funny thing, I'm sure that the difference in my net worth between endowing university chairs, and fear of running out of money was less than 20% and probably closer to 10-15%.

As humans, we are hard-wired to see patterns, and we analytical types of have tons of tools at our disposal to project patterns into the future. So while it is pretty foolish to worry about either scenario, it's also very human.

Near the end of a bull market, thinking if my net worth increase over the next 25 years as it has over the last 10, maybe I should be thinking about a small building.  Likewise in the middle of bear market where the index lost almost 10% in a month worrying about what happens if this persists for several more years is also understandable.

Intellectually it is easy to know that both bull and bear markets eventually, not always easy to remind yourself when you are in the middle of them.

[mistymoney]

I am/was also on the 2023 list. I'm not quite ready to give up the dream! I'll wait till we're at least past 1st quarter earnings 2023 to look at where the market is, where I am at, and recalibrate financials and other getting-ready-to-pull-the-plug dimensions. Being in the 2023 cohort was a surprise due to the upmarket, but even so, after living with thinking you are on your last year, it is hard to let go of it!!

There is an element of releif that the market did deflate before I pulled the plug, rather than after. Although I had been thinking about OLY to 2022 before the market started tanking!

Thinking back to a previous poster who noted the difference between needing to be careful about money throughout retirement and having more money than you could ever use, I think pinpointing the NW of invested assest between those two is like theading a needle with oven mitts on. It seems impossible to exactly hit that happy medium. And then, my next question is - how much does it take to move from the constant worry to more money than you would ever use category? Could just one additional month tip the balance? 6 months? 2 years? Likely varies extensively depending on individual circumstances, age at retirement, and ambient market conditions.

It is a really good question, and my flippant answer is one bear market.

Pre Covid and then last year, I was focused on how could I make my niece/executor's life easier in disposing of some of my weird Angel investing, wondering if I'm being too frugal by not flying first class when the price was around $1,000-$1500, and trying to decide what subject I should have the endowed chair at my Alma mater teach.

Friday,at the bottom market I was looking at margin call, on my main account. I then read some more data on the slowing real estate market, which caused me to wonder what happens if the money I've been lending to real estate flippers doesn't get paid back. Am I really in a position to foreclose on these properties?  For the first time in many years, I wonder "have I really screwed up I'm in danger of running out of money?
"
Here is the funny thing, I'm sure that the difference in my net worth between endowing university chairs, and fear of running out of money was less than 20% and probably closer to 10-15%.

As humans, we are hard-wired to see patterns, and we analytical types of have tons of tools at our disposal to project patterns into the future. So while it is pretty foolish to worry about either scenario, it's also very human.

Near the end of a bull market, thinking if my net worth increase over the next 25 years as it has over the last 10, maybe I should be thinking about a small building.  Likewise in the middle of bear market where the index lost almost 10% in a month worrying about what happens if this persists for several more years is also understandable.

Intellectually it is easy to know that both bull and bear markets eventually, not always easy to remind yourself when you are in the middle of them.

japan

[clifp]

I'm not sure I understand. The Nikki is up almost 300% since 2009, sure it is worse than the US but so is almost everything else.

[nereo]

Newfoundland

[wageslave23]

I'm not sure I understand. The Nikki is up almost 300% since 2009, sure it is worse than the US but so is almost everything else.

Zoom out a little on the chart...

[mistymoney]

I'm not sure I understand. The Nikki is up almost 300% since 2009, sure it is worse than the US but so is almost everything else.

Zoom out a little on the chart...

what I was thinking....

[maizefolk]

Newfoundland

The Malabar Coast

[mistymoney]

I am/was also on the 2023 list. I'm not quite ready to give up the dream! I'll wait till we're at least past 1st quarter earnings 2023 to look at where the market is, where I am at, and recalibrate financials and other getting-ready-to-pull-the-plug dimensions. Being in the 2023 cohort was a surprise due to the upmarket, but even so, after living with thinking you are on your last year, it is hard to let go of it!!

There is an element of releif that the market did deflate before I pulled the plug, rather than after. Although I had been thinking about OLY to 2022 before the market started tanking!

Thinking back to a previous poster who noted the difference between needing to be careful about money throughout retirement and having more money than you could ever use, I think pinpointing the NW of invested assest between those two is like theading a needle with oven mitts on. It seems impossible to exactly hit that happy medium. And then, my next question is - how much does it take to move from the constant worry to more money than you would ever use category? Could just one additional month tip the balance? 6 months? 2 years? Likely varies extensively depending on individual circumstances, age at retirement, and ambient market conditions.

It is a really good question, and my flippant answer is one bear market.

That is a really broad stretch! Of course it would provide almost 100% certainty!

My data mind is trying to narrow it down to it's smallest component part! ie X number of months or x number of k of $$.

Then there is the initial data point to count from. Is it this jan, or is it from the trough that we don't know yet? I'm leaning towards the peak for this thought process. So if at the peak in Jan you just hit a 4% WR and were readying to give notice and see a few days of negative returns and started to wait and watch....so you were ready, now the market has shifted - how many extra months before you are in ok territory again?

Rich broke or dead gives a 4.2% failure rate over 30 years at an inital 4% WR. So if retirement in Jan at a 4% WR indeed plays out as a fail by 30 years, it would seem that just 6 months should make an impactful difference - 6 months closes to the recovery (whenever that may be), 6 fewer months to fund at decreased market levels (both overall and before soc sec or other income starts). But maybe that only takes a fail at year 22 out to a fail at year 28, so not enough! but impactful nonetheless.

And if you add eventual soc sec into both of those scenarios, it really improves chances if you get to those payments early enough across the 30 years. The younger you retire, the less impactful eventual soc sec payment are for 'saving' the portfolio.

[wageslave23]

I am/was also on the 2023 list. I'm not quite ready to give up the dream! I'll wait till we're at least past 1st quarter earnings 2023 to look at where the market is, where I am at, and recalibrate financials and other getting-ready-to-pull-the-plug dimensions. Being in the 2023 cohort was a surprise due to the upmarket, but even so, after living with thinking you are on your last year, it is hard to let go of it!!

There is an element of releif that the market did deflate before I pulled the plug, rather than after. Although I had been thinking about OLY to 2022 before the market started tanking!

Thinking back to a previous poster who noted the difference between needing to be careful about money throughout retirement and having more money than you could ever use, I think pinpointing the NW of invested assest between those two is like theading a needle with oven mitts on. It seems impossible to exactly hit that happy medium. And then, my next question is - how much does it take to move from the constant worry to more money than you would ever use category? Could just one additional month tip the balance? 6 months? 2 years? Likely varies extensively depending on individual circumstances, age at retirement, and ambient market conditions.

It is a really good question, and my flippant answer is one bear market.

That is a really broad stretch! Of course it would provide almost 100% certainty!

My data mind is trying to narrow it down to it's smallest component part! ie X number of months or x number of k of $$.

Then there is the initial data point to count from. Is it this jan, or is it from the trough that we don't know yet? I'm leaning towards the peak for this thought process. So if at the peak in Jan you just hit a 4% WR and were readying to give notice and see a few days of negative returns and started to wait and watch....so you were ready, now the market has shifted - how many extra months before you are in ok territory again?

Rich broke or dead gives a 4.2% failure rate over 30 years at an inital 4% WR. So if retirement in Jan at a 4% WR indeed plays out as a fail by 30 years, it would seem that just 6 months should make an impactful difference - 6 months closes to the recovery (whenever that may be), 6 fewer months to fund at decreased market levels (both overall and before soc sec or other income starts). But maybe that only takes a fail at year 22 out to a fail at year 28, so not enough! but impactful nonetheless.

And if you add eventual soc sec into both of those scenarios, it really improves chances if you get to those payments early enough across the 30 years. The younger you retire, the less impactful eventual soc sec payment are for 'saving' the portfolio.

I think you are overcomplicating it. Just look at what withdrawal rate has 100% success rate for length of time you want. Or if you want to be more precise work back to what your investments would have been worth at the peak and make sure that supports a 100% success withdrawal rate. 

*None of this matters if the next hundred years aren't the same as the last hundred years. I'd bet my entire stache that the 2000s will be as different as the 1900s were to the 1800s.

[nereo]

*None of this matters if the next hundred years aren't the same as the last hundred years. I'd bet my entire stache that the 2000s will be as different as the 1900s were to the 1800s.

No, it’s not about whether it’s “the same” - it’s whether the the next hundred years feature multi-decades periods which are no worse than the worst investment periods of the previous ~120 years.  From a retirement standpoint, a FIREe will be perfectly fine with conditions that are largely “meh” by historical standards. 

[vand]

*None of this matters if the next hundred years aren't the same as the last hundred years. I'd bet my entire stache that the 2000s will be as different as the 1900s were to the 1800s.

No, it’s not about whether it’s “the same” - it’s whether the the next hundred years feature multi-decades periods which are no worse than the worst investment periods of the previous ~120 years.  From a retirement standpoint, a FIREe will be perfectly fine with conditions that are largely “meh” by historical standards.

They might exceed the worst if you factor in all of the following headwinds:

High stock valuations
Absurd bond valuations
High real estate valuations
High/rising inflation
Aging demographics
Record peace-time sovereign debt
Decreasing globalisation
Full employment (will only get worse from here)

Some of these have already begun to unwind and mean-revert.. others are yet to do so or can only become a larger drag (demographics, debt)

[wageslave23]

*None of this matters if the next hundred years aren't the same as the last hundred years. I'd bet my entire stache that the 2000s will be as different as the 1900s were to the 1800s.

No, it’s not about whether it’s “the same” - it’s whether the the next hundred years feature multi-decades periods which are no worse than the worst investment periods of the previous ~120 years.  From a retirement standpoint, a FIREe will be perfectly fine with conditions that are largely “meh” by historical standards.

It matters because a 4% withdrawal rate had a success rate of about 95% over the last 120 years. I can guarantee you it won't be 95% for the next 50-120 yrs. It might be 100% or It might be 60%, but it sure won't be 95%. So trying to be too precise with future predictions based on historical data is naive.

[Metalcat]

I’ve yet to meet the automatronic early retiree who was not influenced by macroeconomic conditions and who ever altered their behavior accordingly. To become ER it takes a fair degree of being aware of one’s finances and optimizing accordingly. I just don’t see that going away, ever, and having the person spend on the same things, damn the cost or the markets or newly available alternatives.

Any attempt to model retirement in this way is going to run into this problem.

This is what I've said for years.

The 4% rule is modeled off of a behaviour that no human would ever actually do.

It's very simple: if the thought of cutting back your expenses or making more money in the future is less appealing to you than working longer, then work longer. If the thought of cutting back your expenses or making more money in the future is no big deal compared to staying in your job now, then leave your job.

It's really not frickin' complicated.

Retiring in a high inflation market is like buying a house during a real estate bubble. These are lifestyle choices that are informed by math, not defined by them.

There is no such thing as a bad time to retire, there is only such thing as an inopportune time based on the individual person's life circumstances and risk factors.

If someone is like me: very comfortable cutting my spending and extremely comfortable generating more money if/when needed, then there is no such thing as a bad market time to retire. What the market does is just inform how I'll adjust.

I retired for reasons that are INFINITELY more important than whatever the hell the market was doing. And that's what really matters. What factors are making the person want to retire?

If their job is eroding their physical health and the sustainability of their marriage, then working a few more years because of what inflation is doing is FUCKING INSANE.

If they enjoy their job, can't stand the idea of cutting expenses, have a skill set that would make it hard to jump back into work, and aren't overly excited about retirement, then sure, why not work a few extra years to mitigate SORR?

Asking if a time period is "bad" to retire is like asking what time of day is best to exercise or best age to get married. It depends on the person and the myriad factors that affect them individually.

The best time to retire is when the risks of continuing to work outweigh the risks of retiring. The best time to exercise is when the person is most likely to enjoy it and keep doing it. The best age to get married is the year that they have been with the right person long enough to know they want to get married.

Retiring presents with inherent risks that are modulated by the behaviour of the markets. Continuing to work presents with inherent risks modulated by forces that are entirely individual.

All of the above risks can be hedged and mitigated in various, complex, interconnected ways.

The sum of those risks and hedges is what determines when the best date is for someone to retire.

[EscapeVelocity2020]

When I see some comments, I wonder what these folks thought during the darkest days of the 2008/9 downturn, when their portfolios were dropping like a rock and Congress failed to pass the bank bailout the first time.  You know, when Lehman went bankrupt overnight, money market funds broke the buck, and even rich people were freaking out because the free money overnight lending seized up.  Most likely they weren't around, just like I wasn't around for the Great Depression so it's hard to imagine doing things like washing aluminum foil off to re-use it multiple times.

It's easy to be confident when markets are high (and they are significantly up from 2020, which is when the Fed implemented all the stimulus and ZIRP, thus kicking off the inflation that they are now combatting).  I don't think this weak market backdrop is going away any time soon.  Hopefully I'm wrong, prepared for the worst and hoping for the best as they say, but the tone at Bogleheads and ER.org was pretty grim (the MMM forum wasn't really around at that time).  I don't think anyone was crowing about how great ER was from October 2008 to March 2009...

Of course, with hindsight now, all that angst eventually subsided and eventually the party was back in full swing by 2011, but it was a bumpy ride.  All the confidence I'm seeing right now seems misinformed if we end up having a repeat of the Great Financial Crisis (which is more likely to happen than not during our investing career).

Edit to add - this post is not directed at Malcat, hopefully it is not interpreted that way

[Metalcat]

Edit to add - this post is not directed at Malcat, hopefully it is not interpreted that way

No worries. I didn't take it as such since it wasn't at all applicable to what I said.

However, it is true that people who have not been through much hardship may have a hard time assessing the actual risks of having to adjust to a lower spend.

Ironically, I think this makes many people much more afraid than they probably should be. I've had to adjust to loss of lifestyle many times in my life and it's not the end of the world.

On the flip side, experiencing hardship can also make some people overly conservative as a reaction, especially if they dealt with poverty in childhood and never went to therapy to process that trauma in a healthy way.

For me, the risks of SORR and having to either cut back expenses or make more money would certainly never be worth putting in more years to a job that I'm dying to leave. Tightening my belt and adjusting to a much less comfortable lifestyle doesn't intimidate me at all.

That said, that doesn't mean I don't also like ample financial security. But my *personal* factors favour me putting my energy into having ways to generate more money when needed rather than trying to buy that security in advance by doing work that isn't optimal for my lifestyle.

Each person needs to assess their own personal risk factors, strengths, and resources.

For me, it's stupidly easy to generate more income, especially when the markets are down because I specifically chose to train in skills that are more marketable when the economy is a shit storm.

That's not by chance, that's a proactive decision that I strategically made because I looked at the skills and thought "that sounds fun to learn."

So for me, the proactive choices I've made and my particular circumstances make market performance almost completely irrelevant in terms of overall success rate. It's just not a risk I need to factor in very much. My health is a much larger risk, so I pander to that risk and just kind of ignore SORR because it's barely relevant to me.

For someone with a very different life, SORR may be a much larger factor. But SORR's level of importance is in no way universal.

Being myopic about SORR as a determinant of when you should retire is kind of batshit crazy IMO. It's a single factor in the rich, complicated tapestry of factors that make up MAJOR lifestyle decisions.

As I said before, people here manage to grasp that buying a house is as much a lifestyle choice as it is a financial one, but they seem to get stuck when it comes to conceptualizing leaving a career.

It is first and foremost a *LIFESTYLE* decision where ALL of the available options come with risks and benefits.

When you understand leaving a given job to be a lifestyle choice with huge financial implications, SORR becomes a much more comprehensible risk to assess.

[ATtiny85]

When I see some comments, I wonder what these folks thought during the darkest days of the 2008/9 downturn, when their portfolios were dropping like a rock and Congress failed to pass the bank bailout the first time.  You know, when Lehman went bankrupt overnight, money market funds broke the buck, and even rich people were freaking out because the free money overnight lending seized up.  Most likely they weren't around, just like I wasn't around for the Great Depression so it's hard to imagine doing things like washing aluminum foil off to re-use it multiple times.

It's easy to be confident when markets are high (and they are significantly up from 2020, which is when the Fed implemented all the stimulus and ZIRP, thus kicking off the inflation that they are now combatting).  I don't think this weak market backdrop is going away any time soon.  Hopefully I'm wrong, prepared for the worst and hoping for the best as they say, but the tone at Bogleheads and ER.org was pretty grim (the MMM forum wasn't really around at that time).  I don't think anyone was crowing about how great ER was from October 2008 to March 2009...

Of course, with hindsight now, all that angst eventually subsided and eventually the party was back in full swing by 2011, but it was a bumpy ride.  All the confidence I'm seeing right now seems misinformed if we end up having a repeat of the Great Financial Crisis (which is more likely to happen than not during our investing career).

Edit to add - this post is not directed at Malcat, hopefully it is not interpreted that way

I hadn't found BH or anything yet in 08. All I had was the knowledge of "buy low, sell high" and since 'high' was not around there was no inclination to do any selling. Fortunately I was working in the automotive supplier sector, so there were plenty of other things to occupy my mind.

I do find some of the BH threads really strange. Similar to the March/April 2020 threads. A lot of people who really should have known better are likely going to be working several extra years due to their inability to execute the plan developed during calm, upwards times. At least some of the Mar/Apr 2020 covid panic-sellers can get back on track if they push their cash back into their AA.

[Ozlady]

DH and i retired 2 years ago...

i recommend people to read again Michael Kitces ' Bond Tent In Retirement article ...

(although i myself substituted Term Deposits for Bonds ...)

As a result of this Bond (term deposit)  Tent.,  i rejoice as depressed equity prices means i am able to purchase equities at great discounts  and look forward to higher yields and higher cash flows for my retirement...so why is it the worst time to retire? i am greatly puzzled...

[vand]

Has anyone figured how much has a bond tent helped this time around as bond have been smashed along with equities? Very little, I would wager given how far eg BND has fallen.

I admire the bravado on display from our recent cohorts. You may yet survive this all. However, if it were me who pulled the plug 12 months ago, went about my new life, forgot about the markets and came back a year later to find that between withdrawals, market falls, and inflation my x25 stash had now shrunk to a x17 stash after just 1 year of retirement I would be shitting myself. 
 

[vand]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

[2Birds1Stone]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

[BeanCounter]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Well, I think you all are forgetting that Retiree A had the shares that made the original valuation possible. So yes retiree B dropped down to the same amount as Retiree but he still has the shares that will, in time go back up. Retiree B never had those assets.
In 2008 retiree A’s assets may have dropped down to retiree B’s total but in two years they would have risen again to their previous value.

[vand]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Show me your research!

[vand]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Well, I think you all are forgetting that Retiree A had the shares that made the original valuation possible. So yes retiree B dropped down to the same amount as Retiree but he still has the shares that will, in time go back up. Retiree B never had those assets.
In 2008 retiree A’s assets may have dropped down to retiree B’s total but in two years they would have risen again to their previous value.

Both have a 17 pot multiple as things stand. Same number of units in relation to their desired expenditure.

Ret A would have had more units at the outset but has had to sell units into a falling market to fund his lifestyle, which has simultaneously been getting more expensive

Ret B may never have accumulated as many units a Ret A at his peak, but he has more units at his point of retirement than he ever had before

[Metalcat]

Has anyone figured how much has a bond tent helped this time around as bond have been smashed along with equities? Very little, I would wager given how far eg BND has fallen.

I admire the bravado on display from our recent cohorts. You may yet survive this all. However, if it were me who pulled the plug 12 months ago, went about my new life, forgot about the markets and came back a year later to find that between withdrawals, market falls, and inflation my x25 stash had now shrunk to a x17 stash after just 1 year of retirement I would be shitting myself.

Are you purposefully ignoring all of the posts where we talk about being comfortable modifying our spends or making more money, or generally just being flexible?

Yes, if you retire in a high inflation environment, you have to be prepared to be flexible. That doesn't make it a bad time to retire unless you have a problem with being flexible.

For some people, being flexible is WAY more appealing than staying in their job until inflation improves.

If YOUR specific goal is to retire, walk away and not even look at your investments, never adjust your spend, and never bring in more money, AND you don't mind continuing to work now, then yeah, it wouldn't make sense for YOU to retire during this period.

But that's not everyone'a goal. It wasn't Pete's goal, it's not my goal. It's not bravado to know what your personal risks are and be comfortable with them.

These are lifestyle decisions. This whole forum is about us understanding that what works for us may be different from what works for everyone else.

Most people here, as they get closer to pulling the plug, they get more financially conservative, consumed with concerns of SORR, and "what ifs," and OMY. And that's fine. That's their specific risk analysis.

Others become less conservative, less concerned about the details, because along the way they've become very comfortable with being flexible. They are okay pulling countless levers to adjust to whatever comes. They assess that the trade offs they will likely have to make are so much more appealing than staying in their jobs that they want out of.

That's not bravado, that's just knowing yourself, your options, and which ones suit you best.

I happen to be an insanely adaptable and flexible person who can easily generate substantial sums of money quite casually. My risk profile is going to be *very* different from an inflexible, high spending, creature of habit OR a very tight budgeted ERE type who is hell bent on not working.

Will many of the people who quit during this period end up pursuing some kind of paid work to offset the conditions that they retired in? Sure, maybe. That's really not an uncommon thing to do in retirement.

But that doesn't make the plan a failure, because that's not by default a bad option compared to staying in the job that was making them unhappy.

I have an entire family of people who took on passion projects in their retirements, many turned out to be highly profitable, and incredibly satisfying. Retiring gave them the breathing space to decompress, relax, and figuring out what they wanted their futures to look like.

Many, MANY retirees discover that they want something different for themselves than they had planned when they were working. It can be hard to anticipate what an older, wiser version of yourself will want to be happy.

But if someone knows they are utterly miserable in their current job, then they know staying in that job isn't it.

Personally, I think anyone with a substantial amount of money who is staying in a job they despise because of financial fear is kind of insane. There are just too many other options in life.

So perhaps there are some people who foolishly retired from jobs they actually enjoy where they make tons of money, and they just ignorantly retired with no plan to adapt to the markets and blindly spent 4% +estimated inflation, year over year, down to the penny, because the internet told them. Ignored the sky rocketing price of goods and didn't check their balances until years later only to realize "FUCK! I SHOULD HAVE STAYED A FEW MORE YEARS! I'M SUCH A FUCKING IDIOT!"

But it's more probable, given what is far more common in our society that most of the people who retired during the great resignation were fucking burnt out and being pushed well beyond what they could tolerate any further. And chances are for them, even if they have to cut spending or go back to work, it's still a better option.

It's not bravado to leave a bad situation where the alternatives are challenging but less brutal, it's basic common sense.

[wageslave23]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Well, I think you all are forgetting that Retiree A had the shares that made the original valuation possible. So yes retiree B dropped down to the same amount as Retiree but he still has the shares that will, in time go back up. Retiree B never had those assets.
In 2008 retiree A’s assets may have dropped down to retiree B’s total but in two years they would have risen again to their previous value.

Both have a 17 pot multiple as things stand. Same number of units in relation to their desired expenditure.

Ret A would have had more units at the outset but has had to sell units into a falling market to fund his lifestyle, which has simultaneously been getting more expensive

Ret B may never have accumulated as many units a Ret A at his peak, but he has more units at his point of retirement than he ever had before

Person A may have started out with a 91% chance but now he is much more likely than average to be in one of the few failure scenarios, so now his chances are about 50/50. Your probability is constantly changing.

[wageslave23]

I think the original question was best - will 21/22 end up being one of the 4% failures? This is an academic question and has nothing to do with personal circumstances and hopefully takes the emotional responses out of the equation.