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Old 08-20-2019, 04:03 PM
 
2,401 posts, read 840,519 times
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Quote:
Originally Posted by Mircea View Post
Anyway, if job losses are severe enough to impact the Wage Index, you may want to apply for Social Security a year earlier than you planned, or delay by a year, so you don't lose money.

Just keep that in mind.
Thanks- I hadn't even considered that. I'm collecting Survivor benefits on DH's record now but will file for my own at 70, 4 years from now, so it's something I need to watch.

I retired in 2014 and the market has been pretty kind to me. I've been through crashes when I was working and it was different when I was putting new money into the market at bargain prices rather than withdrawing. Anyway, here's what I tell myself if the market tanks:

1. I've been gradually moving to a higher % of fixed income for stability.
2. About 40% of what I spend is either travel or charitable donations. Both could be cut back although I wouldn't like it.
3. SS plus a couple of non-COLA pensions ($900/month each) would cover a lot of the essentials if I really didn't want to withdraw money. I think the retirees who "lose their savings" in a recession are the ones who HAVE to get $X out of the investments every year, even though $X has become an uncomfortably large % of their reduced portfolio.
4. I've kept my withdrawal rate at an average of 3.5% (had an expensive year when we downsized, other years were better) so there's some wiggle room.
5. The Monte Carlo simulations my advisor runs every year includes the effects of bear markets and I still have a 92% chance of not outliving my savings.
6. Finally- I could file for SS on my own record and get probably $1,000/month more; at 70 it will be $1,500/month.

So- I'm not doing anything different right now and I may not have to.
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Old 08-20-2019, 05:05 PM
 
1,797 posts, read 652,982 times
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My retirement is largely based on annuities. The last recession was such a total non-event for me that I actually decided to semi-retire in 2009, at the age of 49. Real estate taxes on my properties dropped quite a bit during recession, and that effect was the only one I can think of on my finances (ie, the only effect was positive).
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Old 08-20-2019, 05:41 PM
 
Location: Albuquerque NM
1,684 posts, read 1,552,922 times
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I worried about a recession and the impact on my 401k before I retired but now am hardly concerned at all. If a recession hits, my plan is to start taking delayed Social Security and start withdrawing from my 401k stable value fund rather than equities. I also have two to three years of cash in CDs and online money markets. And the bulk of my retirement income is a secure government pension.

Since I am planning to move to Oregon to a hot real estate market, I am hoping for a real estate cool down. I bought my home twenty years ago and paid it off in fifteen (yes, I know that was not a good financial decision but I sleep better) and I live in an insulated part of flyover country with a bad economy. The last recession did not have as much impact on our housing as it did in other parts of the country. Prices went up some and then dropped back down some but not the huge spikes. My home is in a very popular neighborhood and may not sell as quickly during a recession but will sell. And I don't expect the drop in selling price to be as great as that in Oregon.

My main concern during a recession will be for my nieces, nephews, and friend's children who did not fare well during the last recession. They are mostly in their 30's and 40's but do not have secure, professional jobs.
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Old 08-20-2019, 06:12 PM
 
12,355 posts, read 15,321,958 times
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You'll see a lot of retirements the next recession, just like the previous one. And, of course, bankruptcy lawyers will be doing a land office business. A couple years ago they were hurting, even discounting their fees. Not anymore!
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Old 08-20-2019, 06:52 PM
 
Location: Sierra Vista, AZ
16,138 posts, read 20,926,968 times
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When they calculate cost of living increases the government takes 1% from everything. Social Security, Veterans compensation, Military pensions and survivors benefits, you name it. All well and good, itís only 1%. I am in my 20th year of retirement and itís starting to hurt. A 20% increase would put me back where I should be
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Old 08-20-2019, 06:54 PM
 
Location: SoCal
13,859 posts, read 6,614,329 times
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COLA this year could be 1.6%, not as nice as last year which is 2.8%. In 2010, and 2009, we got 0% COLA, this following 5.8% COLA for 2008.

https://www.ssa.gov/oact/cola/colaseries.html
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Old 08-20-2019, 07:01 PM
 
3,089 posts, read 1,085,601 times
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I will be retiring next year. House is paid off, no credit card nor car loans. Biggest bill will be health care but I really have set up where the money that I need to live for next few years is not attached to market. So if a recession starts I don’t need to take out anything from market and can hopefully wait until it bounces back.

So my advice set up your investments in different buckets and keep money you will need for 2-3 years in a safe from recession place.
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Old Yesterday, 05:13 AM
 
Location: Australia
1,028 posts, read 376,154 times
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Interesting question. We both retired at the end of 08 but husband was able to work on contract a couple of days a week for another few years. As in turned out Australia did not go into recession but we were all braced for it. The global recession did impact on people though, particularly as global shares and investment products lost a lot of value. Retirees fully dependent on income streams from their investments were worst hit and some of them ended up becoming eligible for the government Aged pension, which is means and assets tested. We have an industry pension so we were unaffected.

On a personal level, a couple of our kids were working in the UK in 2008, in finance and banking, and promptly lost their jobs. One was coming home to get married and it looked as if both the bride and groom were going to be unemployed at the time of their wedding. Luckily SIL managed to get a position with a British company and later DD did the same. Which enabled them to return to the UK for a few more years, as they wished.

Then for reasons not fully understood by me, the Aussie dollar went up and travel to Europe and the US had never been cheaper for us. So we were able to enjoy holidays of several weeks in Europe and the US each year til both the kids came home.

The main provision I have made for any upcoming recession (which will be a shock to younger people here as we have not had one for 27 years) is that I have forgone the tax advantage of drawing income from my superannuation or retirement fund and left it intact. So that I would not be drawing money out of a declining total. I can take a lump sum if needed.
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Old Yesterday, 05:41 AM
 
72,858 posts, read 72,697,003 times
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Quote:
Originally Posted by Beach Sportsfan View Post
I will be retiring next year. House is paid off, no credit card nor car loans. Biggest bill will be health care but I really have set up where the money that I need to live for next few years is not attached to market. So if a recession starts I don’t need to take out anything from market and can hopefully wait until it bounces back.

So my advice set up your investments in different buckets and keep money you will need for 2-3 years in a safe from recession place.
Most of us do use some form of cash buffers...we have two years ...but cash buffers as I keep saying are a mirage ...they mentally feel good ..but the reality is they add nothing to the party as far as extra safety that simply rebalancing just a balanced portfolio does not do better ....

It would always be bonds being sold in a recession and in a recession bonds increase in value while cash earns less and less .

In fact as I point out all the time , even if a retiree was 100% equities , the growth in the up years more then compensated for any selling in the down years ... a 50/50 portfolio clocks in at a 95% success rate over the 119 30 year cycles to date and 100% equities has a 93% success rate ....

There really is a lot more mis information out there about the importance of cash buffers , then the cash buffers actually add. ...we just like them mentally
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Old Yesterday, 08:11 AM
 
Location: Haiku
4,520 posts, read 2,694,980 times
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Quote:
Originally Posted by Giesela View Post
I was thinking about the news and worry about an upcoming recession.
This thread is NOT ABOUT RECESSION COMING SPECULATION.

Theoretically, if you have done what experts recommend, own your home, car, found some sort of monthly means to cover monthly expenses (pension, investments, rentals whatever).

Then recessions don't affect those retirees? Well depending on investments I guess.

Was anyone retired during the last one?

Anyone curtailing plans or putting them off to see if this next one materializes? Coming up with a recession plan, if you think it will affect you? For example if you had been thinking of selling and moving south, are you going to do it sooner now vs waiting in case the real estate market cools?
I have a computer program I wrote that uses historical data to analyze portfolio performance. I used it to back test what happens to people who retire right before a recession as opposed to during a recession. If you used the 4% rule to guide your decision, there is no difference between the two, both situations would have successful outcomes. That is, you would not have run out of money in any historical 30-year period.

The only difference is the 4% rule would result in a higher annual withdrawal rate for the person who retires before the recession. But since you cannot predict when a recession occurs you cannot say "I need to retire now because next year might be a recession". You really need to make your decision based on the here-and-now and whether the RIP tool you use (like FireCalc) gives you a result you are happy with.
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