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Old 08-21-2019, 02:21 PM
 
6,992 posts, read 3,886,067 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 was not retired in the Great Recession.

As for currently, I am going to try to put my home on the market to sell early 2020, which I think may be the last opportunity to sell for a few years, if a recession hits.

I'm also going to sell a few of my riskier stock holdings. With my savings, my SS benefits, and dividends, I should be okay to withstand a several year recession without having to sell investments at a low point.
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Old 08-21-2019, 03:54 PM
 
72,876 posts, read 72,721,455 times
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Quote:
Originally Posted by bpollen View Post
I was not retired in the Great Recession.

As for currently, I am going to try to put my home on the market to sell early 2020, which I think may be the last opportunity to sell for a few years, if a recession hits.

I'm also going to sell a few of my riskier stock holdings. With my savings, my SS benefits, and dividends, I should be okay to withstand a several year recession without having to sell investments at a low point.
Dividends are no different then selling the same dollars off a non dividend paying portfolio...a 4% dividend and a 4% withdrawal from equities would give you the same draw and balance assuming the same total return ..

Donít think for a second that these stocks are somehow any different in a bear market....
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Old 08-21-2019, 04:15 PM
 
Location: NE Mississippi
13,908 posts, read 8,742,308 times
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You have to arrange your finances to withstand things like recessions. That's not very simple for most people. We retired in 2010.



We have:
Real estate income. Our rental properties are paid for and that means we can accept less rent than the competition. The result is, we have no turnover. All our tenants have been with us for years.
Cash. Money market and T Bills are where we keep cash. We don't try to generate income from our cash; we just make sure it is safe.
Equities. We have very large profits in the few stocks we hold. Because we have cash we would not be forced to sell - not for many many years.

Everything paid for. For me, that was central to retirement planning. We retired in place, and in that respect we are very, very lucky. Moving, what with selling the house and transporting everything is a huge expense. We avoided it, but not everyone can.
A Plan. When I get too old to fiddle with real estate (about 80, maybe?) I will sell the rental properties and move the proceeds to cash. We will spend the money over a 25 year period. The absolute very worst that could ever happen is that we could live to be 105 years old and run out of money down to Social Security and a small pension. And that would only happen if all our stock equities plunge to zero.
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Old 08-21-2019, 04:19 PM
 
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A plain ole 40 to 60% equity and bond portfolio with a 4% safe withdrawal rate is already designed to withstand the worst of the worst ...it requires nothing else to be done unless years down the road markets have not recovered.

That is why 95% of the time 4% is way to conservative of a draw .....
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Old 08-21-2019, 04:29 PM
 
1,646 posts, read 315,858 times
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Well, what I am doing is keeping a bit more liquidity in my gambling account.
I'm going to be the bull in the bear market and am working on a watch list of potential new buys.

I've been invested through Black Monday, Dot com bubble burst and the Great Recession.
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Old 08-21-2019, 05:24 PM
 
Location: Ohio
20,203 posts, read 14,393,338 times
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Quote:
Originally Posted by athena53 View Post
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 would love to give you more precise info, but that isn't possible. Previously, I had said that a recession was likely 1st QTR/2nd QTR 2020, but seeing how the Federal Reserve cut interest rates I don't see that as likely.

The last two historical periods, the 106-month economic expansion in the 1960s and the 120-month economic expansion in the 1990s both ended with double-dip recessions. In Economics, past history is not necessarily indicative of future outcomes. Even so, it is still a possibility. For those two double-dips, you could hardly characterize them as severe, as they were only 8-10 months each and only in the last one in 2001 were there any significant job losses. It didn't cause the Wage Index to decline, but it only rose about $800.

You can find the Wage Index here (scroll way down):

https://www.ssa.gov/oact/cola/AWI.html

You're smart enough to figure this out yourself and the only info you need is right here:

https://www.ssa.gov/OACT/ProgData/taxquery.html

Just click on "OASI" and enter the year you want and you'll get the info you need.

What you're looking at is the amount of FICA payroll taxes collected.

Since you plan on 2023 to file, you'll be indexed to Year 2021.

In December 2021, you will know whether the Wage Index will go up or down --even before it's officially published in November 2022 -- by comparing the amount of FICA taxes collected to Year 2020.

The Wage Index is not the average of all wages/salaries in the US. It is the average of all FICA wages/salaries, so it does not include wages/salaries in excess of the FICA wage cap.

So, if they collect $815 Billion in 2020 and then $811 Billion in 2021, you know there's a problem. They collected less, because fewer people were working, so the average wage people earn is less.

If you look at 2008, you'll see they collected $576 Billion then in 2009 they only collected $572 Billion -- a decrease.

That's why the Wage Index for 2009 was less than 2008.

Anyway, you need to make the best decision that's right for you, and the only way you can make the best decision is if you're armed with accurate info and now you know where to find it.
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Old 08-21-2019, 06:42 PM
 
6,992 posts, read 3,886,067 times
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Quote:
Originally Posted by mathjak107 View Post
Dividends are no different then selling the same dollars off a non dividend paying portfolio...a 4% dividend and a 4% withdrawal from equities would give you the same draw and balance assuming the same total return ..

Donít think for a second that these stocks are somehow any different in a bear market....
Nope.

When you sell stock to get the money, you sell shares. The shares that you paid $100 for might be $60 at the bottom of a recession. Let's say that stock pays 1.5% in dividends. You have lost CAPITAL ($40 for each share you sold, plus the future loss of 1.5.% dividend for each sold share). You had owned, say, 100 shares of Exxon. But now you own 60 shares.

When you spend the dividend, you have spent profit. You still have all 100 shares of the company, and will still get the 1.5% dividend for all 100 shares. And more than that, if the stock if a long term dividend payer; those stocks give you a RAISE every year in your dividend. It's important to keep the capital (if you still want the stock).

You could reinvest the dividends, if you don't need the money...which is spending the profit to add more Exxon shares at a decreased price (if you want more shares).

You don't have to spend all the dividends, but it's important to have regular dividends during a recession w/o having to worry about selling shares of stock at a reduced price. To me.
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Old 08-21-2019, 07:36 PM
 
72,876 posts, read 72,721,455 times
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Quote:
Originally Posted by bpollen View Post
Nope.

When you sell stock to get the money, you sell shares. The shares that you paid $100 for might be $60 at the bottom of a recession. Let's say that stock pays 1.5% in dividends. You have lost CAPITAL ($40 for each share you sold, plus the future loss of 1.5.% dividend for each sold share). You had owned, say, 100 shares of Exxon. But now you own 60 shares.

When you spend the dividend, you have spent profit. You still have all 100 shares of the company, and will still get the 1.5% dividend for all 100 shares. And more than that, if the stock if a long term dividend payer; those stocks give you a RAISE every year in your dividend. It's important to keep the capital (if you still want the stock).

You could reinvest the dividends, if you don't need the money...which is spending the profit to add more Exxon shares at a decreased price (if you want more shares).

You don't have to spend all the dividends, but it's important to have regular dividends during a recession w/o having to worry about selling shares of stock at a reduced price. To me.
Nope you need a lesson...you are misinformed.....

Every dividend has a mandatory reduction in share price by the same amount before it can trade ...it is automatically done and all compounding is on your opening invested dollars left .

A dividend also has nothing to do with profit or not it is an amount paid out approved by the board in good and bad years

If you have a 100k invested and it pays out a 10% dividend what you end up with for markets to compound on at the ring of the bell is 90k and 10k in pocket .. if that stock doubles you have 180k and 10k in pocket ....

The company sold off a piece of your share price in effect and handed it to you .


If I have a portfolio of non div payers and I have 100k and sell off 10k worth , I have 90k left and 10k in pocket ...if it doubles I have the same 180k and 10 k in pocket .


It works the other way too in down markets ..


If you have 100k and it pays 10% out ,you have 90k left and 10k in pocket ...markets fall 50% ,,you have 45k left

I pull 10k out of my non div payers and I I have 90k left ..if it fell 50% we have the same 45k ..

The problem is you don’t understand how dividends work and every pay out must have a mandatory reduction before markets can compound up or down on it .

Without offsetting the dividend amount with as much appreciation it just drives the stock price lower and lower with each payout .... a down market always has the same effect dividend or not..there is no difference between selling a piece of a portfolio or selling a piece of a share price .

In both cases they both will go to zero value without enough compounding to offset what was paid out ....

Investing is about dollars being compounded on , not how the value is made of share wise ...that is why a stock split has no change in value

Last edited by mathjak107; 08-21-2019 at 07:44 PM..
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Old 08-21-2019, 07:37 PM
 
Location: SoCal
13,865 posts, read 6,620,462 times
Reputation: 10451
Oh no, somebody accidentally stepped into a land mine. I spoke soon, it not soon enough.
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Old 08-21-2019, 07:52 PM
 
72,876 posts, read 72,721,455 times
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Quote:
Originally Posted by NewbieHere View Post
Oh no, somebody accidentally stepped into a land mine. I spoke soon, it not soon enough.
Well I don’t want posters here believing misinformation or myth..they should understand properly how things work so they don’t get hurt by believing they are isolated and safe
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