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Old 08-22-2019, 08:25 AM
 
Location: Grove City, Ohio
10,174 posts, read 12,487,327 times
Reputation: 14148

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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 like to think we're pretty well bullet proof to the effects of a recession.

80% of our monthly retirement funds come from the federal treasury while 20% comes from a state pension plan.

Even if the state pension was totally eliminated we would be OK with a little belt tightening. Ohio’s biggest public pension fund lowers expectations. I could see the state cutting some benefits but not totally eliminating it.

The only thing that could really hurt is if the federal government cut social security benefits which I don't see ever happening.

Question: If a state did reduce pensions would SS re-figure the WEP?
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Old 08-22-2019, 08:26 AM
 
72,908 posts, read 72,747,988 times
Reputation: 50436
Quote:
Originally Posted by bpollen View Post
Nope. You are misinformed.

If you can live off the dividends, a $500,000 portfolio will still exist after 20 years. You will not lose your capital. Through good times and bad times. In fact, the $500k PF will continue to grow in value. Although it will shrink in a recession.

It's like working for a salary vs. working for commission. There's a tradeoff. You get a paycheck at regular intervals, and after 20 years (with luck), you still have that paycheck coming in (only more so, because of wage increases). With a commission job, you get a windfall some years, and you have only expenses with no income in some years (like during a recession).

A person IMO should have asset allocation, and type of investment allocation. A growth portion, a dividend portion, a conservative value equity portion, and so on.

I have high flying stocks that do well, and will consequently sink like rocks during a recession. I have a standard growth section. And I have a dividend investment section that, when coupled with my SS payments, would prevent me from having to sell investments at the bottom of a recession.

Cha-ching.

(Note all the "ifs" in your scenario. IF the equity growth holdings do well, IF this, IF that. "IF" isn't good enough for a retiree in a recession. And I don't suggest that people DON'T have growth holdings. I certainly do. But those will likely go down quite a bit in a recession. However, I will still get the dividends for most of my holdings, regardless of the share price. AND the share price will ALSO continue going up like other stocks, and many will likely NOT go down tothe same extent as my high flying stocks. CHA-CHING.)



Irrelevant.....this has nothing to do with high flying stocks ...this has to do with the mechanics of a dividend and the fact that you must see the stock or fund appreciate at least as much as the payout or it goes deeper and deeper in to a loss with each payout .

There is nothing to argue here ....

Selling the same dollars off from a portfolio of non dividend payers by selling some shares vs
The same amount from a dividend selling a piece of the share price will yield the same balance and longevity in payment for any given total return ...always.

A down market will take the same toll on both as well assuming the same total returns. There is nothing inherent in selling a piece of the share price better then selling a piece or shares of equal value.

All compounding is on dollars invested not number of shares ...

Last edited by mathjak107; 08-22-2019 at 09:01 AM..
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Old 08-22-2019, 08:34 AM
 
Location: Haiku
4,540 posts, read 2,698,408 times
Reputation: 6621
Quote:
Originally Posted by NewbieHere View Post
On ER forum, there’s one person retired for 20 years already, 2 recessions under her belt. It takes planning, she’s an engineer, she’s much more savvy when it comes to managing her investments and her emotions. It can be done, but I think the average Joe will just panick, as we see here often in C-D, and probably sells everything. As we saw some of this behavior in Dec.
My father died when I was 15 leaving my mom a life insurance policy and some savings. It was modest, not a lot. My mother invested it and lived off the proceeds for 40 years. Went through three recessions and the terrible inflation of the late 70's. She put my sister and me through college. She was invested 100% equities. Market crashes are normal but they always recover, you just have to be patient. Contrary to what people say here and elsewhere, you don't "lose" money in a market crash, it is just a temporary setback. But I don't have the nerves of steel she had so I am only 65% equities.
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Old 08-22-2019, 10:28 AM
 
Location: Columbia SC
9,156 posts, read 7,916,761 times
Reputation: 12518
My income is SS, fixed amount monthly withdrawals from two Mutual Funds, and RMD's from my IRA's which are also Mutual Funds. Other than the RMD's, I take nothing from my IRA's. I own some stocks.

Any changes in the economy would not affect my monthly income. What it would mean is how long I can continue to take withdrawals. In today's dollars/values I am good for 8 years before I would need to tap into my IRA's. If the economy goes good, my 8 year window gets longer. At age 77, I am not overly concerned with what the economy does.......LOL
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Old 08-22-2019, 10:52 AM
 
Location: Albuquerque NM
1,684 posts, read 1,553,867 times
Reputation: 3704
Quote:
Originally Posted by NYgal1542 View Post
Sounds like a political rant.
I don't even watch the news and I've been worried about another recession for the last ten years.
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Old 08-22-2019, 10:55 AM
 
14,358 posts, read 7,662,880 times
Reputation: 26248
Quote:
Originally Posted by NYgal1542 View Post
Sounds like a political rant.
It is a political rant. There will be a recession. Nobody knows what will trigger it or when it will happen. It’s tough to guess the severity.

Personally, I took the conservative approach and organized my finances assuming a severe recession. I hope I’m wrong.
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Old 08-22-2019, 12:40 PM
 
38,909 posts, read 15,252,729 times
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Quote:
Originally Posted by mathjak107 View Post
While recession are not fun ,retirees have had to deal with them forever ..... many here retired in 2008 and 2009 and no one lost a penny . If people lost money it was their own bad behavior not markets ...and it certainly did not take long For portfolios to comeback .

So a lot of this 2008 hoopla about retirement portfolios being devastated is either false stories parroted or poor investor behavior but it certainly was not stock and bond markets and any form of extended downturn

a typical 60/40 portfolio was down in the 30% range in 2008 and up almost 30% in 2009 ......

My own was down 33% in 2008 and up 28% in 2009 and up 12% in 2010 .....in the end portfolio wise it was pretty much ado about nothing..

Typical retiree portfolios ranging from 40-60% equities were only an issue for one year ,2008.

Today the 2008 retiree is no different then any other average retiree group in our history
So you think that when your retirement fund/portfolio is down 33% in 2008 and a couple years later it is about the same as it was a few years ago that it is all much ado about nothing?

May want to have someone explain how compound interest works.

Also, it took a lot longer than 2 years for housing prices to recover.
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Old 08-22-2019, 12:50 PM
 
1,659 posts, read 323,374 times
Reputation: 1880
Quote:
Originally Posted by GotHereQuickAsICould View Post
So you think that when your retirement fund/portfolio is down 33% in 2008 and a couple years later it is about the same as it was a few years ago that it is all much ado about nothing?

May want to have someone explain how compound interest works.

Also, it took a lot longer than 2 years for housing prices to recover.
It means that, in the end, the great recession didn't impact you.

Those that sold on the dip never recovered the same way. They either didn't buy back or bought back at rising prices.

Simple example:
You bought the stock at $100
Recession hits and you panic and sell at $50
Stocks start climbing but these types of investors don't jump back in right away
They buy back at $70 what they sold at $50 which they originally bought at $100

Housing is a different topic altogether and cannot be compared to the stock market.
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Old 08-22-2019, 01:20 PM
 
Location: Denver, CO
1,725 posts, read 4,089,505 times
Reputation: 1299
Quote:
Originally Posted by GotHereQuickAsICould View Post
So you think that when your retirement fund/portfolio is down 33% in 2008 and a couple years later it is about the same as it was a few years ago that it is all much ado about nothing?

May want to have someone explain how compound interest works.

Also, it took a lot longer than 2 years for housing prices to recover.

If you want compound interest stick that money in a bank and get your safe 2% interest. The market is speculative and you'll have spikes and dips as you go along for the ride.
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Old 08-22-2019, 01:54 PM
 
72,908 posts, read 72,747,988 times
Reputation: 50436
Quote:
Originally Posted by GotHereQuickAsICould View Post
So you think that when your retirement fund/portfolio is down 33% in 2008 and a couple years later it is about the same as it was a few years ago that it is all much ado about nothing?

May want to have someone explain how compound interest works.

Also, it took a lot longer than 2 years for housing prices to recover.
I never said anything about housing .housing-is localized ...


Equity Markets go up and they go down ....they have higher highs and higher lows as time goes on ......


Some 60/40 mix's were close to being back in one year and back in the 2nd year...

Making decent money investing always has volatility along for the ride .....don’t try to rule it out ...plan for it , allow for it

Last edited by mathjak107; 08-22-2019 at 02:29 PM..
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