Lost 22% of our IRA/401Ks/Investments

[dstig1]

Not everyone gets to retire willingly when they want. Some for health reasons as you noted, others due to layoffs at a late age where nobody will hire you, but not quite old enough to really retire. I have seen a TON of the latter the past 10 years around here. If it also coincides with a significant down market (a good reason for getting laid off...), yes it can cause problems as things are stacked up against you. How much of a problem depends on the individual situation... For some? No biggie. For others, a real big deal.

 

[zzvyb6]

A lot of people I know had to withdrawn because of year before's income tax debt. Mine is way up. I live off of 4 S.P.I.A.s that pay me 'take home' as much as I earned at GM after 40 years. Ins spite of these withdrawals, my account is still increasing. Now with R.M.W. I've run out of things to buy after a new tractor, NH Stackliner, 20K trailer, hot tub, and a waste oil furnace to name a few. What do you do with $50k in your checking account ?
I recommend you PAY a 'wealth management' company to handle your IRA because their wallet commands a lot better leverage that your own single 'trivial' amount.
You'll sleep better. I feel real bad for my co-workers who took a pension. (no, I actually don't). My 'buy-out' was doubled in 2 years by my investment manger. Now I'm big on donating to new farm 'kids' running from the Michigan blue cities. (I never said that intentionally, it just came out of reality).

 

[CloverKnollFarms]

Investing is what paid for my kids to go to college too. 50% of their tuition was just earnings. Their 529s averaged 11%.

Our HSA investment returns pay for all of our medical expenses, and add to the account balance. Those have averaged 12%. That was one of the best financial decisions I have ever made. It just prints money. Choosing a high deductible plan and investing in the HSA 10 years ago, will help pay for medical expenses for decades to come.

 

[CloverKnollFarms]

I happened to look at our 401k. We have ROTH IRAs and the HSA and a few brokerage accounts too... But the 401k now shows that 25% of its value, is money I actually invested. 75% is match funds or growth.

I retired early, so it will just sit and simmer for another 12 years.

At that point only about 10% of its value, will be the money we invested.

This is what I wish public education would have taught me when I was young. I didn't start really investing until about 15 years ago. In anything.

If you think about purchases in terms of lost opportunity... You realize how expensive things really are, over time.

Spending $15k more on a single new vehicle, over the course of 20 years, is almost $140k

Multiply that by vehicles over a lifetime.

There is your retirement fund

 

[Oaktree]

Actually he is spot on. The biggest risk to a secure retirement is retiring into a down market. (Assuming you had sufficient savings going into that point. If you didn't save much, well there isn't much help for you at this point no matter what.)

I read somewhere that the average 60 year old has less than $50k in retirement savings. Seems pretty short-sighted to me, barring some big inheritance there's almost no way you can catch up at that age. I sure would hate to be 80 and be working because I need to.

A typical retiree (62-65) should not only have their investments largely crash-resistent, they shouldn't be pulling 5% out all at once. Even if they did and that 5% became 6.25%...that's from 20 years to 16 year of remaining assets...but that's assuming you gain ZERO over those 16-20 years. Since the typical S&P fund returns 10%, you would never run out of that money in your lifetime.

Not sure what you mean by "crash resistant". No, you're not gonna lose anything with an annuity or CD but you're not earning much either. Anything else is either subject to the whims of the market or not very liquid (real estate, precious metals, etc.).

 

[CloverKnollFarms]

There is retiring into a bad market, and not actually saving. Most of America never really saved.

I've driven three different vehicles since 2006. Not one cost more than $9000.

That's a year of depreciation on most new vehicles.

My early retirement could be attributed in large part to that choice alone.

 

[CloverKnollFarms]

You can

I read somewhere that the average 60 year old has less than $50k in retirement savings. Seems pretty short-sighted to me, barring some big inheritance there's almost no way you can catch up at that age. I sure would hate to be 80 and be working because I need to.

Not sure what you mean by "crash resistant". No, you're not gonna lose anything with an annuity or CD but you're not earning much either. Anything else is either subject to the whims of the market or not very liquid (real estate, precious metals, etc.).

You can bury cash in the back yard and claim you've lost nothing... Except all the earnings.

What most people "save" is only 10-20% of their total retirement savings (if they are investing) due to compounding. The rest is growth. You can "save" a lot, and still end up poor if you don't make those savings work. Every year inflation makes that savings worth(less)

We tried to be very aggressive, so that we could live on 2-3% of our savings. That way we are insulated not by risk averse investments, but by low withdrawal needs. Allowing those funds to continue to grow.

I'm hoping to leave a lasting legacy as a non college educated child of a poor farming family. My inheritance from my parents will only be their work ethic and spending habits. In the end, that was worth more than any monetary gift.

 

[Torvy]

I read somewhere that the average 60 year old has less than $50k in retirement savings. Seems pretty short-sighted to me, barring some big inheritance there's almost no way you can catch up at that age. I sure would hate to be 80 and be working because I need to.

Not sure what you mean by "crash resistant". No, you're not gonna lose anything with an annuity or CD but you're not earning much either. Anything else is either subject to the whims of the market or not very liquid (real estate, precious metals, etc.).

Crash resistant means things like bond funds that return at a lower rate than most stock funds, but don't drop significantly either. Some specific stock funds tend to run counter (precious metals, for example). Combined with dividend producing stocks, they moderate the effects of market movements. That's why the gross is only about 10% before inflation.

In an aggressive portfolio, I've regularly made 30-45%, but interspersed with some periods of losses. Even with downturns, the market has been very resilient. People tend to lose when they panic and pull money out rather than let it recover...or they foolishly invest in individual stocks that are much more volatile than a fund.

 

[jmc]

Besides buying stocks when there's blood in the streets, another rule of thumb is selling stocks when long term rising prices have sucked about everyone into the market. Might be an urban legend but someone claimed to have avoided the Depression losses by selling out after the shoe shine guy was giving him stock tips.*

*I was reminded of that just before the 2021
dot com bubble burst- two concrete laborers on my job were trading stock tips.

 

[CloverKnollFarms]

When does one buy back in?