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  • FIRST POST
    • ams25
    • By ams25 5th Feb 18, 2:52 PM
    • 159Posts
    • 186Thanks
    ams25
    Bear Market/Crashes: how do Retirees Deal with it?
    • #1
    • 5th Feb 18, 2:52 PM
    Bear Market/Crashes: how do Retirees Deal with it? 5th Feb 18 at 2:52 PM
    So maybe this is the beginning of a crash, correction, bear market, buying opportunity or maybe its nothing.

    And seems to me that we are really still very early in the accelerating shift from defined benefit pensions and annuities to more and more people having to live off a pot of savings and investments.. and to be able to deal with investing that and handling market sell offs as a norm. Not sure how well equipped people are for that.

    So whatever the current market movement is, it's a good opportunity to raise this question for retirees who have stopped regular work and rely on savings and investments (not defined benefit pensions/annuities of private or state varieties) for the majority of their income - how do you (or how do you think you will) cope with seeing a 10, 20, 40% portfolio decline and knowing you are reliant on the same portfolio for your future income.

    - will you ignore it and just carry on because you know markets go up, down and eventually up again
    - will it make you grumpy and irritable with loved ones
    - will you buy more equities because you saw this coming
    - are you comfortable your portfolio is structured to ride out the more common 1-3 year downturn, or the less common 5-10 year downturn/poor returns (or even the 1966 retiree nightmare of 17 years of poor returns and high inflation )

    I've lived through several crashes and bear markets but as I was working it was not all that difficult to ignore them because at the end of the day i didn't need the money anytime soon. In 2008 I (thought) I was around 15 years from retirement, or longer.

    I have tried to structure my asset allocation to suit what I think is my risk tolerance, not to need to sell equities any time soon and even have some funds available if I am brave enough at some point to buy. I believe I can cope with a 3% withdrawal rate over the long term which according to most experts should be a safe withdrawal rate.

    I've read loads to educate me that I am well set up so I should be fairly relaxed. So far the latest global sell off has not bothered me much, but if (or when) it proves to be the next bear market, we haven't seen anything yet.

    So if you have previous experience, as a retiree, how did you cope and what advice for us newbies.
    If, as many here are I suspect, this (or whenever) is going to be the first time as a retiree dealing with a major sell off, how do you see yourself dealing with it. what suggestions do you have for this community here to help them deal with it calmly and to maintain low stress levels.

    As they say, a problem shared.....
    Last edited by ams25; 05-02-2018 at 3:05 PM.
Page 3
    • Cash-Cows
    • By Cash-Cows 10th Feb 18, 9:52 AM
    • 200 Posts
    • 153 Thanks
    Cash-Cows
    When I retire I hopefully 5 years time I will have to psychologically get my head around actually withdrawing money. I!!!8217;ve never spent any investments and will take some getting used to.
    • Thrugelmir
    • By Thrugelmir 10th Feb 18, 9:58 AM
    • 58,475 Posts
    • 51,848 Thanks
    Thrugelmir
    We have a choice: buy a (poor value?) annuity
    Originally posted by DairyQueen
    What level of payment from an annuity do you regard as poor?

    Or is it the loss of your capital that concerns you. In that you expect not only to derive an increasing income from your pot, but be left with a capital sum as well.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Audaxer
    • By Audaxer 10th Feb 18, 10:10 AM
    • 1,042 Posts
    • 602 Thanks
    Audaxer
    When I retire I hopefully 5 years time I will have to psychologically get my head around actually withdrawing money. I!!!8217;ve never spent any investments and will take some getting used to.
    Originally posted by Cash-Cows
    I know what you mean, but when you are retired if you need investment income to supplement your pension it shouldn't be too difficult. I think psychologically it would be easier to take natural income via dividends rather than sell capital, so I have set up an income portfolio for that purpose, although currently reinvesting the dividends until I need to take them.
    • OldMusicGuy
    • By OldMusicGuy 10th Feb 18, 12:04 PM
    • 362 Posts
    • 734 Thanks
    OldMusicGuy
    managing to stay calm in the face of £50k or so of paper (online?) loses this month...not interested in knowing the exact amount. My asset allocation has helped to moderate losses a little and gains over the last 18 months since I stopped working/retired reassure. Quietly pleased with myself that I have handled this first, albeit small, test satisfactorily. Even my wife was surprised by my response...fearing a less tranquil reaction to plunging markets.
    Originally posted by ams25
    I'm about 40K down thus far, a bit sobering as I retire in just over 2 weeks. I'm regretting moving 50K of cash into the market 3 days before the correction, but it's a lesson that I have had reinforced - don't fiddle.

    I was a bit stressed initially but ok now. My strategy for retirement is not one based on safe withdrawal rates and I am glad because it looks like a period of volatility means increased risk of pound cost ravaging for those about to retire.

    This correction has given a good insight into how my funds perform and I will be readjusting my holdings a bit once the market has settled, but not doing anything right now.
    • gadgetmind
    • By gadgetmind 10th Feb 18, 1:17 PM
    • 10,785 Posts
    • 8,662 Thanks
    gadgetmind
    My main SIPP has dropped £35 [Edit!] £35k between recent peak and current level despite being 50% bonds. Ah well.
    Last edited by gadgetmind; 10-02-2018 at 4:19 PM.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • ams25
    • By ams25 10th Feb 18, 2:16 PM
    • 159 Posts
    • 186 Thanks
    ams25
    My main SIPP has dropped £35 between recent peak and current level despite being 50% bonds. Ah well.
    Originally posted by gadgetmind

    Wish I was only down £35.
    • Sea Shell
    • By Sea Shell 10th Feb 18, 2:19 PM
    • 723 Posts
    • 1,010 Thanks
    Sea Shell
    Yeah...I bet a 'k' is missing!!!55357;!!!56832;
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow "
    • pip895
    • By pip895 10th Feb 18, 2:36 PM
    • 576 Posts
    • 321 Thanks
    pip895
    Gosh, that's a lot! I'd be interested to know which has fallen most in the last month - your active or passive portfolio?
    Originally posted by Audaxer
    I have recently converted 50% of my portfolio to passive investments - leaving just my SIPP in active funds. I thought initially that my passive investments had fared a lot worse but now and after taking into account the different valuation points its pretty much a dead heat ~3.5% last week and ~5% since mid Jan.

    Its a sobering amount of money but par from the course - I am 100% up since I started investing actively 8 years ago and you cant expect those sort of returns without risk and some bad years.

    I am retired, but we have a few years worth of funds out of the market - probably more than we need really. After all there is little problem selling out of bonds/gold etc during a crash/correction indeed ending up with a higher equity percentage in depressed markets would be no bad thing - provided of course you rebalance as the markets recover.
    • ams25
    • By ams25 10th Feb 18, 2:41 PM
    • 159 Posts
    • 186 Thanks
    ams25
    When I retire I hopefully 5 years time I will have to psychologically get my head around actually withdrawing money. I!!!8217;ve never spent any investments and will take some getting used to.
    Originally posted by Cash-Cows
    Glad its not only me. After 30+ years of saving and accumulating, starting to withdraw was and is, for me anyway, quite a challenge.

    It's helped a lot that over the past 18 months since I stopped accumulating and went into withdrawal mode that markets have been good so my withdrawals are much lower than my investment growth (though that's maybe changing now). But I find 18 months later I am becoming more relaxed about going into withdraw mode. Apart from just the passage of time helping me to get used to the idea, the specifics that have helped me most are:

    - just getting that this is what the money is for.. to live on.... you can't take it with you.
    - reading a lot about retirement planning and thus understanding that with a conservative withdrawal approach (c.3% is my plan), cash buffer and rising equity glide path, that bar the mother of all bear markets/high inflation and personal spending shocks, there is a good probability of having more money when I die than I do now so I can leave a decent legacy to my children (and/or gifts while alive) and still spend. Given that knowledge which i did not have previously, it is easier to feel ok about spending.
    - recognizing that once you hit your 50s and 60s, you have a limited number of active years ahead of you, and once you pass 75 spending will decline as your ability to do stuff does, so better to front load spending while you can enjoy it.
    - and of course, you see too many people pass away in their 50, 60 and 70s. who knows how long you have.

    all that said, i don't see myself becoming a spendthrift anytime soon. old habits die hard
    • ams25
    • By ams25 10th Feb 18, 2:51 PM
    • 159 Posts
    • 186 Thanks
    ams25
    Gosh, that's a lot! I'd be interested to know which has fallen most in the last month - your active or passive portfolio?
    Originally posted by Audaxer
    good question... made me check.

    my passive (VLS60) has fallen from 102939 at end Jan to 99152 (-3.7%)
    My active 60:40 has fallen from 103210 to 100651 (-2.5%)

    so far the active is doing a little better in a falling market, as you would hope. previously there was not much in it.
    • TBC15
    • By TBC15 10th Feb 18, 3:29 PM
    • 465 Posts
    • 240 Thanks
    TBC15
    My main SIPP has dropped £35 between recent peak and current level despite being 50% bonds. Ah well.
    Originally posted by gadgetmind
    You little tease, I take it this SIPP was all the loose change you have accumulated over the years before putting your trousers in the press.
    • gadgetmind
    • By gadgetmind 10th Feb 18, 4:23 PM
    • 10,785 Posts
    • 8,662 Thanks
    gadgetmind
    You little tease, I take it this SIPP was all the loose change you have accumulated over the years before putting your trousers in the press.
    Originally posted by TBC15
    One little letter missing and what grief you get!

    This SIPP contains all my pension investments since the mid 80s other than the last three/four years or so that are in a different pot for Pension Input Period reasons. It's about 50% of our investments so the one I use as a bellwether.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • gadgetmind
    • By gadgetmind 10th Feb 18, 4:25 PM
    • 10,785 Posts
    • 8,662 Thanks
    gadgetmind
    Oh, and I've spent my career working in jeans and T-shirt about 99% of the time and wouldn't know how to work a trouser press!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • TBC15
    • By TBC15 10th Feb 18, 4:51 PM
    • 465 Posts
    • 240 Thanks
    TBC15
    The trouser press was invented in 1882 by Archibald Gap and revolutionised trouser production.

    Based on your figures my bottom line has shrunk by about the same amount. Ie the imaginary 2018 Range Rover Sport has disappeared of the drive, I!!!8217;ll miss the imaginary smell of leather.

    Edit anyone know whatís the story on the random numbers pitching up in the text?
    Last edited by TBC15; 10-02-2018 at 4:54 PM.
    • ams25
    • By ams25 10th Feb 18, 5:17 PM
    • 159 Posts
    • 186 Thanks
    ams25

    Edit anyone know whatís the story on the random numbers pitching up in the text?
    Originally posted by TBC15
    i've no 4564 ing idea!
    • TBC15
    • By TBC15 10th Feb 18, 5:22 PM
    • 465 Posts
    • 240 Thanks
    TBC15
    I know Imí not the only one having trouble with apostrophes.
    • chucknorris
    • By chucknorris 10th Feb 18, 5:45 PM
    • 9,548 Posts
    • 14,336 Thanks
    chucknorris
    What level of payment from an annuity do you regard as poor?

    Or is it the loss of your capital that concerns you. In that you expect not only to derive an increasing income from your pot, but be left with a capital sum as well.
    Originally posted by Thrugelmir
    Has anyone done a comparison between drawing down and an annuity, I assume that drawing down (albeit with risks) is better because the annuity company is going to factor in the risk (probably more pessimistically), admin costs and profit?
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now mostly hike, gym classes and weight training (also a bit of cycling and swimming), less impact on my joints.
    • gadgetmind
    • By gadgetmind 10th Feb 18, 5:52 PM
    • 10,785 Posts
    • 8,662 Thanks
    gadgetmind
    the imaginary 2018 Range Rover Sport has disappeared of the drive
    Originally posted by TBC15
    My Telsa Model S is currently rather virtual too.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • gadgetmind
    • By gadgetmind 10th Feb 18, 5:55 PM
    • 10,785 Posts
    • 8,662 Thanks
    gadgetmind
    Has anyone done a comparison between drawing down and an annuity,
    Originally posted by chucknorris
    For chapter and verse see "Living Off Your Money" that dissects buying guaranteed income at great length with massive amounts of back testing.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • chucknorris
    • By chucknorris 10th Feb 18, 6:01 PM
    • 9,548 Posts
    • 14,336 Thanks
    chucknorris
    For chapter and verse see "Living Off Your Money" that dissects buying guaranteed income at great length with massive amounts of back testing.
    Originally posted by gadgetmind
    Thanks, for anyone else that wants to delve deeper, here is link to download the first 3 chapters of that book:

    http://livingoffyourmoney.com/wp-content/uploads/2016/05/LivingOffYourOwnMoney_eBook_FirstThreeChapters.pdf

    This looks like the sort of thing that I wanted to read, I'm rushing out to the gym right now, so I'll read this tomorrow:

    https://www.unbiased.co.uk/news/pensions/drawdown-or-annuity-crunching-the-numbers

    https://www.unbiased.co.uk/news/pensions/drawdown-or-annuity-rolling-with-the-risks
    Last edited by chucknorris; 11-02-2018 at 8:25 AM.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now mostly hike, gym classes and weight training (also a bit of cycling and swimming), less impact on my joints.
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