The Intersection of FIRE and Disney

[Starport Seven-Five]

How is everyone doing? The market is crap right now but our quarterly spreadsheet day was better than we expected (total NW was flat).

 

[Sadeesmom]

How is everyone doing? The market is crap right now but our quarterly spreadsheet day was better than we expected (total NW was flat).

Struggling to not look more than once a month at our ROTH IRA's & 401k's, but secure in knowing that we don't want to access them for 15+ years.
Darn near crying once a month when making the irregular deposit in the 529 accounts, and wondering if it will recover in time, or if we will be cash flowing the first semester's fees.

Only time will tell......

 

[Budzooka]

I still check our balances every day and am over the shock of seeing decreases. We haven’t adjusted our strategy and remain steadfast that it will turn around at some point. Not for the faint of heart, but we have a 15 year horizon, so plenty of time for correction.

 

[QueenIsabella]

We only check quarterly, but we're staying the course, as well. Our time horizon is less, but we have a very strong backstop (5 pensions, plus SSx2). Our only issue is, 3 kids in college right now, so withdrawals aren't optional. Luckily, two are part-time students, and all go to a (comparatively) inexpensive school.

 

[DCLMP]

I still check our balances every day and am over the shock of seeing decreases. We haven’t adjusted our strategy and remain steadfast that it will turn around at some point. Not for the faint of heart, but we have a 15 year horizon, so plenty of time for correction.

What do you think could happen that makes it turn around? Do you have any concerns about what's happening in Europe? Pensions? What about the debt?

 

[amylevan]

What do you think could happen that makes it turn around? Do you have any concerns about what's happening in Europe? Pensions? What about the debt?

Are you somehow implying it won’t turn around at some point in their 15 year timeline?

 

[DCLMP]

Are you somehow implying it won’t turn around at some point in their 15 year timeline?

No, I'm just interested in what others think about the current situation and how they think it's going to turn around. I wasn't implying anything.

 

[Starport Seven-Five]

Hope everyone's spreadsheet day went well. We set a new high finally unseating Q4 2021 as our high water mark.

 

[Budzooka]

Hope everyone's spreadsheet day went well. We set a new high finally unseating Q4 2021 as our high water mark.

That’s great. I’m still down from 2021 despite 11% total contributions over that time, as I took a 16% hit in 2022. That really hurts to say out loud.

Just have to believe it will turn back. Up 5% this year and just have to keep plugging away.

 

[DIS_MERI]

I'm at an all time high. Last year was my first time maxing my 401K (I just starting working full time again 3 years ago after 8 years of not working and then 4 years of half time with no 401K available). I could be FI right now, but I have about 25K a year of travel planned for the next 5ish years that I want to work to cover and then I can quit whenever I want (fortunately I love my job and find it very fulfilling).

 

[Sjm9911]

This thread poped up at the right time. I have just put in for retirement for August 1st. Forced fire. Lol. I think I will be ok. As for the market, I am plugging along at my 4 percent, it works for me. My pension will be a bit over the 100k , closer to 109k a year. And with some $$$ in the bank, I should do ok.

 

[mgarbowski]

Still down about 4.5% from 1 year ago, and down 7.6% from the absolute high on year end of 2021. But very much on track.

 

[Starport Seven-Five]

Did an impromptu spreadsheet day yesterday based on the market returns. We finally crossed into the 2 comma club this week... feels like we have been flirting with it for 18 months so glad to finally cross that threshold.

 

[QueenIsabella]

Did an impromptu spreadsheet day yesterday based on the market returns. We finally crossed into the 2 comma club this week... feels like we have been flirting with it for 18 months so glad to finally cross that threshold.

Good for you! Be aware, you might cross back (temporarily, hopefully). We kind of danced over and back for a while. Firmly there now, though.

P.S. We call it the "spreadsheet of phenomenal cosmic power" in this house.

 

[Budzooka]

Did an impromptu spreadsheet day yesterday based on the market returns. We finally crossed into the 2 comma club this week... feels like we have been flirting with it for 18 months so glad to finally cross that threshold.

Congrats! It’s great to hit a milestone.

 

[Starport Seven-Five]

Quarterly spreadsheet day was yesterday and we saw another nice bump in the numbers. The market has been strong the last couple months so hopefully the same is true for everyone else.

Looking over our trajectory is a bit terrifying if I'm being honest. I have kind of ignored the RE side until now because I figured it was so far away that it didn't matter. Now it's on the horizon and we have to start talking about potentially life changing decisions.

 

[QueenIsabella]

I have a couple questions for the FIRE/FIRE-adjacent people here:

(1) How to you put a value on a pension or SS? I consider these items to be the "annuity" portion of our portfolio. I don't include them in our net worth, but clearly, they have value. My quick and dirty technique is to use the typical annuity value ($100k gets you $6k/year in payout), reverse it, and get a theoretical value. So, if you had a pension or SS that gave you, say $48k/year, it's the equivalent of an $800k annuity. Is there a better, more accurate way to figure this? How would you utilize this (theoretical) value--does it change you withdrawal rate, for example?

(2) Speaking of withdrawal rate, I understand the standard 4% (sometimes 3%, especially for early retirees) withdrawal rate which is intended to give you an income stream that last virtually forever. But--is 4% really accurate, over a retirement-until-death lifespan? It makes sense at 65, but if you're, say, 85--couldn't you withdraw at a higher rate? You're far less likely to outlive your money, just by virtue of having fewer years left.

I realize that there are a number of factors to consider--a spouse being a big one. I'm just curious as to what other people's thoughts are on these topics.

 

[Starport Seven-Five]

I have a couple questions for the FIRE/FIRE-adjacent people here:

(1) How to you put a value on a pension or SS? I consider these items to be the "annuity" portion of our portfolio. I don't include them in our net worth, but clearly, they have value. My quick and dirty technique is to use the typical annuity value ($100k gets you $6k/year in payout), reverse it, and get a theoretical value. So, if you had a pension or SS that gave you, say $48k/year, it's the equivalent of an $800k annuity. Is there a better, more accurate way to figure this? How would you utilize this (theoretical) value--does it change you withdrawal rate, for example?

Realistically it's just offsetting what you need to pull from investments so you could do it that way. For example, if you need 60k/year to live and you have 48k/year coming in from pension+SS, you only need your investments to cover that 12k annual gap.

If I had to valuate it I would use the 4% rule which would make that 48k/year worth 1.2 million. I feel like that is an inferior way of looking at it though because it's more accurate to just treat it as income.

(2) Speaking of withdrawal rate, I understand the standard 4% (sometimes 3%, especially for early retirees) withdrawal rate which is intended to give you an income stream that last virtually forever. But--is 4% really accurate, over a retirement-until-death lifespan? It makes sense at 65, but if you're, say, 85--couldn't you withdraw at a higher rate? You're far less likely to outlive your money, just by virtue of having fewer years left.

I realize that there are a number of factors to consider--a spouse being a big one. I'm just curious as to what other people's thoughts are on these topics.

Withdrawal rates are a difficult subject with no really "right" answer. The 4% rule comes from a 30 year study that assumed no behavioral changes, a specific bond/stock mix, and the worst case sequence of market returns. A 5% withdrawal rate had a 68% success rate in the same study for reference.

The major risk to running out of money are the returns in the few years following retirement. If you have flexibility to reduce spending in the event of a black swan market drop during that period of time, you will have no issues (and likely end up with far more money than expected).

Not sure if you're into podcasts but Michael Kitces is probably my favorite on this subject as he dives into a bit more flexible approach. This is more focused towards early retirees but it exposes a lot of the flaws in a rigid withdrawal rate:

 

[bernina]

(1) How to you put a value on a pension or SS? I consider these items to be the "annuity" portion of our portfolio. I don't include them in our net worth, but clearly, they have value. My quick and dirty technique is to use the typical annuity value ($100k gets you $6k/year in payout), reverse it, and get a theoretical value. So, if you had a pension or SS that gave you, say $48k/year, it's the equivalent of an $800k annuity. Is there a better, more accurate way to figure this? How would you utilize this (theoretical) value--does it change you withdrawal rate, for example?

Right now I'm aware of the social security we've earned to date and also the projections for our most likely retirement dates. I keep those in the back of my mind and include them as income when running projections on firecalc, cFIREsim, and the other tools.

For our pensions, since both offer a lump sum option, I periodically run projections to see what our lump sum payouts would be if we quit or were let go today. I then include that as a lump sum of cash in our net worth since it's technically ours free and clear even if fired (dump in 401k to defer taxes or just take the tax hit at the time depending on situation). We will likely both choose the lump sum payout since our pensions are not inflation adjusted. Taking the lump sum, investing, and then eventually being able to pass along to our daughter seems like the better move for us.

Since our lump sum payout is dependent on interest rates (low interest = higher payout), our net worth actually took a hit this year due to the rate adjustments our plans did late last year.

 

[QueenIsabella]

Right now I'm aware of the social security we've earned to date and also the projections for our most likely retirement dates. I keep those in the back of my mind and include them as income when running projections on firecalc, cFIREsim, and the other tools.

For our pensions, since both offer a lump sum option, I periodically run projections to see what our lump sum payouts would be if we quit or were let go today. I then include that as a lump sum of cash in our net worth since it's technically ours free and clear even if fired (dump in 401k to defer taxes or just take the tax hit at the time depending on situation). We will likely both choose the lump sum payout since our pensions are not inflation adjusted. Taking the lump sum, investing, and then eventually being able to pass along to our daughter seems like the better move for us.

Since our lump sum payout is dependent on interest rates (low interest = higher payout), our net worth actually took a hit this year due to the rate adjustments our plans did late last year.

If DH's pensions had a lump sum option, we'd take it in a heartbeat. As of now, though, none of them do. There's a possibility that things could change. I know that his aren't adjusted for inflation, and we'll have a couple choices (second-to-die, that kind of thing). At least SS has a COLA.