What do people do when a serious downturn happens 5 years or so before retirement?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You should have been moving money out of the market as you approach retirement. People that have lots saved can stay more invested. If you have 5M and the market drops 20%,you are still fine. If you have 1m$ it is a bigger issue.

This. Most people (except this forum) are closer to $1m million saved. Unfortunately these people sometimes don't know when to pull out of equity and as a result they can get badly burned.

The median net worth in the US is like $195k…and most are at that level from house equity.

Most people don’t have anything near $1MM saved.

This. Their retirement is social security and/or pensions if they have any. Many seniors also supplement SS with working part time jobs if they are healthy enough. Those who aren't healthy apply for subsidized housing and medicaid type programs. Some have family support, have their kids move in with them for free housing if they own a house or get roommates or caretakers who hope to get a piece of property when elderly person dies.

[Anonymous]

Anonymous wrote:Work longer. That's the answer.

It isn't if your industry doesn't have part time jobs or they can only be had if you are self employed with a list of clients lined up. Many retired seniors already work, but let's be realistic. In professional field nobody is eager to hire older people with health issues, needing extra time off, not being spry and energetic. People who had already worked multiple decades, especially women who also raised kids while working full time, are burnt out. As it stands, a lot of seniors get low paying low point of entry part time service jobs (as cashiers, greeters, in restaurant industry, retail, etc). It's great if you are healthy enough to do this even part time, but a lot of people over 65 are simply not healthy, which is another issue.

I am sorry, but we aren't 1st world if we insist people who aren't born into wealth and haven't accumulated millions have to work till they drop dead.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Work longer. That's the answer.

Ageism

No one likes to hire older workers, they say, outside of execs and highly specialized people. Most people are not that. So then what?

"then what" means working for minimum wage in your local walmart or a little local boutique or a restaurant. Since most seniors cannot even withstand full time schedules and long workshifts 5 days a week they make pittance working part time. Some extra spending money to buy slightly better food or upgrade some furniture, etc.

[Anonymous]

Anonymous wrote:Wait 10 years to take your money out so it can earn back what you lost.

You could be dead by then if you retired at 65

[Anonymous]

Anonymous wrote:

Anonymous wrote:What happens when they turnoff the SS spigot and make Medicare untenable so no doctors accept it?

Most Americans will starve to death, be homeless and die without medical care.

There will be massive riots before this happens. We have so many people relying on these programs for mere survival that our streets will be inundated with elderly beggars like 3rd world and our homeless tent encampments will grow into full fledged shanty towns as people will simply have nowhere to live being unable to afford their own paid off houses or rent control apartments and having no family able to take them in.

[Anonymous]

Anonymous wrote:What do people do when a serious downturn happens 5 years or so before retirement?

I feel like people are becoming more and more aggressive investing in equities and even when people "diversify" when closer to retirement they are still heavily invested in equities.

So say you are retiring in 5 years and you don't have the multiple millions that the standard user on this forum has, what steps do take to recover financially?

You should have an allocation that makes sense for your age and plans. If you're 5 years from retirement and you're in 100% equities, then you have dug your own grave! My parents are within 5 years of retirement (my dad, in particular, has had a hard time retiring because he loves his work), and they have enough cash equivalents to last them the rest of their lives, plus real estate, some of which is also cash flow positive, and none of which has a mortgage. At this point, equities, vc etc are invested for their legacy, not for themselves. Your investment plan should have plenty of cushion for a crash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Work longer. That's the answer.

Ageism

No one likes to hire older workers, they say, outside of execs and highly specialized people. Most people are not that. So then what?

You stay at the job you already have.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What do people do when a serious downturn happens 5 years or so before retirement?

I feel like people are becoming more and more aggressive investing in equities and even when people "diversify" when closer to retirement they are still heavily invested in equities.

So say you are retiring in 5 years and you don't have the multiple millions that the standard user on this forum has, what steps do take to recover financially?

When you’re that close to retirement, you should have essentially nothing in the stock market.

Unless you’re my FIL. But if you were, you’d be an idiot.

I disagree. If they have a federal pension and will have ss, they don’t need to draw down their tsp for many years. They should still be investing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What happens when they turnoff the SS spigot and make Medicare untenable so no doctors accept it?

Most Americans will starve to death, be homeless and die without medical care.

This is when we have to revert to the culture of 50+ years ago, with multi-generational living. Grandma or Grandpa moves back in with family- this was the way for 1000's of years before modern America moved to rugged individualism.
A starving grandma is a moral failure of their family.

Multi-generation was pre WWII.

It was the 1950s and the idea of the “nuclear” family that killed off multi-generation in the US.

[Anonymous]

That's why you have bonds. If you are 100% stocks, you can greatly reduce sequence of return risk by reducing your withdrawal rate to 2-3%

[Anonymous]

I was a federal employee for 7 years and have been converting my TSP to the G fund since it never goes down to use as a hedge against a downturn to guard as SORR. My other retirement accounts have bigger balances and are invested in the stock market for growth.

[Anonymous]

I am PP and I also have a year's emergency fund. I plan to retire in 3-6 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Work longer. That's the answer.

Ageism

No one likes to hire older workers, they say, outside of execs and highly specialized people. Most people are not that. So then what?

You stay at the job you already have.

That isn’t always an option - at 53 my entire field was vaporized by Trump and Elon Musk (USAID funded public health) and now I and my thousands of former colleagues are competing for the small pool of public health jobs still out there. I’m not going to lose my house or go hungry, but the reality is my retirement is not going to be what I had planned unless I can find another full time job pretty soon.

[Anonymous]

Keep working and/or cut back on their spending and/or lower their retirement standard of living goals

[Anonymous]

I’m 53 as well and DH I have most of our retirement savings in stocks. ($2M+) Things like Vanguard Total stock market funds.

Even if it’s a down market for 5-10 years at the start or near retirement, in the long run and over 30 years+ of retirement, we will have a greater return from stocks. (Around 7% average.)

Anything I put in bonds or cash is really a losing proposition with inflation and other things, relative to stock low cost mutual funds or ETFs. I would live off of other non retirement savings, work part time, or spend less if I lost my job over the next 10 years and there were a down market.

I don’t understand having 40%+ of a $1M+ portfolio in cash or bonds if you are under 70. You have more than enough time to make up for any downturns as long as you don’t sell a bunch immediately.