How long could you live off your portfolio if the worst happened?

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Kelrex
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Re: How long could you live off your portfolio if the worst happened?

Post by Kelrex »

Grt2bOutdoors wrote: Sat Aug 29, 2020 2:04 am
HomerJ wrote: Fri Aug 28, 2020 11:35 pm
mortal wrote: Fri Aug 28, 2020 10:06 pm I mean, the worst case scenario is a nuclear exchange and the total collapse of civilization.
Part of me wants to spend $10,000 to stock up just in case that happens (my parents have a farm way out in the country)

But my wife would never let me spend "waste" that much money on supplies and seeds and books and ammo.

But if it ever happens, and all our electronic ones and zeros end up meaning NOTHING, I'm going to be very sad I didn't turn a tiny fraction of my portfolio into those material goods.
I keep a normal stock of a few weeks of non perishable, it’s a fraction of the cost your talking about. Even if you bought that much in supplies, how long do you think you’d survive?
You can prep marginally well for one disaster, but not for all of them. A few weeks of food supplies (plus a knowledge of cooking from only non perishable ingredients), a go bag, extra medication, a good first aide kit, basic first aide skills, and some basic self sufficiency skills are all great short term hedges for most emergencies. Long term prepping? Virtually impossible, you would have to spend a fortune and gamble that you prepped for the correct scenario.

What good is 10K worth of food when the majority of major emergencies require evacuation? Sheltering in place actually requires the fabric of society to hold together, especially if you have resources.

An expert on disasters and emergency management once told me that the only way to realistically prepare beyond the basics is to "live a life without regrets".
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JoeRetire
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Re: How long could you live off your portfolio if the worst happened?

Post by JoeRetire »

Pete12 wrote: Fri Aug 28, 2020 7:29 pm
JoeRetire wrote: Fri Aug 28, 2020 7:20 pm If necessary, my wife and I could live 40 years with your "worst case" scenario.

We are 66 and 65 years old. Color us not worried.
God bless you!
I don't think we are unusual in that regard. We have plenty of money saved, and our expenses could be fairly low if needed.
Most of our friends are in similar positions.

We don't expect the "worst case" to happen. We spend more than the absolute minimum, we travel, give plenty of gifts, buy whatever we like - generally spend discretionary funds. All of that could stop if necessary. I suspect most people could do the same if they were forced to do so.
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JoeRetire
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Re: How long could you live off your portfolio if the worst happened?

Post by JoeRetire »

Pete12 wrote: Fri Aug 28, 2020 7:29 pm
JoeRetire wrote: Fri Aug 28, 2020 7:20 pm If necessary, my wife and I could live 40 years with your "worst case" scenario.

We are 66 and 65 years old. Color us not worried.
God bless you!
I don't think we are at all unusual in that regard. We have plenty of money saved, haven't yet started receiving Social Security, have a bunch of equity in our home, and our expenses could be fairly low if needed. Most of our friends are in similar positions.

We don't expect the "worst case" to happen. We spend more than the absolute minimum, we travel, give plenty of gifts, buy whatever we like - generally spend discretionary funds. We live a wonderful life, yet still end up spending less than we had budgeted while doing our financial planning over the accumulation years. All of that discretionary spending could stop if necessary. I suspect most people could do the same if they were forced to do so.
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Re: How long could you live off your portfolio if the worst happened?

Post by awval999 »

mortal wrote: Fri Aug 28, 2020 10:06 pm I mean, the worst case scenario is a nuclear exchange and the total collapse of civilization.

Look man, I'm financially independent at a 3% SWR. That withdrawal rate has survived two world wars, the collapse of a super power, etc. If that SWR fails, the world is likely in such bad shape that I wouldn't be around to 'live' off anything.
Waiting for the home run. Here it is.
Look all, no amount of money or 0.5% SWR or 100 year expenses matters in a true “worst” case scenario.
hudson
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Re: How long could you live off your portfolio if the worst happened?

Post by hudson »

In the OP's worst case, I would have to look at the numbers and reduce spending appropriately.
As a retiree, I might consider doing something to generate income.
I would sell off the extra stuff that I can live without.
I would find a way to make it portfolio or no portfolio. The solution would probably be on the spending side rather on the portfolio side.
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Re: How long could you live off your portfolio if the worst happened?

Post by Chuck107 »

.....
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Alas, I find moderation of this forum too restrictive for my tastes, farewell.
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HomerJ
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Re: How long could you live off your portfolio if the worst happened?

Post by HomerJ »

Kelrex wrote: Sat Aug 29, 2020 6:24 am
Grt2bOutdoors wrote: Sat Aug 29, 2020 2:04 am
HomerJ wrote: Fri Aug 28, 2020 11:35 pm
mortal wrote: Fri Aug 28, 2020 10:06 pm I mean, the worst case scenario is a nuclear exchange and the total collapse of civilization.
Part of me wants to spend $10,000 to stock up just in case that happens (my parents have a farm way out in the country)

But my wife would never let me spend "waste" that much money on supplies and seeds and books and ammo.

But if it ever happens, and all our electronic ones and zeros end up meaning NOTHING, I'm going to be very sad I didn't turn a tiny fraction of my portfolio into those material goods.
I keep a normal stock of a few weeks of non perishable, it’s a fraction of the cost your talking about. Even if you bought that much in supplies, how long do you think you’d survive?
You can prep marginally well for one disaster, but not for all of them. A few weeks of food supplies (plus a knowledge of cooking from only non perishable ingredients), a go bag, extra medication, a good first aide kit, basic first aide skills, and some basic self sufficiency skills are all great short term hedges for most emergencies. Long term prepping? Virtually impossible, you would have to spend a fortune and gamble that you prepped for the correct scenario.

What good is 10K worth of food when the majority of major emergencies require evacuation? Sheltering in place actually requires the fabric of society to hold together, especially if you have resources.

An expert on disasters and emergency management once told me that the only way to realistically prepare beyond the basics is to "live a life without regrets".
Well, since my parents have a place out in the country, if we could get there, it would be a pretty good place to ride-out any catastrophe. Better than staying in the city with hundreds of thousands or millions of people.

I wasn't just thinking food.. Some food sure, but more like guns for hunting, seeds for planting, and a bunch of hard-cover "rebuild civilization" books.

You know, books that explain how to build a windmill or how to grind wheat into bread, etc. :)

It would be fun to put together a blacksmith shop out there (my dad already has a great wood workshop with a ton of tools, even all his old non-power tools),

I know it's silly, which is why I haven't done it... but I work on Disaster Recovery (among many other things) in my company, so I have a weird mind-set about trying to be prepared for as much as possible.

Maybe I'll start buying the books, if nothing else :)
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Kelrex
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Re: How long could you live off your portfolio if the worst happened?

Post by Kelrex »

HomerJ wrote: Sat Aug 29, 2020 8:31 am
Kelrex wrote: Sat Aug 29, 2020 6:24 am
Grt2bOutdoors wrote: Sat Aug 29, 2020 2:04 am
HomerJ wrote: Fri Aug 28, 2020 11:35 pm
mortal wrote: Fri Aug 28, 2020 10:06 pm I mean, the worst case scenario is a nuclear exchange and the total collapse of civilization.
Part of me wants to spend $10,000 to stock up just in case that happens (my parents have a farm way out in the country)

But my wife would never let me spend "waste" that much money on supplies and seeds and books and ammo.

But if it ever happens, and all our electronic ones and zeros end up meaning NOTHING, I'm going to be very sad I didn't turn a tiny fraction of my portfolio into those material goods.
I keep a normal stock of a few weeks of non perishable, it’s a fraction of the cost your talking about. Even if you bought that much in supplies, how long do you think you’d survive?
You can prep marginally well for one disaster, but not for all of them. A few weeks of food supplies (plus a knowledge of cooking from only non perishable ingredients), a go bag, extra medication, a good first aide kit, basic first aide skills, and some basic self sufficiency skills are all great short term hedges for most emergencies. Long term prepping? Virtually impossible, you would have to spend a fortune and gamble that you prepped for the correct scenario.

What good is 10K worth of food when the majority of major emergencies require evacuation? Sheltering in place actually requires the fabric of society to hold together, especially if you have resources.

An expert on disasters and emergency management once told me that the only way to realistically prepare beyond the basics is to "live a life without regrets".
Well, since my parents have a place out in the country, if we could get there, it would be a pretty good place to ride-out any catastrophe. Better than staying in the city with hundreds of thousands or millions of people.

I wasn't just thinking food.. Some food sure, but more like guns for hunting, seeds for planting, and a bunch of hard-cover "rebuild civilization" books.

You know, books that explain how to build a windmill or how to grind wheat into bread, etc. :)

It would be fun to put together a blacksmith shop out there (my dad already has a great wood workshop with a ton of tools, even all his old non-power tools),

I know it's silly, which is why I haven't done it... but I work on Disaster Recovery (among many other things) in my company, so I have a weird mind-set about trying to be prepared for as much as possible.

Maybe I'll start buying the books, if nothing else :)
As long as the catastrophe doesn't necessitate evacuation as I mentioned already, or destroy the property (and it's food and books), or result in violent uprising in the region, or invasion, or make the property and it's resources a target of theft or extortion, or the property doesn't get seized by the state, or the emergency doesn't result in one/some of your family members needing extensive medical care in an urban center, or, or, or...

A plan to shelter in place actually requires the fabric of society to hold together in order to be sustainable. Civilization can't be rebuilt until the state of emergency is restabilized, and in the meantime, surviving disaster is a very different process than thriving in the aftermath.

Holing up in a remote rural estate is a *great* option for *some* scenarios, but I would account for it as the rather limited hedge that it is.

In a lot of scenarios having a universally valuable skill that's useful in both destabilized and restabilized conditions is your best hedge because then no matter what society is doing and no matter what happens to your property, your human resources will probably protect you.

That's a not-totally-insignificant motivation behind why I became a medical professional. I figured it was useful no matter what the future brings.

Bringing it back to the OP's topic, this is also why even if I had no assets and no capacity to earn, I'm sure I could barter some skills for security.
Money is just a placeholder for skills, time and effort. If the money system collapses, the skills don't lose value.
catlady
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Re: How long could you live off your portfolio if the worst happened?

Post by catlady »

Somewhere between 15-20 years after cutting down on discretionary spending, late 30s couple. Add another 5-10 years if we moved to a cheaper location.
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Pete12
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Re: How long could you live off your portfolio if the worst happened?

Post by Pete12 »

JoeRetire wrote: Sat Aug 29, 2020 6:29 am We spend more than the absolute minimum, we travel, give plenty of gifts, buy whatever we like - generally spend discretionary funds. We live a wonderful life, yet still end up spending less than we had budgeted while doing our financial planning over the accumulation years.
THIS is what I aspire to in retirement, all being well. A little bit of luck helps of course, but being a Boglehead doesn’t hurt either.
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Re: How long could you live off your portfolio if the worst happened?

Post by Wanderingwheelz »

The real risk for many people is not that their stock investments will tank and never come back. In my opinion the bigger risk is that social security isn’t what some people in their 40s and maybe even 50s are counting on. Perhaps a lot less.
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Re: How long could you live off your portfolio if the worst happened?

Post by novemberrain »

:sharebeer
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softwaregeek
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Re: How long could you live off your portfolio if the worst happened?

Post by softwaregeek »

Two years cash from my emergency fund. One more from bonds. 15 more years from stocks.

I had to remind myself that If the income goes, the income tax does as well. Mentally I was including income taxes in monthly spend.

But realistically, wife is a critical government worker and we could move to a lower cost area so probably forever. Technically the wife could file for early retirement in just ten years but she wouldn’t make much. 17 years gets her enough for us both to live on if we went low cost of living and if social security holds up. We have both had to take pay cuts though, which irritates me but ensures the wife will keep earning as well as her gold plated benefits.
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Kalo
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Re: How long could you live off your portfolio if the worst happened?

Post by Kalo »

It occurs to me that there's a piece missing from the scenario outlined in the original post: Re-balancing.

Stocks are not going to take a 50% haircut overnight. What do you do as it's happening? Re-balance from bonds to stocks as stock values fall? Or not?

Bonds cannot be used for two different purposes (to re-balance with but also to use for income/living expenses in a bad scenario). They can in part of course, but not in total. So when calculating this scenario, you would have to determine what you are going to do with bonds while the stocks tank. You could always set a limit on how much you would re-balance into stocks; pick an absolute value of bonds that you will retain no matter how far down the equities drop. But to do the calculation, you need to decide and build it in.

I think a lot of people wind up double counting in their mind, thinking they've got X$ in bonds that they will always be able to live off of, while at the same time planning to use some of that X$ to re-balance with. Doing this gives an imprecise result, if it would be of any use at all.

In practice you can always just decide as you go. Start by re-balancing and pull the plug on that once the bond balance hits a certain point. But to calculate this in advance, you need to decide what the inputs are going to be to really test if the outcome will be acceptable.

Kalo
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Re: How long could you live off your portfolio if the worst happened?

Post by Toons »

Forever and Ever







:mrgreen:
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Re: How long could you live off your portfolio if the worst happened?

Post by fsrph »

This is all speculation. Stock market declines 50%? Bonds stay where they're at? These are not worse case scenarios. How about stock market declines 90%, social security is cut and banks and insurance companies fail. The biggest omission is to ignore inflation. Years of hyperinflation can be a killer to most portfolios.

That being said, I think I'll be OK living off my portfolio for my entire life (I'm 61) with a substantial portion still remaining. I have low expenses, no debts. and several income streams for living expenses.

Francis
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afan
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Re: How long could you live off your portfolio if the worst happened?

Post by afan »

Rest of our lives.

Another way of saying that we can afford to retire.

I use a somewhat different and I think more plausible bad scenario.

I drop stocks by greater amounts, much worse than 50%. I do not assume that dividends and interest payments disappear. I model them at current rates instead.

I assume that a balanced portfolio delivers a small positive real return after the drop. I use 1 and 2% real returns.

Doing that, we would be fine for the rest of our lives with drops bigger than 50% in stocks.

I suspect we would have deflation if there were a massive depression but I don't count on expenses decreasing. I assume we maintain current lifestyle at current cost. I would hope to win some arguments about cutting spending but we would be OK if I did not.

Assuming we collected 75% of current law SS payments, we would be net savers through retirement. Without SS we would be about flat through retirement or maybe down slightly.

I do not model stagflation, which is a much more painful financial possiblity. I just don't know what to use as real returns. Also do not have a good speculation on the response in SS.
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Re: How long could you live off your portfolio if the worst happened?

Post by retire2022 »

Op

Lost 600K on March 23, 2020 gained almost everything back short of 20K, have put in since this year. Asset allocation is 98/2, 32 years of contributions about 500K. I am up 1.979 million (+60 times expenses), I have pension, healthcare from work, and still employed working from home.

SSA in 65 for Medicare in five years, Social Security at 70 38K per year. Pension estimated 66K. The stock market will have to loose 80% of my portfolio to feel it.
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Re: How long could you live off your portfolio if the worst happened?

Post by Trader Joe »

"How long could you live off your portfolio if the worst happened?"

Much, much longer than any reasonably expected human lifespan.
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Re: How long could you live off your portfolio if the worst happened?

Post by dknightd »

Pete12 wrote: Sat Aug 29, 2020 4:52 pm
JoeRetire wrote: Sat Aug 29, 2020 6:29 am We spend more than the absolute minimum, we travel, give plenty of gifts, buy whatever we like - generally spend discretionary funds. We live a wonderful life, yet still end up spending less than we had budgeted while doing our financial planning over the accumulation years.
THIS is what I aspire to in retirement, all being well. A little bit of luck helps of course, but being a Boglehead doesn’t hurt either.
I would recommend you do not just "aspire" to this. I suggest you plan for it. :cheers:

Under your worse case scenario, we would be fine forever. Otherwise I would not have retired. This is my first year of retirement, covid reduced expected travel, so we will end up with a surplus we can put toward next year.

If SS disappears, or inflation outpaces investment returns, we'd have to cut back on our spending. Perhaps by a lot!

For my planning I assumed stocks would drop 50%, and I would rebalance as needed. I assumed 0% real returns on total portfolio after that drop. I assumed SS would pay as currently projected. Under this scenario we would have to reduce discretionary spending, but we would not have to eliminate it.

As you say, luck plays a role. If we are lucky we'll have money left over to leave to our kids. I'm not planning on that, and neither are my kids (I hope). My plan was to make sure my kids did not have to take care of me (at least not financially).

I hope you are lucky and get to retire when you want to. This might be one of the most difficult decisions you ever make. I know people who had to retire before they planned. They are fine, and are grateful for the extra years not working. I know people who kept working one more year, then another. They now have more money than they will ever need, but less time to enjoy it.
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum. I think the solution might be afternoon naps ;)
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Re: How long could you live off your portfolio if the worst happened?

Post by av111 »

People hoping to sell stuff like homes and goodies on doomsday may find buyers are hard to get
AV111
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Re: How long could you live off your portfolio if the worst happened?

Post by flaccidsteele »

av111 wrote: Sun Aug 30, 2020 9:42 am People hoping to sell stuff like homes and goodies on doomsday may find buyers are hard to get
+1 ^this
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: How long could you live off your portfolio if the worst happened?

Post by AerialWombat »

.....
Last edited by AerialWombat on Sat Apr 03, 2021 10:29 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
GoneOnTilt
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Re: How long could you live off your portfolio if the worst happened?

Post by GoneOnTilt »

If the worst happened, none of us would be around to worry about our portfolio. Think rapid extinction-level event like a large asteroid strike (we are currently in the midst of a massive extinction-level event due to loss of biodiversity; we just can't see it day-to-day. It is rapid, but on a geologic time scale).

If the next least-worst happened, we'd be more concerned about having canned goods and weapons than our asset allocation. Think nuclear attack where many survive but civilization as we know it is severely disrupted.

In terms of the worst happening, investing would be pretty far down the priority list.
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JoeRetire
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Re: How long could you live off your portfolio if the worst happened?

Post by JoeRetire »

Pete12 wrote: Sat Aug 29, 2020 4:52 pm
JoeRetire wrote: Sat Aug 29, 2020 6:29 am We spend more than the absolute minimum, we travel, give plenty of gifts, buy whatever we like - generally spend discretionary funds. We live a wonderful life, yet still end up spending less than we had budgeted while doing our financial planning over the accumulation years.
THIS is what I aspire to in retirement, all being well. A little bit of luck helps of course, but being a Boglehead doesn’t hurt either.
Luck is always a factor. I was lucky to be born when I was, where I was. I was lucky to be able to get a good education at a cost I could afford. I was lucky to be good at a lucrative profession. I am lucky to be married to someone who has always shared my approach to our finances. I am lucky to be reasonably healthy. Etc, etc.

And of course we are lucky that our investments did well for enough years to put us in the position were it's not a worry.
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Re: How long could you live off your portfolio if the worst happened?

Post by texanghost »

Like others have mentioned, if the true "worst" happened, there's not much anyone can do about it.

I did do an example scenario of the stock market dropping 50% and both my husband and I losing our jobs at the same time recently, though, when I was nervous about my job.

We'd have about 2 years between cash and taxable investments in that case, maybe another year or so if we started liquidating tax-deferred retirement accounts. 9 months of that is a cash emergency fund. There is a lot of "cushion" in the emergency fund monthly budget, though, so we could probably cut further and stretch it out a bit longer if needed.

One other thing I'll say is that being able to live off of 1 income if married is really great if you can do it. Helps you sleep well at night during troubling times and feel less stressed at work. :beer
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Re: How long could you live off your portfolio if the worst happened?

Post by Rat_Race »

Assuming full state pension is attained in 4 years and the pension plan doesn't go bankrupt, indefinitely.
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Pete12
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Re: How long could you live off your portfolio if the worst happened?

Post by Pete12 »

JoeRetire wrote: Sun Aug 30, 2020 1:38 pm I am lucky to be married to someone who has always shared my approach to our finances.
This is a huge one.... so many relationships break down over money :moneybag
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Re: How long could you live off your portfolio if the worst happened?

Post by Ron »

I have no idea.

Financial disaster may be lurking just around the corner for me/wife.

If one/both need long term care, our joint portfolio would be greatly reduced to the point of Medicaid kicking in after our financial resources are extinguished.

That's the worst I can see and I doubt if many can forecast this in their future.

- Ron
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Re: How long could you live off your portfolio if the worst happened?

Post by balbrec2 »

Pete12 wrote: Fri Aug 28, 2020 10:27 am I know there have been threads in the past about "stress-testing" a portfolio but I was looking for some real examples to compare to. I just did a stress test of our portfolio using the following rules:

- Both myself and wife lose our jobs and never work again (we are actually both self employed so in our case I assume we both go out of business.)
- Stock market permanently declines 50% and does not recover. Bonds remain the same.
- Portfolio does not grow at all after this happens- no dividends, no interest
- We remain in our current home, paying the mortgage and bills as scheduled
- We continue to pay other expenses such as kids school fees (K-12), health insurance, life insurance premiums etc.
- We cut back on all other discretionary expenses such as eating out, vacations etc.
- When kids go to college they will have to take loans / other financial assistance etc.
- Ignored inflation

In reality I am sure we would have to cut back way more than this (for example downsize our home) but let's keep it simple for now.

Based on this, I estimate our current portfolio of retirement accounts and taxable account would last about 9 years. I am 44 and wife is 46 so we would obviously have a ways to go before social security / medicare kicked in.

I would be curious to see how we stack up against other Bogleheads. Having run this exercise I do feel fairly good that we would be able to survive although of course the prospect of this actually happening is quite scary :shock:

Best wishes,
Pete
Assuming I still receive my SS and pension? Indefinitely! Less than half of
our assets meet our budget requirements in retirement. If need be we could do
some budget trimming also.
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Re: How long could you live off your portfolio if the worst happened?

Post by AlohaBill »

We can live off our portfolio until we die. If my wife precedes me in death, I don’t think I would last more than a month. That would be the worst thing that could happen or I get a very bad stroke and she has to take care of me.
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Re: How long could you live off your portfolio if the worst happened?

Post by Random Musings »

People today live without portfolios.

In fact, a lot of people in this world.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ
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Pete12
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Re: How long could you live off your portfolio if the worst happened?

Post by Pete12 »

Random Musings wrote: Mon Aug 31, 2020 7:44 pm People today live without portfolios.

In fact, a lot of people in this world.

RM
Very true. Got to keep things in perspective sometimes.
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Re: How long could you live off your portfolio if the worst happened?

Post by Jeff Albertson »

So the question: 'How long could you live off your portfolio if the worst happened?'

Maybe worst means the end of humanity? If so, then one estimate puts the odds at 1 in 6 by the end of the century. Check out the FT podcast, 'The Rachman Review', Putting existential risk on the agenda, Toby Ord talks to Gideon Rachman about his book The Precipice. The Kindle version of the book is available now for $2.99.
https://www.ft.com/rachman-review
Ord is from the Oxford University Future of Humanity Institute -
https://www.fhi.ox.ac.uk/
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Re: How long could you live off your portfolio if the worst happened?

Post by ROIGuy »

I have started using the Flexible Retirement Planner software for doing some analysis on our various retirement scenarios. I am curious from others that have used it what do you think of it, and it's accuracy?
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VictoriaF
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Re: How long could you live off your portfolio if the worst happened?

Post by VictoriaF »

"The worst" has two meanings:
- the worst that could happen
- the worst that should be considered in the decision analysis.

Rational decision making is rooted in von Neumann's and Morgensten's axioms later revised by Leonard Savage. Axiom #4 Independence implies that if some state of the world has the same outcome for all actions, it should be removed from the consideration.

The worst things that could happen include meteors hitting the Earth, global nuclear wars, new viruses that are deadlier than COVID, and other events that would end the life as we know it. These events have the same outcomes regardless of our course of action, and thus they should be removed from the consideration.

In my decision analysis, I can live off my portfolio for 30 to 40 years.

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
lws
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Re: How long could you live off your portfolio if the worst happened?

Post by lws »

I live on my pension and Social Security.
I do not live off my investment portfolio.
If pension goes bust, I'll adjust.
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FIREchief
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Re: How long could you live off your portfolio if the worst happened?

Post by FIREchief »

Pete12 wrote: Fri Aug 28, 2020 10:27 am - Both myself and wife lose our jobs and never work again (we are actually both self employed so in our case I assume we both go out of business.)
I don't understand this one. I would think that you either take low paying jobs or you are disabled and collecting Gov benefits.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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MrBobcat
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Re: How long could you live off your portfolio if the worst happened?

Post by MrBobcat »

House is in excellent repair and paid for so I could eat beans and rice, pay my utilities and RE tax indefinitely. :D
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Pete12
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Re: How long could you live off your portfolio if the worst happened?

Post by Pete12 »

FIREchief wrote: Thu Sep 03, 2020 1:07 pm
Pete12 wrote: Fri Aug 28, 2020 10:27 am - Both myself and wife lose our jobs and never work again (we are actually both self employed so in our case I assume we both go out of business.)
I don't understand this one. I would think that you either take low paying jobs or you are disabled and collecting Gov benefits.
This is "my" worst case scenario, for the purposes of this exercise. In reality I'd take any job available if it came to it. I put myself through college bussing tables and I'd do it again.

In "other" worst case scenarios that others have mentioned, such as death & destruction etc. I would open that 21 year old bottle of scotch I've been saving, light up a cigar, and say my prayers!
hoops777
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Re: How long could you live off your portfolio if the worst happened?

Post by hoops777 »

You cannot predict the stock market and you cannnot predict what drastic scenarios would occur if the worst case happened.If the stock market sucks for 20 years that is a whole different ballgame from a real worst case situation. There are a lot of people who have nothing invested in the market but everyone cares about food,water,air,health.....
K.I.S.S........so easy to say so difficult to do.
retire2022
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Re: How long could you live off your portfolio if the worst happened?

Post by retire2022 »

hoops777 wrote: Thu Sep 03, 2020 2:00 pm
There are a lot of people who have nothing invested in the market but everyone cares about food,water,air,health.....
So true, I had a co-worker pulled out from Fidelity Magellan 70K in 2008 and scared to death had not put it in the market despite my counseling. Miraculously he did relent and put it in a target fund. My friend is skeptical of the stock market, but will be ill-prepared once retired as his pension alone is two of the three legged stool, personal savings, social security and pension won't be enough to maintain his current middle class life style.
redrum
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Re: How long could you live off your portfolio if the worst happened?

Post by redrum »

Lets say the absolute worst is as follows -
a) 50% stock market decline
b) both lose our jobs
c) home values fall by 50%

If we assume a, b and c are permanent, then something has gone very wrong somewhere. We could likely make it for 15-17 years (assuming we start withdrawing from our 401k.)

Alternatively, we could also go back to our LCOL home country and survive just about forever. (we weren't born in america)
ByThePond
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Re: How long could you live off your portfolio if the worst happened?

Post by ByThePond »

livesoft wrote: Fri Aug 28, 2020 11:18 am If equities dropped 50% and bond funds stayed about the same, I think we could live at least forever or more on our portfolio at our current rate of expenditures. Why is that? We are retired and not yet receiving SS benefits, but those are coming.
Same here, but with only the lesser SS coming in. And even with the potential SS haircut factored in and no lifestyle changes.
Last edited by ByThePond on Mon Sep 07, 2020 9:27 am, edited 1 time in total.
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Pete12
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Re: How long could you live off your portfolio if the worst happened?

Post by Pete12 »

retire2022 wrote: Sun Sep 06, 2020 3:46 pm My friend is skeptical of the stock market, but will be ill-prepared once retired as his pension alone is two of the three legged stool, personal savings, social security and pension won't be enough to maintain his current middle class life style.
Jack Bogle said “invest we must”
At least a little of ones portfolio in stocks, just to keep up with inflation..
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JoMoney
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Re: How long could you live off your portfolio if the worst happened?

Post by JoMoney »

*shrug*
I could give a calculation of portfolio/expenses=x years, or I could also include some growth expectation and amortize it over time to get a few more years... Or I could imagine a world where business/economy/stocks fail, rampant inflation, social security insurance reneges on the promised benefit.

But the bottom line is I'm going to try and make the most with what I have, and I'll do what I have to in order to survive. The best case scenario is having a surplus of savings and investments that allows me to do everything I want with minimal discomfort... Things may not work out as well as hoped for, building in a bigger savings buffer seems prudent, but I also don't want to fall into the trap of endlessly trying to prepare for every disaster scenario. There is no end to that, and it forces you into a mindset of living the lifestyle of a disaster created in your own mind.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
GoneOnTilt
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Re: How long could you live off your portfolio if the worst happened?

Post by GoneOnTilt »

I am 57. A conservative estimate, including taking SS at 62, might be that my portfolio would last 22 years. So not enough, therefore I need to work for at least 5 more years.

Excluding stocks, I have almost 11 years of fixed income saved. So obviously a lot would depend on what happens to the stock market. A crash and prolonged bear market would shorten the estimate considerably, I guess.
hoops777
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Re: How long could you live off your portfolio if the worst happened?

Post by hoops777 »

Way longer than we will be alive as long as SS stays good.
K.I.S.S........so easy to say so difficult to do.
sschoe2
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Re: How long could you live off your portfolio if the worst happened?

Post by sschoe2 »

Tough to say. With my current expenses probably 10-15 years. The big problem would be health insurance could cut that in half.
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Re: How long could you live off your portfolio if the worst happened?

Post by abuss368 »

Who knows and I try to think positive! In the meantime I try to focus on just keep buying.
John C. Bogle: “Simplicity is the master key to financial success."
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