You are currently viewing #399: Ask Paula: The Stock Market is Down – Can I Still Retire?

#399: Ask Paula: The Stock Market is Down – Can I Still Retire?

Bella is SO CLOSE to hitting FIRE and worries about her rate of withdrawal if the stock market goes down. If the stock market goes down, can she withdraw as much as she originally planned?

Meisha is making more money in her new job but can’t contribute to her 401(k) for the first six months – what should she do with her extra money in this interim??

Kyria is a young investor with multiple goals: she wonders how best to save for a down payment without it being eroded by inflation and also whether her investment choices should take more risks, because time is running out. on his side.

Sam has been investing for several decades and thinks he should stay invested in his portfolio, despite the recent drop in value… but he still wonders if there is a chance he will sell.

Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.


PS Do you have a question? Leave it here.


Here are the details:

Bella asks (at 04:23 mins): I am 50 years old and I am single. I have a net worth of approximately $2.4 million with $1 million in brokerage accounts, $1 million in tax-deferred 403B IRA accounts, and $400,000 in cash and cash equivalents.

I would like to reach FIRE next summer. I plan to spend around $90,000 a year, or just under 4%.

I have a rather special job and I would like to give them at least six months notice because they are going to have a hard time replacing me.

What happens if, during this interval, the stock market falls by 50%?

Then, as I’m about to FIRER, I won’t have $2.4 million – I’ll only have $1.4 million and my annual spending budget of $90,000 is over 4% from my wallet.

I have $400,000 because I want to use the bucket method, so I have about four to five years in cash to cover my expenses until the stock market recovers.

If there is a massive crash, can $90,000 a year still be safely withdrawn?

Meisha asks (at 23:51 minutes): I recently changed jobs, which gave me a pay raise of almost 20%.

However, my new job will not allow 401(k) contributions for the first six months.

What do I do with the money I would normally put into my 401(k)?

I considered putting it in ETFs, but given the market, I’m not sure that’s the best idea.

I also have $17,000 in federal student loans and $120,000 in private student loans. I could use this money to make additional payments.

What are your thoughts?

Kyria asks (at 40:30 minutes): I want to buy my first home in five years, while making sure I plan my retirement well and invest my money in the smartest way possible.

I just graduated from high school and work as a claims administrator at a personal injury law firm.

I have been financially independent since moving from my parents’ home in Florida to New York two years ago. In those two years, I skipped two tax brackets, which made me want to take my finances more seriously.

I am currently earning a salary of $80,000 and have a side hustle that earns me about $15,000 a year. I also have a 401k with a 6.5% contribution through my employer.

I know that if I save $1,500 a month, I will have $100,000 by the time I graduate college for a down payment on a house.

Unfortunately, with inflation, it will only be around $72,000.

Where should I put the $1,500 per month so that my savings aren’t eroded by inflation?

Due to my youth, I know compound interest is in my favor, but should I also be a little riskier and invest in more lucrative and volatile stock options?

Think of me as a blank slate with no financial ties or serious financial commitments at this time. What advice would you give to this person?

Sam asks (at 1:02:51 minutes): Are we selling in this downdraft?

I’m down about 25% of net worth liquidity.

I’ve been through this since 1987 and my response is to stay the course – these things go around in circles. I don’t need the most important money, it’s not money that needs to be spent.

** Timestamps correct as of August 2022. Starting 60 days after the episode’s release, timestamps may change slightly as we make updates and changes.

Resources cited:

Episode 119: How Much Can I Spend in Retirement, starring Dr. Wade Phau | Podcast

Episode 217: Planning for retirement in 2020, with Dr. Wade Pfau | Podcast

Episode 156: How to Build Amazing Habits, starring James Clear | Podcast

Debunking the myth: “Renting is throwing money away” | Blog

Fable x Treat yourself to everything | Digital book club

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