If you were that close to retirement you should have been in a lot more safe investments. Besides you don't have to draw all your stuff at once.

 

Like bonds right? They're not doing well either. Cash has absolutely no return. Gold, well no, that's taking a hit. Commodities, oil is $20 a barrel. Where are those safe investments? Toilet paper?

 

I have a bottle of Booker's 30th that's looking real good right about now.

 

Vanguard 2020 retirement fund

Down about 16% from the highs recently. That's quite a hit, and surprisingly a lot for a retirement fund meant to expire this year. I mean, they should have very little risk for people trying to retire in 2020.

How much would you have lost in your retirement account? It depends:

Assumptions: 1990 - 2020 career. Invested in S&P500, which averaged an 11.5% return over that time.

Contributed $10k per year. 2020 starting value: $2.6M, Has lost $416k in the last few weeks. Go to all cash, work one more year and change to make up the losses.

Contributes $20k per year: 2020 starting value: $5.2M, has lost $832k in the last few weeks. Work a year if you want.

Contributes $30k per year: 2020 starting value: $7.8M, has lost $1.25M in the last few weeks. Quit now, count it all up to "bad luck" and retire. Your $6.5M can bring in $284k per month over 30 years at a 2% growth rate, which ought to be pretty safe. At the end of that, you'll be 95.

I mean, the market hasn't been very bad over the past 30 years for people retiring soon. Yeah, this sucks, but a 16% decrease after averaging 11.5 percent per year since 1990 isn't awful. The number sounds big, but it's big because you made so much cheese during the good times, that the bad times are amplified.

Source for average return is here. Compound calculations done here.

 

Nice post, I'm actually in that fund. And your analysis is how I'm looking at it.

 

Yep, and hopefully you won't need to withdraw much from it over the first few years of retirement and your gains will come back.

 

Yeah, me too, where's the guy with that bottle of whiskey, thanks.