FAST FIVE: F.I.R.E. – Ignited By The Bull, Extinguished By The Bear
However, we also have to assume: The couple never has children Never requires serious medical care (hopefully) Never considers buying a house Has no major life events, etc.
Portfolio declines by $65,000 plus the $35,000 annual withdrawal increases the 6.5% decline to 10%.) Obviously, not accounting for volatility when planning to retire early can have severe future consequences.
Most likely, our young couple will be met with a “bear market” sooner, rather than later, in their early retirement.
The reasoning was that if you were good enough to keep your job during the recession, you obviously have a valuable skill set.
The problem with “retiring early,” is that it leaves plenty of time for things to go wrong. Unplanned Accident/Medical Problem. Young people suffer from an “invincibility syndrome.” They tend to not carry insurance, due to the cost, because they “never get sick.” While we certainly hope it never happens, a major accident or health issue can extract tens to hundreds of thousands of dollars of capital critically impairing retirement plans.