[quote=svelte]The longest downturn in the 20th century was about 10 years – The Great Depression.
Therefore at 20 years out, I would keep the pedal to the floor…keep virtually all the money in the stock market and maximized 401K contributions.
At 10 years out, re-evaluate. How is their health? Do they plan to retire early? Does the job market look good in their chosen field(s)? Is the stock market way overvalued? If poor health, early retirement, employment problems are imminent, or an extreme stock crash looks likely then move to a more conservative position.
At 5 years out, I would start moving to a more conservative position. Most financial planners would recommend 60% stock 40% stable, Warren Buffett recommends 80-90% stock 10-20% stable. They should shoot for something in that range at 5 years out, depending on their risk tolerance.
The above is what I’ve been implementing in my own life.[/quote]
The is considerations to retiring early. Like soon.
As far as medical/health, it appears that with the Covered California PPO Platinum plan, it’s roughly $1600/month or $19200/year. In addition, there is a a 10% coinsurance up to $4500/year for in network or $20,000/year for out of network. So out of pocket medical cost would be $23.7k-39.2k in the worst case.
No mortgage or rent.
Passive income of $120k/year. Imho, it’s going to be tight, but assuming early retirement, doable to live off of the passive income. But the question is, what about the the retirement accounts. Assuming early retirement, they can be touched after 59 1/2 years, which would be 13 years away, instead of 19. So maybe bank that at 4% with a 50/50% split between equity and some income/dividend/fixed income basket in case things go sour for the next 10 years, and there’s maybe 9 more years after that to recover.
The other angle is if one does an early retirement, instead of at 65, I think the social security benefit is severely crippled.
One thing I was suggesting is maybe take on a job that provides health insurance to clamp down on that cost. For instance, if you work X number of hours at starbucks, you get medical coverage. Do something simple that is flexible.
