Bucket Question

[GrayHare]

The bucket strategy is a form of insurance, and like all insurance it costs something -- until you need it.

 

[mathjak107]

not really , i have a 50/50 mix . i still have cash instruments , bonds and equity's . i am giving up nothing if i choose to spend cash and bonds first and later refill from equity's or systematically maintain the same allocation by drawing equally from the pie .

it is only the mechanics that differ , result will be pretty much the same . in both cases how much cash you start with will be the same .

 

[pb4uski]

I've concluded that buckets vs conventional asset allocation with rebalancing is a distinction without a difference, especially where the AA includes an allocation for cash (rather then solely stocks and bonds).

 

[bingybear]

With $4.4M in after tax accounts is the OPs taxable income going to be low? We need to know how the $4.4M is invested to get an idea of the OPs tax bracket.

with 4.4MM and assume 2% divident/cap gain, most likely say goodbye to ACA subsidy unless he has kids at home too.... and then maybe not that much of a subsidy, if at all.

 

[Seattle]

That much cash seems too high to me too.

Another source of taxable income you will be reporting is realized long and short term capital gains. When you pull out $750K all at once, you may find about $250K in cap gains you need to report. I

I forgot to mention that right now I have $1M sitting is pure cash. Not the smartest move in the world, I get that, but I am in cash, so I can avoid any capital gains. In fact, from the 1999 bubble, I am still sitting on $400K in losses to be able to counter against...

I am very good at making money, very bad at managing it

I will call my Vanguard manager this week and get this straightened out.

I love all the posts and wisdom - you guys are rockstars - thank you!!!

 

[Mulligan]

I am only throwing this out there because it really hasn't been mentioned. Is part of the reason you have so much cash is because you are fearful of losses in the market during retirement? If so you have plenty of money to buy piece of mind. Just to put in perspective not a recommendation at all, but you could generate $143,000 a year by dumping it all into 10 year CDs.
Tossing in social security and draw downs, you could probably go into the ol 4 corner offense and run out the clock and still have money left over.
Once again, I am not recommending anything, just be comfortable with what you want to do as you certainly seem to have the financial flexibility to do so.


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[Seattle]

I am only throwing this out there because it really hasn't been mentioned. Is part of the reason you have so much cash is because you are fearful of losses in the market during retirement?

Honestly, it sounds crazy, but I have been so incredibly busy with my job that I just accumulated $1M in cash and with the market going downwards (ie. China etc.) i just held onto it and didnt put it to work. Also, being as busy as I am, I also missed the runup.

I am not a market timer - the truth is that my job is all consuming and it sounds like a weak excuse, but I just blinked and the time flew by and maybe psychologically, I sleep at night with enough cash around (I was raised very poor - hard to shake)

This entire FIRE thought process came out of an out of the blue compelling event at work coupled with a visit to my doc with my BP at 160/90 (I am on BP meds, it went down to 135/80 and it is all just alot of stress). Something has to give, so even though I would like to keep working, all roads are pointing to a warning shot that it is time to call it a day. Been a long time coming I guess, just all came to a head at the same time (funny how that works huh?)

So, 10 year CDs huh? I have never heard of anything like that. I am actually not that conservative and I think the best course of action is to set aside $300K in cash to live 2 years and put the rest to work in a 50/50 Vanguard portfolio....

 

[Mulligan]

Honestly, it sounds crazy, but I have been so incredibly busy with my job that I just accumulated $1M in cash and with the market going downwards (ie. China etc.) i just held onto it and didnt put it to work. Also, being as busy as I am, I also missed the runup.

I am not a market timer - the truth is that my job is all consuming and it sounds like a weak excuse, but I just blinked and the time flew by and maybe psychologically, I sleep at night with enough cash around (I was raised very poor - hard to shake)

This entire FIRE thought process came out of an out of the blue compelling event at work coupled with a visit to my doc with my BP at 160/90 (I am on BP meds, it went down to 135/80 and it is all just alot of stress). Something has to give, so even though I would like to keep working, all roads are pointing to a warning shot that it is time to call it a day. Been a long time coming I guess, just all came to a head at the same time (funny how that works huh?)

So, 10 year CDs huh? I have never heard of anything like that. I am actually not that conservative and I think the best course of action is to set aside $300K in cash to live 2 years and put the rest to work in a 50/50 Vanguard portfolio....

The 10 year CDs are brokered CDs you can buy through Vanguard and other brokerages. Some people choose to use longer CDs as replacement of bonds due to low interest rates. That is good that you are comfortable with your decision. It appears to me there are more than one successful financial strategies for retirement. So to me, the most successful one of those that are sound is the one you have the most confidence in.


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