I feel confident in my understanding of the proper accumulation strategies but Im confused about certain distribution strategies. For instance, some people have 5 years or more of living expenses in CDs. I assume that they live off of this money when the market is down like it is now, but how exactly does the logistics of this work? Is it a mechanical thing or is it open to interpretation?
If possible, I'd like someone to break down in detail how they go about living off CD proceeds. Assuming they have a 5 yr CD ladder with each leg being 1 yrs living expenses, what do you do at the end of a bad year (or a good year for that matter)?
Its the end of the year and the market stunk. Do you just cash in the CD that just expired and use that money to live on, leaving yourself with a 4 yr CD ladder....and leave stocks alone?
If so, what happens if the market downturn lasts 2-3 years? Are you left with a 2 yr CD ladder that only gets replenished when the market goes back up and you feel good about selling some stock (funds) to buy CDs?
Is there any preset percentage that the market has to move up or down before any of this takes place?
Would anyone like to describe their distribution method in bad AND good times? Ive never spent much time thinking about distribution since so im interested for myself but also for my mother who just retired and has no idea what shes doing.
If possible, I'd like someone to break down in detail how they go about living off CD proceeds. Assuming they have a 5 yr CD ladder with each leg being 1 yrs living expenses, what do you do at the end of a bad year (or a good year for that matter)?
Its the end of the year and the market stunk. Do you just cash in the CD that just expired and use that money to live on, leaving yourself with a 4 yr CD ladder....and leave stocks alone?
If so, what happens if the market downturn lasts 2-3 years? Are you left with a 2 yr CD ladder that only gets replenished when the market goes back up and you feel good about selling some stock (funds) to buy CDs?
Is there any preset percentage that the market has to move up or down before any of this takes place?
Would anyone like to describe their distribution method in bad AND good times? Ive never spent much time thinking about distribution since so im interested for myself but also for my mother who just retired and has no idea what shes doing.