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View Poll Results: How many years of withdrawals should you have in bonds and cash
0 years in bonds & cash, keep 100% in stocks 3 3.61%
1 year in bonds & cash, the rest in stocks 2 2.41%
2-4 years in bonds & cash, the rest in stocks 15 18.07%
5-9 years in bonds & cash, the rest in stocks 26 31.33%
10-19 years in bonds & cash, the rest in stocks 13 15.66%
20-29 years in bonds & cash, the rest in stocks 7 8.43%
30+ years in bonds & cash, the rest in stocks 1 1.20%
Don't vary the AA regardless of bond & cash amount 16 19.28%
Voters: 83. You may not vote on this poll

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Old 01-11-2014, 10:33 AM   #41
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Originally Posted by CaliforniaMan View Post
I took a look at some reviews of the Bernstein book you mentioned. One stated:

"He does look at several examples of people with different spending needs. A rule of thumb he provides is that by age 70, people should have enough safe assets to fund at least 20 years of spending needs after accounting for Social Security and other pensions. Of course that is very tough to do, especially in today’s low interest rate environment."

Unless your spending is very low, and SS high, it does seem he is directing that to higher net worth individuals. 20 years seems a bit extreme for me, but for high net worth people it certainly would be prudent. I will put his book on my list. Thanks.
I'm sure that "high" and "low" are very subjective.
In our case, if my wife starts SS at age 66, and I wait till 70, our combined benefit will be over $50,000. That covers 100% of our spending "needs". Other assets will cover spending "wants" and gifts.

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Old 01-11-2014, 10:36 AM   #42
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Originally Posted by Independent View Post
When I see this comment, I assume it goes with a withdrawal plan that says in "some" circumstances I'd get 100% of my withdrawals from bonds.

If I get into that situation, clearly my "number of years in bonds" will drop. But, that must be okay, or why would I make this type of plan?

So I think this approach requires some explicit plan for when to actually withdraw those bonds, when to stop withdrawing them, and when to refill the bond bucket.

The answer to "how much is enough" comes from writing out that plan then running it through possible market scenarios until I've convinced myself that it meets my goals (whatever they may be) in at least X% of the plausible scenarios.

So I'd say you should start by writing out your plan for using and refilling your bond bucket.
Yes, this is pretty much exactly what I was wondering and I think you described it much better than I did. While there are many plausible scenarios, I must admit that I have not come up with a solid plan for when to draw 100% in bonds/cash and how to replenish the bond/cash bucket.

Merrily, merrily, merrily, merrily,
Life is but a dream.
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Old 01-11-2014, 11:15 AM   #43
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I guess I'm an outlier here, I have about 30 years expenses in cash and the rest in stocks. I don't like bonds-- I've traded them through mutual funds many times over the years and got clobbered almost every time so it finally sunk in that I shouldn't go there. Cash is a slow bleed but at least it's been predictable, I see the opportunity cost as an insurance premium. It came in handy being able to buy stocks without selling around YE2008, although I think it would have been better for me if that rout weren't so short-lived. Better luck next time, eh?
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Old 01-11-2014, 12:23 PM   #44
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Our AA is 45/40/15 for equities, cash and real estate. I keep 10 years living expenses in cash (CDs, savings and a few iBonds) and the rest of our liquid investments in stocks. We both have pensions and also have rental income. I just don't see any benefit to owning bonds these days. I replenish my cash from stock trades if needed, but if the market is down I can wait out the dip for a recovery. Stock dividends and our pensions cover our basic needs and the rental income covers property taxes and maintenance for all of our real estate including our home. Life is good!

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