ShortInSeattle
Full time employment: Posting here.
- Joined
- Jan 5, 2012
- Messages
- 518
Hey all,
Hubs and I are working on our ER plan and we are a bit stuck. Would appreciate any wisdom you've got to share.
Basically we have two pools of money. Tax deferred and Taxable. We plan to ER in our 40s which means we'll be making withdrawals from just the taxable account for a while.
The problem is that all of our bonds are in the tax deferred account, as this makes sense for our tax situation today. (We don't pay taxes on distributions yet)
Today:
Tax Deferred Accounts: Has all of our bonds, REITs, some equities.
Taxable Accounts: All Equities
Scenario:
Let's say we ER, make withdrawals out of the taxable account (containing the stock portion of our portfolio) and the market tanks. Suddenly our taxable account has shrunk, and we will feel leery to withdraw from there. We have assets in bonds but they are locked away.
So what is the solution?
A)Mirror our AA in both our taxable and tax-deferred accounts so that we can always have a balanced portfolio to work with, even prior to age 59.5
B) Don't worry about it. If the taxable account tanks, sell bonds in the 401(k) and rebalance, viewing the portfolio as "a whole" even if some of it isn't accessible.
C) Some other solution?
I suppose we are realizing that our "accessible" dollars for the first phase of retirement are the most volatile dollars, and we're trying to figure out how to deal with that.
Appreciate any insights.
SI
Hubs and I are working on our ER plan and we are a bit stuck. Would appreciate any wisdom you've got to share.
Basically we have two pools of money. Tax deferred and Taxable. We plan to ER in our 40s which means we'll be making withdrawals from just the taxable account for a while.
The problem is that all of our bonds are in the tax deferred account, as this makes sense for our tax situation today. (We don't pay taxes on distributions yet)
Today:
Tax Deferred Accounts: Has all of our bonds, REITs, some equities.
Taxable Accounts: All Equities
Scenario:
Let's say we ER, make withdrawals out of the taxable account (containing the stock portion of our portfolio) and the market tanks. Suddenly our taxable account has shrunk, and we will feel leery to withdraw from there. We have assets in bonds but they are locked away.
So what is the solution?
A)Mirror our AA in both our taxable and tax-deferred accounts so that we can always have a balanced portfolio to work with, even prior to age 59.5
B) Don't worry about it. If the taxable account tanks, sell bonds in the 401(k) and rebalance, viewing the portfolio as "a whole" even if some of it isn't accessible.
C) Some other solution?
I suppose we are realizing that our "accessible" dollars for the first phase of retirement are the most volatile dollars, and we're trying to figure out how to deal with that.
Appreciate any insights.
SI