Originally Posted by haha
That works very well as long as you foresee the downturns. I wold find it very nerve-wracking.
Hopefully not, though I did hit this one. The idea is to pull out cash when the market is in line with, or higher than, my retirement expectations. So if the market starts on target and then jumps 30% in one year you can take out 3 or more years of living expenses. No guessing involved.
I went ahead and started with a pile of cash just to cover the first few years of retirement and try to avoid the worst case of a downturn just after retirement. And I was expecting maybe 20% down, but certainly not 50%. Even if the market went up, the cost of staying in cash was fairly small IF you went ahead and spent it down to zero before selling equities.
If the market is higher than my retirement projections I'll take out some cash. If it is lower than projections I'll spend the cash first. If I don't have any cash I'll sell equities as needed (more like once a month than once a year).
I didn't want to always have 3 or more years worth of cash sitting there over 30 years doing virtually nothing. I'd rather sell equities as needed. I'm just trying to smooth things out a bit with the cash scheme.