I retired at 52 two years ago. With interest rates near zero and stocks at lofty valuations, we were quite concerned about sequence of returns risk. In the year leading up to ER, we made the decision to take both pensions as an annuity, pay off the mortgage, buy two rental houses, increase our cash allocation to 5%, and tilt the taxable portfolio to high dividends.
At the moment, DW is still working OMY, but her pension annuity will replace her net pay exactly. So, our early spending is covered by her net pay/pension, my pension, rental income, dividends from the taxable account, and small withdrawals from the cash allocation, mainly just to cover occasional large discretionary items. This should easily carry us to 67-70 when SS and RMDs begin.
These actions probably sacrificed some long-term growth potential. But, with a long time horizon, we feel a lot better about near-term sequence of return risk compared to the alternatives. There's still a growing portfolio of stocks and bonds, sufficient to cover other long-term risks like inflation, longevity, and LTC. Also a monstrosity of a house that will be downsized at some point, further boosting the nestegg and cutting expenses.
I watch our investments and market volatility with interest as always. But with spending covered, I don't fret much about sequence of return risk, interest rate risk, what the Fed might do, price of oil, etc. My biggest problem is just getting past the rookie fears and actually spending some money.