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withdrawal percentages from assets
Old 01-02-2016, 03:42 PM   #1
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withdrawal percentages from assets

How do others here withdraw their money for retirement. I am not talking about total percent a year or various time tables like monthly or quarterly. But like, for example, what amount of stock or bonds. Say if you were 50/50 you would take 50% from stocks and 50% from bonds. Or maybe some take from their winners to get back in balance. I don't know if this is a dumb question but I am just curious to see others approach.
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Old 01-02-2016, 03:49 PM   #2
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In general, if you take from your assets in a way to maintain your asset allocation you will end up taking more from the winners and less (possibly nothing) from the losers. So, if your desired allocation was 50/50 and you were actually at 50/50 you would take half of your distribution from equities and half from bonds. On the other hand, if you were 40 equities and 60 bonds, you would take from bonds until you got back to 50/50.
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Old 01-02-2016, 04:23 PM   #3
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I agree that you want to do it in a way that maintains your asset allocation.

What some of us do (I learned this from reading here at er.org) is to let the dividends and CG distributions accumulate - and use that as a starting point for withdrawals... then xrebalance the remainder at whatever frequency you are comfortable. Several folks here rebalance 1x year... other rebalance if it gets out of balance by x%.... that's a choice you'll have to figure out... no right answer or wrong answer.
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Old 01-02-2016, 06:56 PM   #4
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I usually have enough cash built up from distributions paid thoughout the prior year (most in Dec) to cover my withdrawal, then I rebalance what is remaining.
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Old 01-02-2016, 07:00 PM   #5
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Yep, distributions come at opportune times of the year. Yes, December distributions are higher than the rest of the months, but I need them to pay property taxes and college tuition due in January.

If I have to sell something to raise cash, it is mostly based on what has the least tax hit.

Rebalancing seems to be the least of my worries as things somehow almost reblance themselves. After all, if I'm getting less than 0.3% a month of distributions that is not going to throw off any asset allocation numbers to make them outside of my rebalancing bands.
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Old 01-02-2016, 07:04 PM   #6
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I've been retired almost 2 years surviving on cash from my portfolio. Next up - I'll take monthly disbursements from an annuity.


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Old 01-02-2016, 07:15 PM   #7
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I usually have enough cash built up from distributions paid thoughout the prior year (most in Dec) to cover my withdrawal, then I rebalance what is remaining.
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Old 01-02-2016, 07:33 PM   #8
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Old 01-02-2016, 11:24 PM   #9
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I have all equities, no bonds, so not much help there. However, for my mom the policy is to withdraw only from bonds if the market is 20% or more down. Anything above that and the withdrawal is used to aid rebalancing of the AA as needed.
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Old 01-03-2016, 12:50 AM   #10
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Check out this thread too if you aren't already
Rebalancing and Withdrawal Strategies
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Old 01-03-2016, 07:23 AM   #11
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Check out this thread too if you aren't already
Rebalancing and Withdrawal Strategies
There are lots of threads to consider if you search. This is another recent thread that touts equal withdrawals and PE/10 based selection.
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Old 01-03-2016, 11:45 AM   #12
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There are at least 47 gazillion methods (am I exaggerating?) for taking a withdrawal. I subscribe to the KISS method. Figure out how much cash you need. Subtract that from the total portfolio, reallocate the portfolio, transfer the cash to your bank.
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Old 01-03-2016, 01:04 PM   #13
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There are at least 47 gazillion methods (am I exaggerating?) for taking a withdrawal. I subscribe to the KISS method. Figure out how much cash you need. Subtract that from the total portfolio, reallocate the portfolio, transfer the cash to your bank.
But you haven't actually explained your method. To subtract an amount from your portfolio you have to sell something - equities, bonds, MF. The question is what do you sell when. If, for example, you mean that you simply subtract a proportional amount from each component then that is the method.
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Old 01-03-2016, 01:08 PM   #14
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I sold my winners this year. I want to be in Roth so I don't pay so much tax.


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Old 01-03-2016, 03:16 PM   #15
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But you haven't actually explained your method. To subtract an amount from your portfolio you have to sell something - equities, bonds, MF. The question is what do you sell when. If, for example, you mean that you simply subtract a proportional amount from each component then that is the method.
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Easy-peasy!

Take the total portfolio, subtract the cash you need for the coming year.
Check the asset allocation, make changes (buy/sell) within your holdings leaving you with a balance in cash. Consider winners and losers, and make a decision at this time if you are making adjustments to holdings.
Extract the cash - transfer to your bank.

So I rebalance and withdraw cash. Hope that's clear!
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Old 01-25-2016, 11:30 AM   #16
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I usually have enough cash built up from distributions paid thoughout the prior year (most in Dec) to cover my withdrawal, then I rebalance what is remaining.
Hi audreyh1 - Are you saying that you can live on only dividends and CG distributions throughout the year? Just using simple math and a 2% dividend rate you must either have low expenses or a pretty large portfolio.

Am I missing something?
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Old 01-25-2016, 12:16 PM   #17
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Hi audreyh1 - Are you saying that you can live on only dividends and CG distributions throughout the year? Just using simple math and a 2% dividend rate you must either have low expenses or a pretty large portfolio.

Am I missing something?
Just checked out dividends and capital gains distributions for Vanguard LifeStrategy Moderate Grown VSMGX 60/40.

For example, you have 42,000 shares (~$1M).

06/24 Div $0.241 * 42,000 = 10,122
12/28 Div $0.264 * 42,000 = 11,088
12/28 LTCG $0.374 * 42,000 = 15,078
12/28 STCG $0.018 * 42,000 = 756
2015 TOTAL: $37,674

Definitely seems feasible particularly if you have other income coming in.
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Old 01-25-2016, 12:20 PM   #18
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Hi audreyh1 - Are you saying that you can live on only dividends and CG distributions throughout the year? Just using simple math and a 2% dividend rate you must either have low expenses or a pretty large portfolio.

Am I missing something?
I think you'll find that many people here use the same approach.

I do.

Dividends/CGs + SS and perhaps a pension or rental income might cover the needs of 80% of the folks here.

A large portfolio doesn't help if your expenses aren't lower than income, so while all relative, I'd say low expenses are the rule.
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Old 01-25-2016, 12:53 PM   #19
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How do others here withdraw their money for retirement. I am not talking about total percent a year or various time tables like monthly or quarterly. But like, for example, what amount of stock or bonds. Say if you were 50/50 you would take 50% from stocks and 50% from bonds. Or maybe some take from their winners to get back in balance. I don't know if this is a dumb question but I am just curious to see others approach.
When I did the rebalancing after I retired, I shifted from 60/40/0 to 60/34/6. The 6% in cash is in an online savings account that earns 0.95%. I have an automatic transfer monthly from that online saving account which I consider to be part of our retirement investments to our local credit union account that I pay our bills out of. In a normal year our monthly transfers will use up a bit less than have of the online savings account and I refill it to 6% when I rebalance in December each year.

So in a nutshell... part of our AA includes cash and our withdrawals come from the cash.
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