twaddle
Thinks s/he gets paid by the post
- Joined
- Jun 16, 2006
- Messages
- 1,703
ER's know two things about stocks:
1) Stocks have a higher return than bonds in the long run
2) Retiring into a bear market with a high allocation to stocks is a potential retirement killer
So, how do you balance these two factoids? Some have talked about buckets, some have talked about starting with a higher bond allocation and moving into a higher stock allocation over time. But we've never modeled these strategies.
Until now! bob90245 over at diehards.org has put together a nice spreadsheet that compares a bonds-first withdrawal strategy to other withdrawal strategies.
Harvesting Withdrawals in Retirement
The results are what you'd expect: withdrawing bonds first results in a high stock allocation over time, and it also allows you to make it through those early bears with fewer scars. Try setting the IWR to 4% and the retirement year to 1929, 1968, and 1969.
The worst scenario appears to be a 1966 start, but a relatively high allocation to small stocks helped.
1) Stocks have a higher return than bonds in the long run
2) Retiring into a bear market with a high allocation to stocks is a potential retirement killer
So, how do you balance these two factoids? Some have talked about buckets, some have talked about starting with a higher bond allocation and moving into a higher stock allocation over time. But we've never modeled these strategies.
Until now! bob90245 over at diehards.org has put together a nice spreadsheet that compares a bonds-first withdrawal strategy to other withdrawal strategies.
Harvesting Withdrawals in Retirement
The results are what you'd expect: withdrawing bonds first results in a high stock allocation over time, and it also allows you to make it through those early bears with fewer scars. Try setting the IWR to 4% and the retirement year to 1929, 1968, and 1969.
The worst scenario appears to be a 1966 start, but a relatively high allocation to small stocks helped.