Question on living expense withdrawals

[Russ2020]

I have a question regarding withdrawals from my investment accounts for living expenses. My wife and I are retired. We currently will need to sell assets in the amount of $45,000 between now and the end of the year for living expenses. Our current money market account set up for living expenses has $20,000 in it. We are living off our taxable account and are managing our LTCG’s for Roth conversions. My plan is to sell Total Stock Market Index Fund in our taxable account and immediately sell the same dollar amount in Total Bond Market which is in our IRA account and buy back Total Stock Market Index fund. So, I am basically selling bonds to live on. Our current equity to fixed income ratio is approximately 40/60.

Here’s my question. Is it better to do this when the market is down (like now)? Before the downturn I had over a 200% gain on Total Stock. Some of that gain is gone now and the reported LTCG’s will be less. Or since I have to sell more shares because they are worth less, is the whole thing a wash?

Thanks for any comments.
Russ

 

[Montecfo]

If you execute the trades right, you are not actually selling equities, you are selling bonds. But in this volatile market you will have to be careful with your trade executions to make sure the equity trades are simultaneous.

How have your bonds held up? That seems to be the bigger question.

 

[Russ2020]

All my bonds are in mutual funds. They are all at highs. That is at least going back a few years.

 

[pb4uski]

All my bonds are in mutual funds. They are all at highs. That is at least going back a few years.

I think I would sell enough bonds to fund at least 2 years worth of withdrawals since it would not seem that bonds have much room to move higher (but FWIW, I might have said that 6 months ago, so what do I know).

 

[Russ2020]

I think I would sell enough bonds to fund at least 2 years worth of withdrawals since it would not seem that bonds have much room to move higher (but FWIW, I might have said that 6 months ago, so what do I know).

If I did that I would have no room for Roth conversions

 

[pb4uski]

I didn't say to withdraw it, just to convert it to cash in the IRA since bonds are near an all-time high. Let the cash sit in a money market fund until you need it.

If I did that I would have no room for Roth conversions

 

[Russ2020]

I didn't say to withdraw it, just to convert it to cash in the IRA since bonds are near an all-time high. Let the cash sit in a money market fund until you need it.

Got it. Thank you.