Our SWR is teeny tiny, as cola'd pensions and SS cover the bulk of our spending, but I recall the feeling in the pit of my stomach during the 2008-2009 time frame. DH had retired on 7-1-2008, so the downward spiral made us feel particularly vulnerable. We hung tough and didn't sell, rebalanced on 3/9/09 of all days, but the experience remains vivid in my memory. I look back at how much our assets declined and the resulting trek back upward by 153% in wonder. It was a valuable lesson. That experience did convince us to change our AA however from 60/40 to 55/45, when with 20/20 hindsight, we reanalyzed our tolerance for risk.
As this is the last year that my consulting business will operate, and as I join the Class of 2017, we have decided to ratchet our equity portion down further 1% per year until it reaches 50%. And we've settled on a cash position of 5% out of an abundance of caution. We also have rebalanced more frequently(twice a year) to lock in gains and purchased another year on our bond ladder each time. I am to a lesser extent, concerned with interest rate risk. So just yesterday we sold all of our Intermediate term muni fund, 8% of assets, and bought a short term muni fund.
Even though I know we are bullet proof, psychologically I'm certain we would cut spending in a prolonged deep downturn. There is much fat in our budget, so many options to run leaner.
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