With 5 years left, where to put contributions?

[PolicyProf]

After some great feedback from my intro posting, I would love some insight for my final 5 years of contributions. My current AA is 45/40/15, with the 15 in TIAA Traditional. I plan to use a version of buckets when I pull the plug, and am now in the process of converting some of my TIAA Traditional into two years of MM cash for downturns - so I think I will have my cash bucket covered at just the right time. I don't have a lot of post-tax cash (about a half-year spending), and FireCalc tells me that I'm right on the bubble of 100% success in five years with my current contribution levels. Five years away from RE (at age 59), and having an option to reallocate future contributions, where would you put it? I do realize it's a very conservative AA so far. Thanks in advance.

 

[MBAustin]

I would personally not go any more conservative at this point, particularly if you plan to have two years of cash available at ER. At what I thought would be 5 years out (turned out to be 1 year out because I ER'd earlier than planned) we started moving from 70-30 to 60-40. Since then we've worked down to 50-50.

 

[COcheesehead]

How do you have your buckets set up? How many years in each?
When I plugged my assets into a buckets spread sheet, I found I had bucket 1 and 3 covered nicely, but bucket 2, the income bucket, was underfunded. Going through that exercise may tell you where you need to put new money.

 

[PolicyProf]

Thanks, everyone! Understanding more clearly bucket 2 is a great point, and it's been the more challenging one to fully wrap my head around -- and that worries me. It will take 10 years (total) to convert my TIAA traditional so that will give me 5 additional years of income after my bucket #1 is full (that number is pretty straightforward to calculate). The remainder of bucket 2 is going to require more pencil sharpening. Thanks for that nudge!