Does This Plan Make Sense?

[Mysto]

OK guys and gals - here's the plan so far. I am reasonably close to SS early withdrawal and I have a low risk tolerance. I also don't have all that much to start with but my cost of living is pretty low right now. The current plan is:

Money in laddered CDs that will pay basic living (minus SS payments with a 3% cost of living increase) until the 70 1/2 required withdrawal. (That means my basic needs are covered and I know that I can get 5% plus locked in within the next few months)

The rest of the taxable funds in Wellesley to add to the basic living (yields) when the market is good - not to touch principal. (Low volatility with limited downside based on history. This allows me to live a little)

Tax-deferred funds in a diversified portfolio (looking at Merriman's perfect Vanguard) or a Vanguard Target fund with a couple of outside index fund tweaks. (A mix of not less than 40% equities but not more than 60%. This would allow me to leave this fund alone for over 8 years and not worry so much about market ups and downs)

I really respect the thoughts on this board. How am I doing? What might you do differently? Thanks again.

[Mysto]

I was thinking and writing at the same time - but not about the same things. The last part should have read - I can let the diversified portfolio go for over 10 years without touching it (obviously it must be rebalanced)

[Jarhead*]

Quote:

Originally Posted by Mysto Money in laddered CDs that will pay basic living (minus SS payments with a 3% cost of living increase) until the 70 1/2 required withdrawal. (That means my basic needs are covered and I know that I can get 5% plus locked in within the next few months)

Mysto: Sounds good to me. You have your needs met with very little risk until you have to start your RMD. (Giving time to let the "Big Dogs" run.

"Keep your left arm straight, right arm tucked at impact, and grip it and rip it."

Good Luck, Jarhead

[renferme]

Plan seems conservative and safe.
Don't know what your overall equity position is, but CD's are playing 5% or more for 5 to 7 years right now and if your overall safe withdrawal rate is < or = 4%,
you're ok.

[Mysto]

Thanks Jarhead

bennevis - My intent is to draw down the CDs. They will only last until MRD. That ensures a stable base income at the start of my retirement (I have no pension) and lets the main portfolio get some time (over 10 years) to grow without disruption. The Wellesley yields could be used for additional income or left in the fund depending on current market conditions and my immediate needs (they would be in my taxable account and easier to move around).

Having said that - I am only trying out a plan and still would appreaciate input from one and all. Better methods - allocations - funds - etc.

A lot of people here have done it successfully and I am eager to learn.