Equities Return are Stellar - should I withdraw some now or wait end of year?

[cyber888]

So I retired last year and want to try and withdraw some from my 403B this year.

Equities have had a stellar performance in the first quarter (Jan-March), should I withdraw some now, and do a quarterly withdrawal, or wait till end of the year for a lump-sum withdrawal?

Care to share your strategies ?

If you are retired and withdrawing from your nest egg, do you do it monthly, quarterly, or yearly.

Just asking because this is a stellar 1st quarter growth.

 

[Chuckanut]

FWIW, If I know I will need to withdraw money at some point in the next 12 months and the markets are bumping up against record high levels, I sell some assets to get the needed amount of dollars. There is nothing wrong with taking some profit off the table and using it for expenses that are legally required and/or will improve the quality of life. That’s about as close as I get to market timing.

Nobody ever went broke taking a profit.

 

[OldShooter]

... Care to share your strategies ? ...

When we need cash for some reason, we withdraw it with an eye towards moving our current AA towards our desired AA. We do not try to time the market.

Background: Taylor Larimore's market timing quotes https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

 

[Al18]

I’ve been retired 5 years. Usually sell 3/4 stocks in Q1 and 1/4 in Q3. All proceeds go into a high rate online savings account. Money is automatically transferred into my checking account the beginning of each month.

 

[DJRR]

Buy low/Sell high is better than the alternative If you need the cash, sell.

 

[Major Tom]

I sell some equities to generate the next year's income, once a year, every year, in the last week of December. Yes, there are some years when, using this approach, I will be selling at a low point. However, the market is up more years than it is down so, in the long run, it all averages out in my favor. I'm in it for the long haul, and not interested in short term fluctuations.

It probably also helps that my withdrawal rate, based on my current portfolio value, is ~2.2%. I'm not living on the edge financially - especially as this doesn't include SS, which I haven't taken yet. I'm personally not keen on trying to time my withdrawals in this manner, though others seem comfortable doing so, and even enjoy it.

 

[audreyh1]

I rebalance to my target AA as part of my annual withdrawal in Jan so I don’t worry about where the funds will be pulled from ahead of time. That said if my portfolio gets way out of balance during the year due to some asset class way over or underperforming I can always rebalance again then.

 

[Montecfo]

As an active investor I am regularly buying and selling a bit. Sell stocks that have become overvalued, met objectives, or no longer fit.

I usually harvest gains to fill a spending ladder that extends 2-3 years.

I do think now is a good time, but I also expect stocks to continue to rally as rates continue to decline-at least for now.

I do not have a "set" schedule for doing this. It is done opportunistically. Obviously selling at a high is better than the alternative.

 

[GrayHare]

I've sold some to lock in profits. It's a type of rebalance because it's not predicting anything, we already know stock prices have run up. IMO there's no need to wait for a specific calendar time.

 

[FREE866]

I sell the 1st of April, July , and October. Takes away any decision of what I “ think” what stocks will do. Simple.

 

[jebmke]

When I was withdrawing, I took an amount at the beginning of the month needed for the next month's bills.

I have stopped selling equity entirely. If I need money, I'll sell bonds.

 

[HI Bill]

Equities have had a stellar performance in the first quarter (Jan-March), should I withdraw some now, and do a quarterly withdrawal, or wait till end of the year for a lump-sum withdrawal?

My general philosophy is that if the market is at/near an all-time high on the 2nd of January, I sell enough ETF shares to cover at least 50% of my annual spending needs. I'd rather sell at an all-time high and miss out on some gains than have to worry all year about whether the market will fall before I make my distribution (and I have to cut my spending or spend money market reserves). This year I gave up ~20% in gains by doing this, but it could have just as well gone the other way.

 

[jazz4cash]

I keep 1-2 yrs cash in hi yield savings/short CDs. I top off when it drops to 1yr or opportunistically as I see fit. At a time like this I think it’s OK to take a bit from equities proactively. Its not market timing since the funds will not be going back into the market. The main thing is to have enough liquidity so you never have to sell when you don’t want to.

 

[Chuckanut]

The main thing is to have enough liquidity so you never have to sell when you don’t want to.

+1.

If I sell stocks at a high point and then if the market continues to go up, I still have most of my stock investments and I can profit. We’re talking here about a small percentage sold to finance known future expenses in the coming year or two. Not a huge bailout from the stock market. That’s a different ball game.

 

[mrfeh]

So I retired last year and want to try and withdraw some from my 403B this year.

Equities have had a stellar performance in the first quarter (Jan-March), should I withdraw some now, and do a quarterly withdrawal, or wait till end of the year for a lump-sum withdrawal?

Care to share your strategies ?

If you are retired and withdrawing from your nest egg, do you do it monthly, quarterly, or yearly.

Just asking because this is a stellar 1st quarter growth.

You are timing the market.

If you need cash, sell. If you don't, don't.

 

[Marc]

I try to keep two years expenses in cash. I also don't like to sell in a down market. For last five years I have been able to only sell when market is going up. My plan has been to sell $30K every time S&P reaches an even 100 such as 5100 or 5200. I have been doing this since market crossed 4,000 IIRC. When market went down I did sell again when it reached back to 4400 and above so all have not been at record closes. I assume total bond fund will start recovering a bit more and then I will sell the bond fund for cash if it starts being overweight.

Almost on cruise control but not quite.

Marc

 

[TheWizard]

In reply to the OP, I also have a 403(b) and do monthly withdrawals from it to satisfy my RMD. Prior to starting RMDs a few years ago, I did monthly Roth conversions from that 403(b).
Additionally, I do another Roth conversion in December to tweak my AGI based on IRMAA thresholds.
None of the above actions have anything to do with whether the stock market is up or down.

Additionally, I have been rolling $$ from my 403(b) to my tIRA at Vanguard to allow me to do QCDs. Those rollover are done after the RMD for the year is complete.
Again, nothing in this process has much to do with how the stock market is doing, although the size of my total QCDs might be higher in future years when the stock market is up...

 

[DrRoy]

I only act to maintain my AA.

 

[Koolau]

When we need cash for some reason, we withdraw it with an eye towards moving our current AA towards our desired AA. We do not try to time the market.

Background: Taylor Larimore's market timing quotes https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

My strategy as well. Kill two birds with one stone, so to speak. Only "timing" involved is "when I need the cash." YMMV

 

[cyber888]

I understand people saying 'we don't time the market, but we rebalance our AA".

But my question is "isn't rebalance your AA also timing the market ?"
When your equities are getting "too high", you time that market to rebalance - by withdrawing your 'overvalued equity" and putting it into fixed income. I mean, I don't think people will rebalance if the equity market is down 40%. There's always timing the market when you rebalance your AA.

There's many debates I'm seeing about rebalance the AA. Jack Bogle said 'no need to rebalance your AA'.

 

[mrfeh]

But my question is "isn't rebalance your AA also timing the market ?"

No. You rebalance to maintain your desired level of risk, not improve returns.

 

[GrayHare]

Timing = Predicting. If you transact for a reason other than predicting the market, you are not timing the market.

 

[OldShooter]

I understand people saying 'we don't time the market, but we rebalance our AA". ...

I think "market timing" is really an undefined term. Every decision to buy or sell is effectively a market timing decision. For example I moved some equity money to fixed income a few weeks ago, anticipating paying income taxes next month and real estate taxes in May. I made the sale as the markets were hitting new highs and thinking the euphoria might not last another couple of months. So that thinking could certainly be called market timing.

Even simple buys and sells, today, this week, next month, etc. are market timing too.

So I don't get too spun up about the small stuff. Moving a significant amount of a portfolio around in anticipation of market action is another matter entirely and probably merits a capital "m" and a capital "t."

 

[W2R]

When I first retired (almost 15 years ago), each year I needed to withdraw some money from my portfolio for living expenses. So, I'd do that in early in the first week of January, right after doing my annual rebalancing. I only took cash from my dividends. I didn't try to market time but instead had strict rules for myself about when to rebalance and download the year's money from my portfolio, and how much to get.

Now that I am older, other income streams have come into play (as planned). I now have my "age 70 SS", my teeny-weeny mini-pension has kicked in, and I am taking RMD's too. All that adds up to more than I need to spend in a normal year, so I don't usually withdraw anything further from my portfolio these days.

I did withdraw $20K for a roof replacement and new hot water heater back in 2023, but did it the same way, right after rebalancing.

So, my suggestion is to make a hard-and-fast rule for yourself about what time of year you withdraw your usual spending money and how much. For many of us, choices lead to temptation to spend too much, but if you have a rule then you aren't operating based on choices.

 

[Koolau]

When I first retired (almost 15 years ago), each year I needed to withdraw some money from my portfolio for living expenses. So, I'd do that in early in the first week of January, right after doing my annual rebalancing. I only took cash from my dividends. I didn't try to market time but instead had strict rules for myself about when to rebalance and download the year's money from my portfolio, and how much to get.

Now that I am older, other income streams have come into play (as planned). I now have my "age 70 SS", my teeny-weeny mini-pension has kicked in, and I am taking RMD's too. All that adds up to more than I need to spend in a normal year, so I don't usually withdraw anything further from my portfolio these days.

I did withdraw $20K for a roof replacement and new hot water heater back in 2023, but did it the same way, right after rebalancing.

So, my suggestion is to make a hard-and-fast rule for yourself about what time of year you withdraw your usual spending money and how much. For many of us, choices lead to temptation to spend too much, but if you have a rule then you aren't operating based on choices.

Yes. RE-balancing at the same time each year isn't timing the market - just the re-balancing. You don't try to improve your gains or limit your losses - you try to keep your AA more or less constant.