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Old 11-26-2016, 08:15 AM   #41
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OP, I hope you were given great advice. I am a little embarrassed to ask this question, as I seem to be the only one here who does not know this, but here goes: I am 63 also and would like to use your plan to go back to 59.5 in 7 months. Also, my Wife is 35 and would like to be 21 again if at all possible.
Ha! I meant to say I am 63 and DW is 59 presently.
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Old 11-26-2016, 02:29 PM   #42
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Doesn't Vanguard have a Managed Payout Fund?
It's been a while since I read up on it but yes, or at least they did. IIRC they'd take a "snapshot" of the fund on Dec. 31 and pay 4% of that out in 12 installments over the next year.

That would make it about as brain-dead simple as it can get.
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Old 11-27-2016, 05:35 PM   #43
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Vanguard Target Retirement Income VTINX, The fund holds approximately 30% of assets in equities and 70% in bonds.
I suspect that people who think a large bond allocation is safe will be getting a huge surprise in the upcoming years.
Vanguard Total Bond Market Index Fund has duration of 5.8 yrs.

If interest rates go up 2%, those bonds will decline about 12%.
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Old 11-27-2016, 08:25 PM   #44
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Op, it was already mentioned above but I just want to bring it one more time - I think that is what you are ultimately looking for
https://investor.vanguard.com/mutual...aged-payout/#/
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Old 11-27-2016, 08:32 PM   #45
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The Vanguard managed payout funds have had structural problems. Two of them got merged into the surviving fund.

I haven't seen anything written positively about this fund over at bogleheads.org, so if anyone is considering investing in this fund, they should ask for informed opinions over at that forum.
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Old 11-27-2016, 08:35 PM   #46
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If interest rates go up 2%, those bonds will decline about 12%.
This is simply not a true statement. For instance, did this fund decline by about 12% the last time interest rates went up 2%? Or how about: Did this fund decline by about 6% the last time interest rates went up 1%?
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Old 11-28-2016, 06:40 AM   #47
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"If interest rates go up 2%, those bonds will decline about 12%"
This is simply not a true statement. For instance, did this fund decline by about 12% the last time interest rates went up 2%? Or how about: Did this fund decline by about 6% the last time interest rates went up 1%?
For Vanguard Total Bond Market Index Fund Investor Shares (VBMFX), Vanguard says:
Average effective maturity 8.1 years
Average duration 5.8 years

And:
"The longer the average maturity, the more a fund's share price will move up or down in response to changes in interest rates."

and
"duration:
A measure of the sensitivity of bond—and bond mutual fund—prices to interest rate movements. For example, if a bond has a duration of two years, its price would fall about 2% when interest rates rose one percentage point."


According to this, if rates go up 2% the price will fall about 2 * 5.8% = 11.6%. Which is about 12%.

If you think this is wrong, take it up with them.
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Old 11-28-2016, 07:00 AM   #48
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If you think this is wrong, take it up with them.
I don't have to. You jumped to the conclusion that the relationship was strictly linear.

But about a year ago, the FOMC raised the Fed Fund Rate by 0.25%. Did the total bond market fund lose 0.25% x 5.8% = 1.45%. The historical record says, no it did not.
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