audreyh1
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I don't manage my total assets as a single allocation. I don't understand why you keep emphasizing "total assets" since I don't use them to calculate my withdrawal either. Where is this requirement that ALL (investable, I assume) assets I own be managed and rebalanced as a single AA coming from?Okay, I'm saying that Cut-throat likes the idea of making percent-of-current-portfolio withdrawals, and spending the amount withdrawn, because he thinks that maximizes his withdrawals without developing unacceptable risks. He understands that this makes his spending quite variable because it will fluctuate with market values.
I think you're making percent-of-current-portfolio withdrawals, and sometimes using part of the withdrawal to buy short term fixed income assets, because you want to stabilize your income. You feel that this approach helps you get money "off the table" when market prices are high, so you don't feel that you need to cut your spending sharply when the market goes down.
What you do with the funds after you withdraw them from your long term assets has no bearing on the asset allocation within your long term assets. However, I specified your "total" asset allocation. I intended the word "total" to mean all of your assets, not just the assets in your long term fund.
Unless I'm really confused, you expect to sell stocks most years. But, when stocks are up sharply, some of the proceeds will be used to buy short term assets.
Again, this is just wording. You want to use "asset allocation" to refer only to the assets in your long term fund. I am using "total asset allocation" to refer to all of your assets. If you like, I could have said:
"Looking at everything you own, you shift to a more conservative ratio when market values get up above X% of your initial value. You plan to move back to a less conservative ratio when market values get below Y%."
I don't sell only stocks most years in my retirement portfolio. I sell whatever is needed to rebalance to the target AA (which is ~53% equities) after withdrawal. Some years bonds perform well too. It's just the normal process.
Cutthroat stated clearly that he also lets his unspent cash build in a cash buffer, and for much the same reason - income smoothing. His spending is independent of his withdrawal, just like mine. His spending doesn't have to be variable just because his withdrawal is.
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