Portfolio Draws

[CalBird]

Two to three times a year, beginning, middle and end of year. Withdraw from taxable account, selling equity when market is up.

 

[orbops]

My DW and I withdraw the minimum amount needed to pay all our expenses for the next 30-60 days.

 

[jpeter1093]

This is exactly what I do (like a monthly "paycheck"), but I pay Fed and State tax with each withdrawal (also monthly). @MarieIG, when do you pay taxes? End of year? I was assuming that would create some kind of penalty... I do have a small amount of pay from a p/t job that also has withholding, and DW has SS that we do not have withholding as of yet.

Flieger

We do the same. Determined our annual income needs, subtracted annual SS payments for both of us, and the rest comes from our advised Vanguard portfolio. They can't withhold CO state taxes so just fed withholding and we pay quarterly via the CO state tax website. We do this withdrawal monthly into our spending checking account. We buy EVERYTHING using a points accumulating credit card and move monies each week from that spending checking account to a 'holding' MM account that pays the credit card balance each month. Works for us and we enjoy the travel perks from the credit card points

 

[HMMY]

I am always interested in posts on this topic (withdrawals) since my procedure has been pretty post hoc, and I'm not convinced by any method's superiority.
I have been doing, for the last 3 years, pretty much GreyHare, pulling a lot from gains. But we have been using these for withdrawals and to build up income assets, which after the last 2 years of pulls now is at the point that my SS plus dividends are about 25% over our bare minimum payment of everything (including a food allowance, etc).
The goal is close to marinauser, where we draw dividends and then maybe scrape into capital gains, which is where we are now this year. After DW draw SS in 4 years, then we are in a place where SS + dividends funds cover more than our spending in any year the last 5 years. Which when I realized this, is why I have scraped all my gains in stock funds in my accounts to bond funds and half of DW's gains.
I think we have achieved what Bernstein called winning the game. Admittedly, quite a bit is in high yield/international bonds, which probably will go down in a stock slaughter, but essentially we will fund all expenses, plus large unplanned (including travel, etc) , just from dividends and SS in 4 years.
I am continuing to sell stock gains for the next 3-6 months from DW's accounts, if those gains occur, half into bond funds/CEFS and half into cash. The latter can fund either stock fund assets if a crash occurs or just fund withdrawals. Cash is not trash, even if the Fed is lowering rates. I think another 1% is the limit but I could (probably) be wrong.
Using rebalancing to fund withdrawals is, however, I think the one winning strategery.
I realize the above is very specialized and I would not recommend it for most. However, it should work for us, quite well. And most importantly, we are not maximizing portfolio, instead using it for reliable income/distributions to avoid drawing down. If things go well, after 7-10 years we may well not have to worry about that (and increase stock fund investments once the risk is pretty much gone). There is a term for this, but I forget it (basically decreasing stock investments at high SOR risk age and then increasing stock allocations once the risk is pretty much gone as you age).

Equity glide path? I retired in 2018 with 55/45 allocation, where the 45% represented 15 yrs of expenses. 7 years later, I am 70/30, where the 30% still represents 15 yrs of expenses. In 10 yrs, at age 70, I'll claim SS. Between now and then, I will reduce my fixed income until it reaches 5 yrs of expenses since SS and dividends will cover my expenses.

 

[indiajust]

I sell and rebalance, do tax loss harvesting, so my activity is heavy in Jan and Nov. Otherwise opportunistic.

I decided to shift the Roth into high income, high growth, plus stuff like commodities/gold/btc to avoid high taxes (or tax complexity). Nothing else. No cash. This is strictly a response to setting myself in a groove for tax efficiency.

I have 3 taxable accounts, 2 are personal direct robo index accounts managed by schwab cloud. 1 is US, the other is ex US. So I prefer not to own ANY of the Roth or robo stocks in my third personal portfolio. Those 2 are the anchors. I funded each one time, the ex US i am getting ready to do a second time. Almost no action.

The third sees all the action, all bill payments, holds cash. Here I use schwabs tools for portfolio analysis (and other tools as well, like Simply Wall St). I look by sectors, by countries, by volatility, by various risk measures, PE, ...... None of these tools are magic but if I see something glaring or problematic, I investigate and discuss.

Once I come to terms with a keep/toss decision, I generally do it right away. With an eye on the total tax liability, so I might defer a month or so till January for tax reasons.

Then I draw on my list of ideas to fill the hole. Almost always in the taxable third account, since that has the most flex.

A recent example starting from a change inside Roth:
I sold down a bit of SLV that was overweight, preserved the commodity bucket size by buying METL, and used extra cash to buy Kraken robotics. I have also bought into some of the MSTR based preferreds inside the Roth. Since I get more income from less capital, i can use a smaller income bucket to meet my needs. Thus I spend the extra cash on small caps lately.

Those Roth changes mean that I need less small caps on my taxable side, so I rebalanced my taxable flex with more international, but only about a third, since I pushed 2/3 into the anchor international robo. Anchors first, flex account is the trimming.

I like that if feels somewhat flow chart algorithmic. In practice if feels like ironing a sheet. There are always a few wrinkles getting worked to the edge. No perfection, just improvement.


I have recently decided to sell off MA. I have better dividend payers, and better growth opportunities. So I will sell off MA, top up one of my existing dividend payers (in this case JEPQ) and then adjust the rest accordingly after reviewing the analytic tools.

I constantly read and think and dabble to keep the idea flow in motion. Motley Fool helps there, with a constant stream of possibilities. As does this site. I continue to explore the CEF thread for insight.

Hope that helps with process insight. This is relatively new to me, as during accumulation I was roughly balancing each account independently for ease of comprehension. Its my response to proper bucket location for tax efficiency and ease of balancing bucket sizes.