I retired 5 years ago at 51. I put about 7 years of my spending in cash and multiple small CD's*. The rest of my money is invested in low cost index funds or ETF's and residential real estate (my primary home and a winter home in the desert to be sold/downsized if needed). Here's my rule: So long as my net worth is within 90% of it's all time high, I sell index funds to fund my life. When my net worth falls below that 90% threshold, I'll use cash and CD's to fund my life. Two of the five years, the market seemed frothy in January so I sold index funds for my entire year's spending. This allowed me to avoid a couple downturns so I've lived entirely on my stock portfolio during my retirement. This seems like the application of the bucket system, but with the sale rule, I'm selling stocks when they're high and not when they're low. I'm curious to get others' thoughts on my method. *Multiple, small cd's so the penalty for early withdrawal is minimal if I need to break the CD. I don't believe bonds fairly compensate me for interest rate risk now so I don't have any bonds.
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I retired 5 years ago at 51. I put about 7 years of my spending in cash and multiple small CD's*. The rest of my money is invested in low cost index funds or ETF's and residential real estate (my primary home and a winter home in the desert to be sold/downsized if needed). Here's my rule: So long as my net worth is within 90% of it's all time high, I sell index funds to fund my life. When my net worth falls below that 90% threshold, I'll use cash and CD's to fund my life. Two of the five years, the market seemed frothy in January so I sold index funds for my entire year's spending. This allowed me to avoid a couple downturns so I've lived entirely on my stock portfolio during my retirement. This seems like the application of the bucket system, but with the sale rule, I'm selling stocks when they're high and not when they're low. I'm curious to get others' thoughts on my method. *Multiple, small cd's so the penalty for early withdrawal is minimal if I need to break the CD. I don't believe bonds fairly compensate me for interest rate risk now so I don't have any bonds.
Post: Containing the Issue
Link to comment from September 11, 2021