That spaghetti dinner went up quite a bit faster than inflation - should’ve only cost $7-8! We’ve had a rolling five year bond ladder in place for three years now. Initially we focused on buying US Treasuries/STRIPS on the secondary market through our brokerage. We did mix these with MYGAs (multi-year guaranteed annuities), which are a CD-like instrument sold by insurance companies. We have slowly migrated away from the Treasuries and now four of the five remaining bond ladder rungs are MYGAs, averaging around 5.5% fixed interest, with no additional costs. Current rates on 5-year MYGAs are running at 6-6.3% fixed. These can be bought directly from A-rated insurance companies or through brokers like stantheannuityman.com where I’ve purchased all of ours. The reason I like MYGAs over Treasuries is there’s no annual OID (original issue discount) tax due to the IRS every year, and there’s no interest rate risk. Before you dig in your heels and scoff - “I will never buy an annuity” - I’d encourage you to check these out. They’re something very different from a traditional annuity. What you see is what you get. And if you are interested in setting up a TIPS ladder, there’s a dead easy way to do that at tipsladder.com.
While it may be true that many retirees fear running out of money, I’m less convinced that “most” do. For instance, survey data cited in this article (https://finance.yahoo.com/markets/articles/38-retirees-underspend-not-fear-133000039.html) shows that 38% of retirees actually fear underspending—something I’ve been hearing more about the past couple of years. I ran into this issue myself when we first retired. A couple of years ago I discovered risk-based spending guardrails (RBSG), and it was an immediate “aha” moment, answering the two questions I’d been struggling with:
How much can we safely spend?
What are the chances we’ll need to change that amount?
Instead of obsessing over a Monte Carlo “probability of success,” RBSG tells us the likelihood that our spending will need to change—either up or down. Combined with a bond ladder covering our fixed expenses, it’s given us a lot of confidence. Four years into retirement, we’re spending twice what we did while working, enjoying the retirement we envisioned, and without the anxiety about spending that seems to afflict so many retirees.
It’s interesting to see how people are invested. I think it would also be helpful to include life stage or current age, as I noticed some commenters did not appear to have any bond/fixed positions in their AA, while others did. We’ve been fully in decumulation mode for four years of a 42 year plan with 38 years to go. Tax Class Equity Fixed ======================= Tax Deferred 53% 47% Tax Exempt 57% 43% Taxable 60% 40%
------------------------------------------ Total 57% 43% The above is tilted toward fixed due to:
a 5-year bond ladder (four MYGAs and a Treasury Bond)
the cash value of my wife’s pension
a private equity preferred stock position throwing off a fixed dividend, all of which are illiquid.
If I include only the portion of our portfolio that is invested in traditional stocks/bonds (mostly ETFs), then it looks like this: Tax Class Equity Fixed ======================= Tax Deferred 55% 45% Tax Exempt 100% 0% Taxable 92% 8%
------------------------------------------ Total 72% 28% Equity is divided 3/4 domestic (mostly VTI), 1/4 international. Fixed is mostly BND and STIP.
Just seeing this now, after reading you’re third article about this today. I’d like to share my brief thoughts on the second question you posed here, “why aren’t financial planners reaching those who need it most?” To me it’s pretty simple: lack of financial literacy among their clients; and incentives for planners are mis-aligned with the desired outcomes of their clients. This is particularly acute for retirees who are in the decumulation stage. AUM planners make their money by keeping asset levels high (and growing). This works great during the accumulation stage, as working people are focused on their jobs, careers and families. They don’t have the time or inclination to learn about personal financial management, so here a planner can help them at least put in place a plan that will lead to the right balance of saving while allowing enough spending to enjoy the journey. Retirees, though, pose a much more challenging problem. They’re faced with 30 years or more of decumulating their portfolios and navigating around the myriad pitfalls that could derail them along the way. As near as I can tell, planners as a group and planning as a profession are doing a lousy job of offering real help here. Of course there are exceptions, but in my opinion their profession is not set up to address this extraordinarily difficult challenge.
Hello Javier - just found your followup post to this one, wherein you succinctly summarize the key insight: financial planning, when done well, fades into the background right along with thoughts about spending money, with the focus shifting to living the life one has chosen. I love this. And I’d love to hear more about the tool you’re building. I went full DIY a couple years ago, using the Income Laboratory platform to do my own decumulation planning. It gives me 90+% of what I need to spend confidently and not worry about under- or over-spending during our anticipated 35-40-year retirement plan. Let me know if you’d like to connect - would love to learn more about what you’re working on - and possibly collaborate with you on it.
A few years ago I started investigating bond ladders for SORR protection, and started looking at TIPS and other bonds and bond-like products (CDs and MYGAs) to build one. Buying TIPS, either from the Fed or on the secondary market, can be a bit daunting. I found a great web-based tool that does the heavy lifting for you. https://www.tipsladder.com/ I first learned about this on Bogleheads. As far as I know, it’s a hobbyist-maintained toolkit and website.
We’ve been using a four-bucket set up for about two years now and really like the way it helps me spend confidently and not worry about sequence of returns risk. My first bucket is a cash bucket, which is in effect our checking account. This is how we pay bills and spend money. Our second bucket is a bond ladder. It has five year’s worth of the equivalent of our fixed expenses. These bonds (actually MYGAs) are not variable and have a fixed interest rate of around 5 1/2%. Our third bucketis a regular investment portfolio comprising stock and bond ETFs, set up with a 70/30 asset allocation. The fourth bucket is what I call non-allocable. This bucket contains a mix of my wife’s pension fund and some private equity preferred stock that throws off a fixed dividend of 10%. Although these assets are ill liquid, I don’t consider either of them particularly risky. These assets are included in the 70/30 asset allocation with bucket three. With this set up we have a decent level of passive income from the portfolio. That, combined with using spending guard rails and less than 50% of our annual spending budget going to fixed expenses, gives us lots of flexibility in reducing our decumulation rate in the case of a market downturn if needed.
Still getting used to Medicare here, so green bananas don’t give me pause (although I do ladder them, creating a mix of maturity levels :-) Lessee - summer plans. Well, last week I bought a second motorcycle specifically for doing track days on, and today I head out to the track for my second track day on it. (Talk about spending the kids’ inheritance…) We’re heading back to the Midwest in June for a week or so to visit with my sibs and celebrate my sister’s 50th anny. Then DW is continuing on to England to visit her mum and sister there. Meanwhile I’ll go motocamping with my gang for a couple of days. In August I’ll head out to Boston to visit my daughter and grandkids for a week. Somewhere in there we’ll be booking our trip to Japan in January with our ski club, along with an additional week or two of skiing and touring on our own after the week with them. Go go go.
Hello Ed - sounds like you and your wife have done the hard work of building a nest egg that gives you peace of mind and the confidence to make that big step into retirement - invest, spend, enjoy. A fellow frugalista myself, I understand well where you’re coming from regarding your hesitance to “let the brakes off” and start spending more freely. One of the disadvantages of retiring healthy and planning on a 30-year or longer retirement is the lack of a sense of urgency around getting on with it. I retired at 58 and my 8 years younger wife quit when I was 63. Since then I found a group of retired guys that meets for lunch monthly; and some of them go on a weekly bicycle ride. I’m one of the younger ones - most them are in their 70s and we have a few in their 80s. The one thing I hear repeatedly when I tell them about a trip we’re planning, or relating tales from one we just finished is how wise it is of us to do as much of this as we can now, while we’re still interested and have the energy to do it. They all pretty much say the same thing - it goes fast and the day comes when you’re not able or no longer up for those adventures. We only have so much time - that’s why you decided to take a step toward freedom from others telling you how to spend your time. I hope you’re able to lean into the spending and exercise that muscle. Denying yourselves now that big trip, nice car, expensive bike, giving with warm hands, etc etc is potentially a recipe for future regret. (For more on that, read about the King Tut Problem - you don’t want to be buried with your gold!).
Anything less than 0.1% is considered excellent for the entire portfolio. That has been and continues to be my target. We’d be at 0.11% except for this private stock position which is throwing off 10% fixed and compounded daily, so it’s worth giving up a few bps for that level of return.
Comments
That spaghetti dinner went up quite a bit faster than inflation - should’ve only cost $7-8! We’ve had a rolling five year bond ladder in place for three years now. Initially we focused on buying US Treasuries/STRIPS on the secondary market through our brokerage. We did mix these with MYGAs (multi-year guaranteed annuities), which are a CD-like instrument sold by insurance companies. We have slowly migrated away from the Treasuries and now four of the five remaining bond ladder rungs are MYGAs, averaging around 5.5% fixed interest, with no additional costs. Current rates on 5-year MYGAs are running at 6-6.3% fixed. These can be bought directly from A-rated insurance companies or through brokers like stantheannuityman.com where I’ve purchased all of ours. The reason I like MYGAs over Treasuries is there’s no annual OID (original issue discount) tax due to the IRS every year, and there’s no interest rate risk. Before you dig in your heels and scoff - “I will never buy an annuity” - I’d encourage you to check these out. They’re something very different from a traditional annuity. What you see is what you get. And if you are interested in setting up a TIPS ladder, there’s a dead easy way to do that at tipsladder.com.
Post: Inflation Hedge
Link to comment from August 29, 2026
While it may be true that many retirees fear running out of money, I’m less convinced that “most” do. For instance, survey data cited in this article (https://finance.yahoo.com/markets/articles/38-retirees-underspend-not-fear-133000039.html) shows that 38% of retirees actually fear underspending—something I’ve been hearing more about the past couple of years. I ran into this issue myself when we first retired. A couple of years ago I discovered risk-based spending guardrails (RBSG), and it was an immediate “aha” moment, answering the two questions I’d been struggling with:
- How much can we safely spend?
- What are the chances we’ll need to change that amount?
Instead of obsessing over a Monte Carlo “probability of success,” RBSG tells us the likelihood that our spending will need to change—either up or down. Combined with a bond ladder covering our fixed expenses, it’s given us a lot of confidence. Four years into retirement, we’re spending twice what we did while working, enjoying the retirement we envisioned, and without the anxiety about spending that seems to afflict so many retirees.Post: For most retirees, the greatest fear is not death—it is running out of money before they die.
Link to comment from August 8, 2026
It’s interesting to see how people are invested. I think it would also be helpful to include life stage or current age, as I noticed some commenters did not appear to have any bond/fixed positions in their AA, while others did. We’ve been fully in decumulation mode for four years of a 42 year plan with 38 years to go. Tax Class Equity Fixed ======================= Tax Deferred 53% 47% Tax Exempt 57% 43% Taxable 60% 40% ------------------------------------------ Total 57% 43% The above is tilted toward fixed due to:
- a 5-year bond ladder (four MYGAs and a Treasury Bond)
- the cash value of my wife’s pension
- a private equity preferred stock position throwing off a fixed dividend, all of which are illiquid.
If I include only the portion of our portfolio that is invested in traditional stocks/bonds (mostly ETFs), then it looks like this: Tax Class Equity Fixed ======================= Tax Deferred 55% 45% Tax Exempt 100% 0% Taxable 92% 8% ------------------------------------------ Total 72% 28% Equity is divided 3/4 domestic (mostly VTI), 1/4 international. Fixed is mostly BND and STIP.Post: What’s in your portfolio ?
Link to comment from June 20, 2026
Just seeing this now, after reading you’re third article about this today. I’d like to share my brief thoughts on the second question you posed here, “why aren’t financial planners reaching those who need it most?” To me it’s pretty simple: lack of financial literacy among their clients; and incentives for planners are mis-aligned with the desired outcomes of their clients. This is particularly acute for retirees who are in the decumulation stage. AUM planners make their money by keeping asset levels high (and growing). This works great during the accumulation stage, as working people are focused on their jobs, careers and families. They don’t have the time or inclination to learn about personal financial management, so here a planner can help them at least put in place a plan that will lead to the right balance of saving while allowing enough spending to enjoy the journey. Retirees, though, pose a much more challenging problem. They’re faced with 30 years or more of decumulating their portfolios and navigating around the myriad pitfalls that could derail them along the way. As near as I can tell, planners as a group and planning as a profession are doing a lousy job of offering real help here. Of course there are exceptions, but in my opinion their profession is not set up to address this extraordinarily difficult challenge.
Post: The Quiet Failure of Good Advice
Link to comment from June 13, 2026
Hello Javier - just found your followup post to this one, wherein you succinctly summarize the key insight: financial planning, when done well, fades into the background right along with thoughts about spending money, with the focus shifting to living the life one has chosen. I love this. And I’d love to hear more about the tool you’re building. I went full DIY a couple years ago, using the Income Laboratory platform to do my own decumulation planning. It gives me 90+% of what I need to spend confidently and not worry about under- or over-spending during our anticipated 35-40-year retirement plan. Let me know if you’d like to connect - would love to learn more about what you’re working on - and possibly collaborate with you on it.
Post: Reflections on a Quiet Failure
Link to comment from June 13, 2026
A few years ago I started investigating bond ladders for SORR protection, and started looking at TIPS and other bonds and bond-like products (CDs and MYGAs) to build one. Buying TIPS, either from the Fed or on the secondary market, can be a bit daunting. I found a great web-based tool that does the heavy lifting for you. https://www.tipsladder.com/ I first learned about this on Bogleheads. As far as I know, it’s a hobbyist-maintained toolkit and website.
Post: Beyond Bank Accounts
Link to comment from June 13, 2026
We’ve been using a four-bucket set up for about two years now and really like the way it helps me spend confidently and not worry about sequence of returns risk. My first bucket is a cash bucket, which is in effect our checking account. This is how we pay bills and spend money. Our second bucket is a bond ladder. It has five year’s worth of the equivalent of our fixed expenses. These bonds (actually MYGAs) are not variable and have a fixed interest rate of around 5 1/2%. Our third bucket is a regular investment portfolio comprising stock and bond ETFs, set up with a 70/30 asset allocation. The fourth bucket is what I call non-allocable. This bucket contains a mix of my wife’s pension fund and some private equity preferred stock that throws off a fixed dividend of 10%. Although these assets are ill liquid, I don’t consider either of them particularly risky. These assets are included in the 70/30 asset allocation with bucket three. With this set up we have a decent level of passive income from the portfolio. That, combined with using spending guard rails and less than 50% of our annual spending budget going to fixed expenses, gives us lots of flexibility in reducing our decumulation rate in the case of a market downturn if needed.
Post: Bucket Strategy
Link to comment from June 6, 2026
Still getting used to Medicare here, so green bananas don’t give me pause (although I do ladder them, creating a mix of maturity levels :-) Lessee - summer plans. Well, last week I bought a second motorcycle specifically for doing track days on, and today I head out to the track for my second track day on it. (Talk about spending the kids’ inheritance…) We’re heading back to the Midwest in June for a week or so to visit with my sibs and celebrate my sister’s 50th anny. Then DW is continuing on to England to visit her mum and sister there. Meanwhile I’ll go motocamping with my gang for a couple of days. In August I’ll head out to Boston to visit my daughter and grandkids for a week. Somewhere in there we’ll be booking our trip to Japan in January with our ski club, along with an additional week or two of skiing and touring on our own after the week with them. Go go go.
Post: Lifetime Supply
Link to comment from May 23, 2026
Hello Ed - sounds like you and your wife have done the hard work of building a nest egg that gives you peace of mind and the confidence to make that big step into retirement - invest, spend, enjoy. A fellow frugalista myself, I understand well where you’re coming from regarding your hesitance to “let the brakes off” and start spending more freely. One of the disadvantages of retiring healthy and planning on a 30-year or longer retirement is the lack of a sense of urgency around getting on with it. I retired at 58 and my 8 years younger wife quit when I was 63. Since then I found a group of retired guys that meets for lunch monthly; and some of them go on a weekly bicycle ride. I’m one of the younger ones - most them are in their 70s and we have a few in their 80s. The one thing I hear repeatedly when I tell them about a trip we’re planning, or relating tales from one we just finished is how wise it is of us to do as much of this as we can now, while we’re still interested and have the energy to do it. They all pretty much say the same thing - it goes fast and the day comes when you’re not able or no longer up for those adventures. We only have so much time - that’s why you decided to take a step toward freedom from others telling you how to spend your time. I hope you’re able to lean into the spending and exercise that muscle. Denying yourselves now that big trip, nice car, expensive bike, giving with warm hands, etc etc is potentially a recipe for future regret. (For more on that, read about the King Tut Problem - you don’t want to be buried with your gold!).
Post: Slow on the Draw
Link to comment from May 9, 2026
Anything less than 0.1% is considered excellent for the entire portfolio. That has been and continues to be my target. We’d be at 0.11% except for this private stock position which is throwing off 10% fixed and compounded daily, so it’s worth giving up a few bps for that level of return.
Post: Investing Fundamentals: A Simple Guide for Beginners
Link to comment from May 2, 2026