oreozing.blogg.se - Retirement drawdown

#RETIREMENT DRAWDOWN UPDATE#

In addition, the overall size of the pie has increased over the same timeframe, with our net worth increasing 45% from 2017 to 2021 (thanks, bull market), in spite of the fact that we’re no longer contributing to our investments.

Roth increased from 24% to 37% of our investment portfolio.

You can see the impact in the pie charts above, summarized below: To rectify that and minimize our chances of getting punished by the required minimum distributions when we turn 72, we planned on doing annual Roth conversions from our tax-advantaged accounts.įrom the original strategy: “this will provide an ideal opportunity to pull heavily from our tax-advantaged funds and convert them into after-tax and/or Roth at the lowest possible tax rate.”Īs I wrote in How (And Why) To Execute A Before-Tax Rollover Into A Roth, we’ve done Roth conversions every year since 2018. Like many Baby Boomers, we have too much money in our tax-advantaged accounts, a legacy of the Roth not being an option in our 401(k) during many of our working years. Tax Allocation: Convert Before-Tax Into Roth Since we expect we’ll sell that home at some point in the future, we’re continuing to “count it” in our investment holdings, unlike our primary home, which is excluded. This reflects our shift out of bonds and into real estate when we purchased a second home near our daughter in Alabama. In addition to growing our equities, we’ve also increased our alternative asset class from 6% to 15%. I outlined the steps we were taking in my post at the time, A Strategy For Buying Into A Bear Market, which included the following chart representing February to April 2020 (red circles are dates we moved money from cash/bonds into stocks, and the percentage is what percentage of our net worth we moved): The S&P 500 hit 2,237 that day, which represented the low point in the market. We took advantage of the COVID downturn to buy during the bear market, with our biggest move into equities coming on March 23, 2020. We have increased our stock exposure from 48% to 57%, which is in line with what we were targeting. “When there’s a market correction, we’ll likely rebalance a bit back into equities” Each of the elements will be presented in the same sequence as the original drawdown strategy, which means we’ll start with asset allocation.Īsset Allocation: Increase Stock Exposureįrom the original drawdown strategy, I mentioned we were planning on increasing our stock exposure.

#RETIREMENT DRAWDOWN UPDATE#

I’ll also summarize our original strategy, then provide an update with actions taken to date. Today, we’ll revisit our original retirement drawdown strategy and analyze how it’s worked since our retirement in 2018.įor consistency, I’ll present each of the charts from the original drawdown strategy, with updates showing our current status as of 12/31/21 for each. It’s a huge shift in your investment strategy, and it’s not something you should approach without a plan. Revisiting Our Retirement Drawdown Strategyĭeveloping a strategy for managing your transition from accumulation to drawdown is critical. I hope you enjoy reading it and trust you’ll learn some things that you can apply to your situation.

I enjoyed writing this post and updating the original charts from our drawdown strategy. What changes should we make going forward?.In addition, we’ll review our strategy to see what changes we should consider now that we’re 3.5 years into retirement. Just like in school, an A is excellent and an F is a failure. Below, I’ll review each section of our original drawdown strategy as well as give our performance a grade. In today’s post, a look back at how that strategy has actually worked over the past 4.5 years.

In this post, originally from The Retirement Manifesto, we examine with the author how well his carefully constructed drawdown strategy fared after three years of retirement, and plan for the future as well.Ī year before I retired, I wrote Our Retirement Investment Drawdown Strategy as our plan for how we were going to manage the transition from Accumulation Phase to Drawdown Stage in retirement. How much do you withdraw? From what account do you take it? How do you pay only as much tax as you need to, without leaving a tip?

But when the retirement rubber meets the road, there are a lot of mechanics to figuring out how you’ll actually draw off of those savings that have hopefully compounded over time.