maconomist wrote: Sun Nov 02, 2025 12:38 pm
If I hold 100% Stocks in Taxable now, then I retire early and there’s a major market downturn, I will not have a stabilizing factor and less ability to generate income during these bridge years from my accessible (taxable) accounts.
This viewpoint looks at the Taxable account in isolation rather than all accounts as a unified portfolio. Stability = volatility = risk to me for an investment portfolio. The most tax-efficient approach would be to hold 100% stocks in Taxable and hold you bonds only in Trad Tax-Deferred (that’s where you’re getting your “total” portfolio volatility-control from). Yet your draw from Taxable has to support your living expenses until age 59.5 when you can tap the Trad & Roth accounts without early withdrawal penalty. So the size of the Taxable account in $ is what matters, not the AA of just that one account (the unified AA across all accounts does matter of course).
While you cited your est. expenses at $100K/yr, you didn’t say how big your Taxable, Trad, and Roth account sizes were. Just as an example, for a 5y bridge (retiring at 54.5) then you’d need $835K in Taxable to have a 97.1±0.5% chance of making it to age 59.5 without running of of Taxable funds. In the low likelihood that you do, you could always tap any 401k you have (Rule of 55), or setup a 72t/SEPP on a Trad IRA, or take contributions (not earnings) from a Roth IRA as return of your contributions are available to you at any age without penalty as long as the first ever Roth IRA is at least 5y old.
Having Taxable at 100% stocks means you’re probably paying 0% LTCG ($96.7K of that $100K draw is at 0% LTCG, but the standard deduction of $31.5K eliminates any tax owed). You could alternatively build a 5y TIPS ladder and have 100% chance of not running out early, but https://tipsladder.com suggest the initial cost would be $1.67M compared to $835K in stocks and the taxes paid would be higher (Engaging Data: Tax Visualization suggests $7.7K/yr taxes on $100K TIPS income vs $0.00 taxes on $100K LTCG from stocks; $31.5K standard deduction for both cases). So either less to spend with TIPS after taxes or spending even more ($1.8M vs $1.7M) to build the ladder with tax-cost included.
That 97.1% success rate for $835K of stocks drawing $100k/y (adjusted upwards by +3%/yr per Trinity Study’s const-$ strategy) is from my Withdrawal Monte Carlo model, linked below the image along with other models that don’t require Excel. I highly encourage you to look at your bridge in the TPAW Planner (uses an Amortization Based Withdrawal vs const-$), as that’s likely the most comprehensive free model out there and it’s reviewed by professors in finance/economics.
Data and Models I use for Monte Carlo:
NYU Data Set 1928-2017 with Model Fits
Withdrawal Monte Carlo <- Image above
You’ll need a MS Excel license; download to your local machine and enable macros (required for the 1,000 random trials and results aggregation).
I’m using my own model as I like to know what’s under the hood, but there are other models I like that have public facing website interfaces:
TPAW Planner (probably most comprehensive, supports ABW), <- Try this one!
Portfolio Visualizer’s Monte Carlo (also their Financial Goals model is nice),
Engaging Data: Rich, Broke, or Dead, (uses historical returns in a cycle for your retirement duration), and
FireCalc (also historical data, but lots more inputs to tailor to your situation).
Paid models sometimes cited here include Boldin (formerly NewRetirement) and Pralana Gold as well as many others (just citing these not recommending for or against on any of these).
Standard caveats about simulations apply (those using 30y rolling periods suffer from small sample size for estimating a binomial proportion as the success rate and those using a large sample size as random draws from a distribution assume the distribution is constant over the withdrawal period; all sims suffer from assuming the future looks like the past in one way or another).
“All models are wrong, some are useful.” – George E. P. Box
