Rodethe600 wrote: Thu Nov 20, 2025 10:01 pm
Vinny_in_NJ wrote: Tue Nov 11, 2025 5:00 am
I’ve only been retired about 1 1/2 years and haven’t seen a really bad market yet but my plan is …I have my expenses listed as wants and needs. I am using a guardrails system that has 10% bands, if my investments fall below that 10% I cut my wants by 10%, readjust my base amount and put new 10% bands in effect and target another 10% of wants and so on. I will do my best to not get into needs since at that point it would effect the quality of day to day life.
My projections on our money growth is based on 5% nominal for stocks with a 3.5% interest rate for fixed income with a 4% inflation rate. I am being very conservative because I know that even though the market can produce much higher returns and interest rates are a little higher nobody should count on them being higher. Figuring higher inflation just puts some extra strain on the money situation without really knowing what the future will be. The lower returns and higher inflation is my way of stress testing our portfolio. Higher returns and lower inflation in real life just means we are doing better than planned.
I have a 55/45 AA that gives me fixed income for quite a while. Fixed income is where I am withdrawing from while my stock (ETFs) portion goes untouched. I am building a TIPS ladder as new issue TIPS come up, so far I have 2 – 5 year tips and 1 – 10 year TIPS for 2030, 2031 and 2035 respectively. The TIPS are there for inflation protection, they should help for expenses in the future. Our 45% fixed income gives us about 11 years of withdrawals without taking into account the interest it provides. The ETF portion has grown a lot and at this point we have more than we started with, but that can and will change at some point. We are at the top of the 12% tax bracket with our income and withdrawals that we are doing right now. The interest from the fixed income is offsetting the amount we are withdrawing from our original money. Without the interest our withdrawal rate is around 6% but with the interest it is around 3.5%.
We have Plan “A” in place, my wife is collecting SS and she took it at FRA and I’m waiting for 70 to collect which is in a little under 4 years from now. Plan “B” is for me to take my SS before 70 but after FRA if need be. But I’m thinking that with the guardrails system in place I may not have to go to plan “B”. If I can take SS at 70 our total withdrawal rate should go to below 2%, at least that’s my projections. Once I’m collecting SS I will probably adjust our AA to a little more aggressive but still keep enough fixed income for at least 5 years of income, maybe more.
I’m thinking that with the guardrails system in place, having enough in fixed income to weather out a storm and having a backup plan in case plan “A” is failing we can survive the sequence of return risk.
I really like this post. Thanks
Glad it’s helpful!
With those 10% guardrail bands I should mention that if our money does hit the bottom bands, it has to remain there for a time period of your choosing, I chose 2 months. We almost hit the bottom band in Feb/April? of this year, we missed it by $6K but it quickly went back up. I do track our investments weekly on Saturday, just a quick go to each account and log in how much each has and track it on a spreadsheet. I do a monthly big look over for every position to track our Asset Allocation as well. Gives me something to do on a quiet Saturday morning!
