maconomist wrote: Fri Oct 31, 2025 2:45 pm
Is this a sensible plan? Or anything else I should consider?
General approach seems fine. You might want to read up on these two Wiki topics:
1) Tax-Efficient Fund Placement suggests that Taxable & Roth accounts be 100% stocks while all your bonds be held in Traditional tax-deferred accounts. If your Trad accounts are already 100% bonds and you still need more to meet your total portfolio bond allocation, then consider tax-exempt bonds in Taxable.
2) Wash Sales to avoid complications in tax-filing, it’s best not to hold the same ticker symbols (or even “substantially identical” funds with different symbols per IRS lingo) in two different accounts. Typically this means if you have VTI in His Taxable, then you do not hold VTI in any other accounts (including Her Taxable). Examples of good & bad choices to avoid wash sales across Taxable and tax-advantaged account types (TSM = Total Stock Market).
maconomist wrote: Fri Oct 31, 2025 2:45 pm
How do you think about Stocks vs Bonds split if you’re uncertain about early retirement desire or timing?
I think about AA as a time-varying plan from now until I die. That plan, for me, does not include a seismic shift right at my retirement date, it’s been 100% stocks up to age 55, then a gentle slope down (following a tailored Van Retirement 2040) and it will level off somewhere between 70/30 and 60/40. Then at age 85 I’ll either make a 10y ladder of TIPS (planned life-expectancy to 95) or buy a 10y SPIA/MYGA (if I no longer have the mental acuity to construct & manage a bond ladder).
Subsequently, being “uncertain” about the specific retirement date had nothing to do with my AA, but that’s because I was 100/0 while working full time (no choices to be made) and starting gliding down when I transitioned to part-time consulting (another 7y after full-time work). That may not be relevant to your situation, but hopefully it offers some insight as to how to plan (e.g., use a TDF glide-path as a template and tailor it to your risk-tolerance, which is what I did). In particular, if you’re retiring early you probably want a higher stock concentration than if you were retiring later (the duration of your withdrawal phase can drive the initial draw and balance multiplier for a const-$ strategy like the Trinity Study while VPW and the TPAW Planner‘s ABW allow for a higher initial draw than the Trinity Study in exchange for occasional pay-cuts due to market down-turns).
Table for 4% Rule Adjusted by Withdrawal Period (derivation link)
Vanguard’s Target Date Retirement Glide-Path Design is a also a good starting point for choosing an AA. The choice of a specific TDF year should not solely be based on age, but could be ahead or behind your expected retirement age based on your personal risk-tolerance.
maconomist wrote: Fri Oct 31, 2025 2:45 pm
For the Bonds portion of my taxable accounts, should I consider non-California Municipal Bonds at the expense of tax efficiency but for the benefit of diversification and stability? e.g. other state municipal bonds, US TIPS, corporate bonds, foreign bonds
I’d probably make that decision based on after-tax yield (or alternatively tax-equivalent yield). You didn’t say what your Fed & CA tax rates are but let’s assume 37% Fed and 13.3% CA (you can adjust these for the BND and VTES calculations below).
BND – Van Total Bond Market 30d SEC yield = 4.08% x (1 – 37% Fed – 13.3% CA) = 2.03%; Avg Dur = 5.8y
VTES – Van National Tax-Exempt 30d SEC yield = 2.53% x (1 – 13.3% CA) = 2.19%; Avg Dur= 2.6y
VTEC – Van CA Tax-Exempt 30d SEC yield = 3.14%; Avg Dur = 6.8y
VTEC is clearly the highest after-tax yield, but it does carry higher risk than BND or VTES (single-state risk of default is higher than national default risk or national+corporate default risk) and the average duration of 6.8y is higher than for BND or VTES, so more sensitivity to rate changes (i.e., higher volatility). I’d probably go 60-70% VTEC and 30-40% VTES, but up to you… pick a criteria and stick with it.
I probably would not hold municipals from other states (won’t you get taxed on that in CA anyway?), but I would consider int’l bonds (e.g., BNDX) in tax-deferred accounts for diversification away from US-only debt (Van’s TDFs and LifeStrategy funds use int’l bonds).
maconomist wrote: Fri Oct 31, 2025 2:45 pm
Are bond ladders and other more complicated instruments relevant at this stage, or should I keep it simple with ETFs?
Some people love bond ladders at any age, but to me it’s extra work since you are managing your own bond fund (work that I’m glad to pay an expense ratio of 0.10% or less to a pro bond fund manager). To me a ladder of individual bonds (specifically TIPS, not T-Notes or T-Bonds) makes the most sense when you’re around 10-15 years of remaining life-expectancy and then you build a ladder once that is duration-matched your planned end-age (thus only construction, not management to replace rungs unless you live beyond your planned date). I’m thinking I won’t have the cognizance to do that and will likely just buy an 10y SPIA. I don’t think an individual ladder is particularly valuable prior to age 75-85, but that’s just my opinion (a ladder makes send when you’re duration matching to a specific spend-date at any age, like buying a car or a house on a given date).
Bond Funds vs Ladders
Individual Bonds vs Bond Fund – A Wealth of Common Sense
Bonds—Ladder or Fund? TIPS or Nah? – Barron’s Streetwise Barron’s Podcasts
The Dilemma That Isn’t: Bonds versus Bond Funds – Articles – Advisor Perspectives
The Pros and Cons of Bond Laddering | Morningstar
Rolling ladders versus bond funds – Bogleheads Wiki
Vanguards Note to Advisors on Bonds vs Ladders
In the Vanguard discussion the paragraph on the Principal at Maturity Myth is specifically worth a read, even if you ignore all the other discussion links.
