Drawdown Strategy Revisited After 3 Years of Retirement

We spend a lot of time on this site thinking about saving: putting a lot of money away, making sure we put it away in the right places, figuring out how much risk we’re willing to take with that savings, and more.

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.

Questions abound. 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?

Revisiting Our Retirement Drawdown Strategy

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From the original drawdown strategy, I mentioned we were planning on increasing our stock exposure. From June 2017: “When there’s a market correction, we’ll likely rebalance a bit back into equities”

Asset Allocation:  Increase Stock Exposure

Grade:  A We have increased our stock exposure from 48% to 57%, which is in line with what we were targeting.  We took advantage of the COVID downturn to buy during the bear market, with our biggest move into equities coming on March 23, 2020.  The S&P 500 hit 2,237 that day, which represented the low point in the market.

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):

In addition to growing our equities, we’ve also increased our alternative asset class from 6% to 15%.  This reflects our shift out of bonds and into real estate when we purchased a second home near our daughter in Alabama.

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