Cash Withdrawal vs. Index Fund Sale for Expenses

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JDSwim3
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Joined: Mon Dec 07, 2020 5:51 pm

Cash Withdrawal vs. Index Fund Sale for Expenses

Post by JDSwim3 »

Retired about a year ago.

Our portfolio includes 2 years of living expenses in a HYSA (as a safety net if the market excrement really hits the oscillating rotating device).

We take monthly distributions to cover expenses, and have only taken from our total market index fund to date.

When deciding on the source for our monthly income, should we factor just the previous month's return or take a broader YTD or even since inception view?

I guess my real question is when does it makes sense to tap our cash reserve rather than selling losers?

Thank you.
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retired@50
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Re: Cash Withdrawal vs. Index Fund Sale for Expenses

Post by retired@50 »

I'd suggest you withdraw funds from your portfolio in such a way that when you've finished your withdrawal, you've either maintained your desired asset allocation (e.g. 60/40), or moved closer toward it.

Regards,
This is one person's opinion. Nothing more.
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bertilak
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Re: Cash Withdrawal vs. Index Fund Sale for Expenses

Post by bertilak »

retired@50 wrote: Thu May 13, 2021 10:24 am I'd suggest you withdraw funds from your portfolio in such a way that when you've finished your withdrawal, you've either maintained your desired asset allocation (e.g. 60/40), or moved closer toward it.
Agreed.
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ruralavalon
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Re: Cash Withdrawal vs. Index Fund Sale for Expenses

Post by ruralavalon »

Congratulations on your retirement this last year :D .
JDSwim3 wrote: Thu May 13, 2021 9:22 am Retired about a year ago.

Our portfolio includes 2 years of living expenses in a HYSA (as a safety net if the market excrement really hits the oscillating rotating device).

We take monthly distributions to cover expenses, and have only taken from our total market index fund to date.

When deciding on the source for our monthly income, should we factor just the previous month's return or take a broader YTD or even since inception view?

I guess my real question is when does it makes sense to tap our cash reserve rather than selling losers?

Thank you.
You may find that you no longer want or need a 2 year cash reserve.

Age 75, retired just over 10 years. We do not have a cash allocation in our portfolio, we do have a large bond allocation, and normally have only a couple of months worth of living expenses (net of Social Security) in our joint checking account.

To answer your question, my suggestion is to spend from your 2 year cash reserve to cover retirement living expenses.
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