Help with decumulation of bonds and stable value.

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vtMaps
Posts: 273
Joined: Tue Oct 14, 2008 12:05 pm
Location: central Vermont

Help with decumulation of bonds and stable value.

Postby vtMaps » Wed Jan 11, 2017 3:45 pm

Our (myself & DW) ISP calls for 30/70 as we begin retirement. We are spending down IRAs and doing roth conversions for a few years while we delay SS. Virtually all of our investments (mid six figures) are in our IRAs.

Our 70% bond allocation is actually 19.4% FSITX, 6.8% TIPS (individual bonds, not a fund), and 43.1% TIAA traditional (stable value). The TIAA Traditional is liquid and of the vintages with a minimum 3% rate. We can sell all or part of it, but cannot rebalance back into it with the same guaranteed minimum rate. (also, we cannot convert it to Roth without losing the 3% minimum rate)

Our ISP does not specify how to decumulate our bond/stable value holdings. We have fairly low risk tolerance, and believe that our social security and stable value will provide for a modest retirement. We hope that our equities and bonds will allow for a more comfortable retirement.

If we sell bonds, we are selling while they are down… not something we ever did during accumulation, and certainly not good from a 'sequence of returns' perspective. If we sell stable value, we are selling part of our guaranteed modest retirement. So, the question is: what to decumulate this year?

Thanks, in advance for your thoughts.

—vtMaps
The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true. --James Branch Cabell

livesoft
Posts: 55289
Joined: Thu Mar 01, 2007 8:00 pm

Re: Help with decumulation of bonds and stable value.

Postby livesoft » Wed Jan 11, 2017 3:48 pm

Bonds are down? They are up 1% this year. Your bonds are down from what point? The highwater mark or something else? Aren't they up for the past 12 months?

I sell my bond fund shares regardess of whether they are up or down or sideways when my asset allocation calls for it. Isn't that what everybody does?

So just sell whatever maintains the asset allocation that you want to maintain whether things went up or down. So I'd sell FSITX and TIPs if I was you. And I would sell a little bit every month or as needed and not all at once at the beginning of the year.
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vtMaps
Posts: 273
Joined: Tue Oct 14, 2008 12:05 pm
Location: central Vermont

Re: Help with decumulation of bonds and stable value.

Postby vtMaps » Wed Jan 11, 2017 4:03 pm

livesoft wrote:Bonds are down? They are up 1% this year. Your bonds are down from what point? The highwater mark or something else? Aren't they up for the past 12 months?

Your points are well taken, thanks. I only look at my portfolio quarterly, and bonds look to be down since my 2nd and 3rd quarter statements.

--vtMaps
The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true. --James Branch Cabell


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