Let's follow up on Saturday's post about a portion of a a newly retired 65 year old's portfolio that is in a taxable account. The idea is he is willing to drawdown or even deplete this piece of money while waiting until 70 to take Social Security and/or take IRA distributions.
Here's a version of what we talked about in that post.
The first result starts with $300,000 and assumes $30,000 comes out each year.
As I mentioned on Saturday, I thought a normalish allocation to plain vanilla equities has a decent chance of outgrowing the erosion of the YieldMax allocation. The "yield' of the portfolio was around 10%.
The second version assumes taking $60,000 per year. Part of the idea if I wasn't clear is the willingness for some depletion of the starting balance of $300,000. The bigger goal is that the money lasts for what he needs, the five years from 65 to 70 even if most of it is exhausted at 70 years old. Anything leftover could be thought of as found money. After two years with a 20% withdrawal rate he still has $278,000.
The portfolio lacks any sort of crisis alpha or defense. If one of the five years in question sees a huge market decline, this portfolio probably will go down in a similar fashion. If the market does have a hideous decline in year three which is where we are in relation to the backtest, being able to still pull out $60,000 until 70 seems plausible.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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