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Needs met stay 100% invested?
Posted on 2/12/26 at 1:05 pm
Posted on 2/12/26 at 1:05 pm
If needs (current comfortable lifestyle) are 100% met by pension, SS, passive income etc, ar what point do you pull some of your assets out of equities into safer assets or do you stay 100% equities?
If nest egg is there to fund wants, lifestyle improvements, and inheritance. Losing 50% to market downturn would be emotionally devastating but passing up gains and building legacy fund would be foolish.
If nest egg is there to fund wants, lifestyle improvements, and inheritance. Losing 50% to market downturn would be emotionally devastating but passing up gains and building legacy fund would be foolish.
3
Posted on 2/12/26 at 1:15 pm to TorchtheFlyingTiger
Meet in the middle if you prioritize more opportunity. Easy to get emotionally ahead of ourselves when we've hit our intended goal but think there's more to be had.
I'd set aside enough to be conservative but still have exposure to some growth. May not be the sexiest move, but it's not going to give you that haymaker of a 30%-50% dip based on your equity selection and lose all that valuable opportunity cost/time.
Then for the rest, you continue to ride out the adrenaline swings knowing this is your "play money". There's a lot of money rotation going on right now so I believe there are buying opportunities in a lot of areas that will have nice returns in the near and long term future. Good luck
I'd set aside enough to be conservative but still have exposure to some growth. May not be the sexiest move, but it's not going to give you that haymaker of a 30%-50% dip based on your equity selection and lose all that valuable opportunity cost/time.
Then for the rest, you continue to ride out the adrenaline swings knowing this is your "play money". There's a lot of money rotation going on right now so I believe there are buying opportunities in a lot of areas that will have nice returns in the near and long term future. Good luck
Posted on 2/12/26 at 1:40 pm to TorchtheFlyingTiger
I'll go with the bucket approach: a short term bucket, an intermediate term bucket, and a long term bucket.
The long term bucket is all stocks. The short term bucket is all cash and money market. The intermediate term buck might be bonds and stocks.
Short term is two years. Intermediate is 3-8 years after that. Long term is everything else.
Then, if you are really well off, but you don't want to crank up those buckets, maybe you come up with some new ones: a speculative bucket, an inflation bucket, a SHTF bucket, inheritance bucket, etc.
Your allocation task each year is to fill up the short term bucket again. You have to choose which buckets it's coming from, and then how to refill them.
The long term bucket is all stocks. The short term bucket is all cash and money market. The intermediate term buck might be bonds and stocks.
Short term is two years. Intermediate is 3-8 years after that. Long term is everything else.
Then, if you are really well off, but you don't want to crank up those buckets, maybe you come up with some new ones: a speculative bucket, an inflation bucket, a SHTF bucket, inheritance bucket, etc.
Your allocation task each year is to fill up the short term bucket again. You have to choose which buckets it's coming from, and then how to refill them.
This post was edited on 2/12/26 at 3:03 pm
Posted on 2/12/26 at 2:06 pm to CharlesUFarley
Definitely need to implement that short term spend bucket. Having difficulty shifting out of accumulation mindset and that would help. Only problem is I want to do large Roth conversions and that's going to consume any excess and additional spend would be in artificially higher brackets while converting.
Posted on 2/12/26 at 3:02 pm to TorchtheFlyingTiger
quote:
Only problem is I want to do large Roth conversions and that's going to consume any excess and additional spend would be in artificially higher brackets while converting.
I beat the Roth thing to death in my mind all the time. I go back and forth on it.
What do you mean by "consume any excess"?
Posted on 2/12/26 at 3:16 pm to CharlesUFarley
Excess meaning any unspent income from pension dividends etc. I'll have to use that and liquidate from taxable to pay tax on the Roth conversions. So, any additional spend would be at higher tax rate than usual in a non conversion year.
Posted on 2/12/26 at 3:33 pm to TorchtheFlyingTiger
I plan to have 2 years of living expenses in cash.
The rest in stocks. If stock market is up 4% or more collect money from stocks for living expenses for the year.
If down 4% or more take living expenses from cash.
Replenish cash in good stock market years.
The rest in stocks. If stock market is up 4% or more collect money from stocks for living expenses for the year.
If down 4% or more take living expenses from cash.
Replenish cash in good stock market years.
Posted on 2/12/26 at 8:26 pm to TorchtheFlyingTiger
quote:
Excess meaning any unspent income from pension dividends etc. I'll have to use that and liquidate from taxable to pay tax on the Roth conversions. So, any additional spend would be at higher tax rate than usual in a non conversion year.
I look at this sort of thing often, considering how much to put in 401K, how much Roth or Trad, how much to convert to Roth IRA from my Rollovers, how to best balance out a Trad 401K so that I can still do a Roth IRA contribution, or whether to scrap all that and just max out Roth Conversions.
If I think about it long enough, the math starts to look the same regardless. No matter where money originates, it's taxed at prevailing rates one way or another. We know what they are today, and don't know what they will be tomorrow.
Will RMD's be a bad deal? Morningstar just did an article that said they were a fairly safe way to draw down your accounts. At any rate, when calcing it out, RMD's are going to be your withdrawal rate after you hit 75, so all this 4% rule stuff is really about what you can do up until then, but the math on taxes is probably nearly the same.
Posted on 2/12/26 at 9:42 pm to CharlesUFarley
I dislike the idea of converting at a higher rate than my current marginal rate (12%) especially since it bumps my LTCG into 15% instead of zero.
But then I consider it is just one year (or several if I make additional conversions) instead of years of higher tax later due to RMDs, widow's penalty, IRMAA, etc. Not to mention I suspect rates wont get lower and may very well increase and SS is potentially going to be means tested.
I'd rather start spending a bit more now but worry if I wait I will miss my window to convert. Then there is the question of convert to top of 22% which will take years to make enough of a dent or 24% bracket and associated dilemma of where to get the cash for tax on larger conversion since selling from taxable in conversion year will cost 15% LTCG.
Need to pick a software solution to model conversion scenarios before I let another year go by.
But then I consider it is just one year (or several if I make additional conversions) instead of years of higher tax later due to RMDs, widow's penalty, IRMAA, etc. Not to mention I suspect rates wont get lower and may very well increase and SS is potentially going to be means tested.
I'd rather start spending a bit more now but worry if I wait I will miss my window to convert. Then there is the question of convert to top of 22% which will take years to make enough of a dent or 24% bracket and associated dilemma of where to get the cash for tax on larger conversion since selling from taxable in conversion year will cost 15% LTCG.
Need to pick a software solution to model conversion scenarios before I let another year go by.
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