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URL:  http://boards.fool.com/if-the-stock-market-drops-40-your-lifestyle-30908482.aspx

Subject:  Re: Retirement Needs Formula? Date:  10/6/2013  12:48 AM
Author:  pauleckler Number:  73453 of 76237

if the stock market drops 40%, your lifestyle next year will change dramatically.

The traditional TMF way to deal with that problem is to keep 5 yrs living expenses (only 20% of assets) in a laddered maturity bond portfolio. You live off the interest and the one bond that matures each year. In normal years you sell 4% of assets and buy a new 5 yr bond. If the market crashes, you defer replacing the bonds until after recovery.

This gives you a buffer that should cover most market dips.
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