No. of Recommendations: 1
Honestly, if you have between $900k and $1 million in your 403(b), you've got more options then they're going to make it appear that you do, provided that your living expenses aren't out of this world. With that kind of a nest egg, I really do like the idea of subscribing to the "bucket" approach that I have read about on Morningstar and other places. Basically, you act as your own personal endowment, with say 4-5% of your portfolio remaining in short-term securities and cash each year (1st bucket), which you can take as income for that period. The rest of the portfolio is invested in buckets of decreasing liquidity/longer duration/maturity (2nd bucket should be short-term bonds, 3rd bucket intermediate-term issues, 4th bucket long-term bonds, 5th bucket index funds/stocks, and 6th bucket private equity/real estate, etc.)

Obviously, the exact asset allocation all depends on your own unique financial situation, but if you've got a big enough nest-egg, as you appear to have, the aforementioned approach is more advantageous than simply getting an immediate annuity in the current low-rate environment. If you were to adopt the strategy, I strongly suggest purchasing individual bonds rather than funds, as you will need to essentially ladder bond maturities to provide predictable revolving income (bond funds' duration vary constantly and make that a messy proposition).
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.