No. of Recommendations: 4

You did not say if you were currently retired or not so I will assume not.

Have you examined your spending/expenses closely? I use this as a first step. If you look at the expense side based upon what you spend now vs what changes might happen in retirement, you will have a much better picture of your income requirement.

If the above places your total retirement income over (hopefully well over) your expenses, it would change the need for your savings.

Using $150K, the standard 4% rule would make $6,000 available for withdrawal the first year. Using a more conservative 3.5%, the number would be $5,250.

If this money is needed for your living expenses, it should be held as cash during the year you need it. The next 4 years worth, $25K to $30K would be in something with lower volatility like and intermediate bond fund/ETF.

The beyond 5 year can be a mix of 5 to 10 funds/ETFs that cover the main bases: US large cap, mid cap and small cap stocks and some world/Europe/Asia/South America funds/ETFs.

Since you are 5+ years out, I would just put 1 year in the bond portion to start. A year ahead, look at what you have and trim a slice from the stuff that has moved ahead the most and place a second year into the bond bucket. Continue each year until you hit the point where you will need the cash. If the markets are doing well, I take some profits to use for cash and let the rest ride.

Once you hit the point where you will need this each year, look at the market conditions. If the stock funds are getting hammered (think 2008), leave them alone and draw your cash from the bonds. You should be able to do that for 4 years without touching the stuff that is beaten down. We made it through the 2007 through 2009 without any required stock sales (we were 90% funding retirement from savings at the time.).

Make a plan for yourself that you understand and follow it. Do not panic sell when markets go down. Most times when people do that they miss the swing up and lose money in the process.

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