A suggestion, if you haven't already - read through The Safe Withdrawal Rate Series on Early Retirement Now. https://earlyretirementnow.com/safe-withdrawal-rate-series/
Very interesting. He makes the case that including a cash cushion to draw from in times when the market is down is important. You would take from that and replenish once the market is up again.
Another thing to think through during your OMY - the idea that once you've "won the game," should you stop playing? I'm actually dividing my retirement into buckets - roughly a 10-year drawdown bucket invested 30-70 (Vanguard Retirement Income), a middle bucket invested 50-50 or 60-40, depending on the account that should last 15 years, and then the rest at 100% VTSAX. It comes out to roughly a 55% stock allocation overall. I'm guessing that seeing years of decline, especially serious decline, is going to be hard, and this is my way of staying the course. My point - is your 75-25% allocation one you need to retire?
Finally, take a look at these white papers and info from Vanguard on international investing. Not sure if your investments are already including it, but these reports indicate that international helps with volatility - which, again, is something that will help in the draw-down phase. https://investor.vanguard.com/investing/investment/international-investing
That's what I would do in my last year of work - look for ways to reduce volatility & take risk off the table. Would love for you to journal your last year's considerations & decisions.
Good points.
I didn't mention it above, but of my stock allocation, 25% is in international and 75% is in US domestic.
The bucket idea is an interesting one. Do you have separate investment accounts for each bucket?
I will have a few fallbacks if the ERN bad-market-in-early-years scenario happens. 1) I have a big cash allocation, over one year of expenses, not included above; 2) I really do like my profession, so I don't mind going back to work, or taking contract positions for a year or two; 3) I can cut back some, if needed; and 4) I don't want it to come to this, but my wife will still be employed and we could easily survive on her salary alone.
It's all in the same Vanguard account, some in taxable, Roth, & traditional IRA. Some of the conservative cushion is in money market funds, and the rest is in Retirement Income (VTINX). VTINX is in both my taxable and traditional IRA.
My moderate investments are Vanguard tax-managed balanced fund (VTMFX) which is 50-50 and tries to be as tax efficient as possible. That's in my taxable account. I also have Life-strategy Moderate and Balanced Index (VBIAX), both of which are 60-40, in my Roth & traditional IRA.
Finally, I have VTSAX in taxable and Roth.
It's way less complicated than it sounds! Slightly less simple, but something I really love doing, is within the taxable Vanguard account, I do have "sub-accounts" that I have what I think of as Year One, Year Two, and Year Three money, which is the money I theoretically could withdraw those first three years. In actuality, I might take the money from somewhere else. I'm a super compartmentalized person & I'm also worried that I won't freely spend money that I should be freely spending - it's almost the idea of, "Here, spend this," that I am guessing I will need when the time comes.
On the Vanguard forum they talk often of a three-fund strategy. This is my version of it: MMF or Retirement Income; moderate all-in-one fund(s); and VTSAX. Since I'm still contributing, I generally put new investments into my moderate funds, but if the market tanks, I will probably shift my new money investments into VTSAX (buy on the decline).
