Hello again,
I wanted to bump this topic because I've been searching about a bit more, figuring that there are surely others out there who might be considering a glidepath-style approach for their starting retirement asset allocation, but who then naturally hit the question of how, when and over how long to reach that AA. Kind of a pre-retirement glidepath, if you like.
At the top of this page in a post from Bogleheads.org, 'trophy_husband' raises my point exactly. He's looked at the McClung research, is looking at the 'Prime Harvesting' approach, and is now thinking about how to adjust from an aggressive accumulation stage AA to that of a more bond-heavy glidepath starting point for retirement:
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=192105&start=400And the replies to that post on that same page gave me a few leads to consider. Some of those include:
- go ahead and just sell and then withdraw from stocks in taxable, but then offset that sale within tax-deferred accounts by selling bonds and buying stocks there
- in the last years leading up to your RE date, stop reinvesting dividends and interest in stocks in your taxable account. Divert that money into bond purchases to start building up that portion of your AA.
In my own case, I've looked at my AA across my entire portfolio (let's say 70/30), drawn up a new target AA for the start of RE (55/45), then compared the difference in target bond amounts vs. my current bond amounts. I need to "make up" that difference between now and my RE date, so I'm now looking at how long it would take if I start 1) divert dividends from reinvestment to instead purchase more bonds, 2) re-direct my regular paycheck contributions more toward bonds than stocks, and 3) plan on investing the net of any future bonuses, which I can conservatively estimate but not completely count on, toward bond purchases.
All of that taken together appears do-able over the next several years, and all hopefully without outright selling stocks in taxable in order to increase my bond AA in time for the start of RE. The key thing now is that I need to be pretty sure about this RE date as this is would be the beginning of my glidepath of sorts toward RE at which point I'll begin the real glidepath (be it Prime Harvesting or some variation on that) in order to try and shield myself from sequence of returns risk in the first decade or so of retirement.
So there are some more details to chew on in case anyone would like to poke holes in all of this, raise other issues or considerations that I'm missing or anything else you like. I'd love to hear others' thoughts who might be considering similar plans having to do in any way with adjusting one's AA from a more aggressive accumulation angle to that of a more preservation angle. I'm also thinking about asking 'Big ERN' from the EarlyRetirementNow blog if he might do a follow up piece on this topic as he's covered a lot of material concerning glidepaths.
Thanks, everyone.