Proposed Portfolio
This is the portfolio that I am using with a slightly different allocation (more bonds). Rick Ferri over at Bogleheads calls this the Core Four (link below). Please feel free to crique. As a person with a 401k at Vanguard, she may have some unique funds which she is definitely fine with retaining if they are worth keeping, though I am not sure if any of those exist in the list above.
http://www.bogleheads.org/forum/viewtopic.php?t=10413#p125261
Fund | Allocation | Type | Notes |
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) | 36% | Stocks | Domestic Index |
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) | 18% | Stocks | International Index |
Vanguard REIT Index Fund Admiral Shares (VGSLX) | 6% | Stocks | REIT |
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) | 40% | Bonds | Domestic Index |
| 100% | | |
Thank you for your time and assistance. Please feel free to ask any questions as well.
You're proposed portfolio is pretty much what I would have suggested. To me, her current portfolio has too many funds. Simplifying that into a few index funds sounds ideal. Even a 3 fund portfolio would do (no REITs).
I would assume an automatic monthly withdrawal would be the easiest way to withdraw (since most people budget per month). But if she was willing to make manual withdrawals each month (or quarter), she could re-balance with each withdraw.
For example, I'm re-balancing my wife's HSA with each monthly deposit ($275) I make. I set up a document in Excel that tells me what the allocation of her next deposit should be. Here's what my spreadsheet looks like (I just added the bond fund, which is why it's current balance is $0):
You could try to set up something similar for her where she basically just withdraws from the funds that are above their desired allocation. But depending on how big the 401k is, how much it moves each month/quarter, and how big the withdrawals are, more re-balancing might be needed. So a fixed monthly withdrawal from each fund may just be a lot easier with quarterly or yearly re-balancing.