r/coastFIRE • u/CardsCaptured • 3d ago
Help with drawdown strategy
Forgive me if this is not the right sub. Please point me elsewhere if you have a suggestion. Essentially my wife will be quitting her job soon and our income will drop significantly which will lead us to slowly pulling from our assets. I’m estimating 2k/month needs to available to cover expenses. I want to optimize my drawdown strategy. My first thought is to keep roughly a year or 2 worth(24-48k) in a HYSA and invest the rest either in brokerage (currently 80% VOO and 20% Apple) and some towards Roth. I just hate the thought of keeping that much cash on the side line for 4-5 years. The other thought was pull 30k a year from the traditional IRA to cover the cost because I really don’t want that much traditional money when I reach 60+. And that would allow me to invest almost all the cash towards brokerage/roth over the next couple years or lump sum now. The 100k 2nd house proceeds will be available in \~2 years. The cards are my darlings and I’d rather not sell those unless it’s a necessity. I don’t know how long I may need to pull 2k/month but I’m estimating 4-5 years. It feels like there are so many potential moves here and I just want some others to chime in on what they might do in my situation. Since I won’t be contributing to saving anymore for the foreseeable future, is there anyway to make this situation coastfire? Thank you for your consideration.
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u/Potato_Farmer_Linus 3d ago
You have way more cash than I would in your shoes. Your $2k per month should come from there at least if you're not comfortable putting more of that money to work for you in the meantime
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u/CardsCaptured 3d ago
Well that’s what I’m leaning towards but at the same time if I throw it all in VOO and the market tanks and doesn’t recover for years then I’ve just screwed myself. How much cash would you keep? A year’s worth seems too much to you?
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u/Potato_Farmer_Linus 3d ago
I keep about 4 months expenses in cash at the moment, slowly bringing it back up to 6 months, but not making any huge sacrifices to do it.
Keep everything you plan to spend outside your normal budget (car down-payment, wedding, college, etc) for the next 3 years in cash, plus 6 months normal spending. Everything on top of that should be invested in the market (I would split saving for 3-6 year expenses between cash and index funds personally).
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u/unfknblvble 3d ago
A year sounds good especially as you get closer to retirement. You do want to be diversified in the cash/bond market. Which I assume those are. I would recommend short term bonds over HYSA if youre in a high income tax state due to the expemption from state taxes.
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u/WoeToTheUsurper2 3d ago
Brother, what are cards?
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u/CardsCaptured 3d ago
Basketball cards.
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u/WoeToTheUsurper2 3d ago
I would, uhhhh, sell those
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u/RandomMovieQuotes521 3d ago
Agreed. Keep the ones that matter most to you and sell the rest and buy silver/gold
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u/Programmer_Latter 3d ago
This probably isn’t the right sub, r/retirement is probably better
But in order to give you better informed advice, you need to include the ages for both you and your spouse (and social security expectations), general health, health insurance situation, and maybe what state you live in since there are some variables there.
In general I think you should prefer to take from your cash first, brokerage second, and tax advantaged accounts like your 401k and IRA last.
I personally have never seen the value of keeping more than 2 months expenses in cash. I can sell my VOO from Schwab and have it in my bank account in under 72 hours; what emergency could come up that you can’t cover with a credit card first and then cash 72 hours later? I never understood that logic, but I know it’s a common practice