Rather than a significant investment in bond funds that pay almost nothing, I like the bucket method.
The only times in the last 100 years or so a 4% initial withdrawal rate, subsequently adjusted upward for inflation, has failed is when someone retired and started collecting just before a major market downturn. Selling stocks to fund IRA/401K distributions in a major down market was the killer.
If you can avoid selling for 2 to 3 years after a major downturn you can historically ride it out. You can do this by having cash, or the equivalent of cash in a "bucket" that can cover 2 to 3 years of necessary distributions. If possible, adjusting your spending down temporarily after a major downturn could accomplish the same objective.
Putting 40% of your retirement funds into a "safe" bond fund that returns 2-3% makes absolutely no sense to me. You are losing at least 5% to average stock returns. Not only are you guaranteed a low return, you face a great risk of losing capital if interest rates rise. Other than short term government bond funds for money i will need in the near future, bond funds play no role in my portfolio.
My biggest fear during my lifetime is another renewed bout of inflation. Just like my parents never forgot the Great Depression, and saved accordingly, I'll never forget 18% mortgages. Money is not lost in a down market unless you sell. Money is lost when a market becomes inflationary if it is invested in bonds or other fixed interest instruments.
Disclaimer: I have no financial training or expertise other than an engineering economics class I took in 1971. Take my advice with a grain of salt.
The only times in the last 100 years or so a 4% initial withdrawal rate, subsequently adjusted upward for inflation, has failed is when someone retired and started collecting just before a major market downturn. Selling stocks to fund IRA/401K distributions in a major down market was the killer.
If you can avoid selling for 2 to 3 years after a major downturn you can historically ride it out. You can do this by having cash, or the equivalent of cash in a "bucket" that can cover 2 to 3 years of necessary distributions. If possible, adjusting your spending down temporarily after a major downturn could accomplish the same objective.
Putting 40% of your retirement funds into a "safe" bond fund that returns 2-3% makes absolutely no sense to me. You are losing at least 5% to average stock returns. Not only are you guaranteed a low return, you face a great risk of losing capital if interest rates rise. Other than short term government bond funds for money i will need in the near future, bond funds play no role in my portfolio.
My biggest fear during my lifetime is another renewed bout of inflation. Just like my parents never forgot the Great Depression, and saved accordingly, I'll never forget 18% mortgages. Money is not lost in a down market unless you sell. Money is lost when a market becomes inflationary if it is invested in bonds or other fixed interest instruments.
Disclaimer: I have no financial training or expertise other than an engineering economics class I took in 1971. Take my advice with a grain of salt.