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A 40% crash at 63 is catastrophic — unlike at 35. Gradually shift to preserve wealth while maintaining growth for a 30-year retirement.
Sequence-of-returns risk: a crash in your first 5 years of retirement can permanently deplete your portfolio. At 35, crashes are buying opportunities. At 63, they're devastating.
4-6 yrs
Impact of -30% at Age 63
Sooner portfolio runs out
3.5-4%
Safe Withdrawal Rate
With proper allocation
40-50%
Target Stock % at 65
Down from 80-90% at 35
Glide Path: Stocks (green) vs Bonds (gray) Allocation %
3-Bucket Approach
| Feature | What's In It | Purpose |
|---|---|---|
| Bucket 1: Cash (1-2 Years) | HYSA, money market, CDs | Immediate spending. Never sell stocks in a downturn. |
| Bucket 2: Bonds (3-7 Years) | Intermediate bonds, TIPS | Refills Bucket 1. Stability. |
| Bucket 3: Stocks (8+ Years) | Diversified equity index funds | Long-term growth. Time to recover from crashes. |
The Key Insight
10 Years Out (Age 55)
Shift to 60-70% stocks, 30-40% bonds. Start building bond allocation.
5 Years Out (Age 60)
Target 50-60% stocks. Build 1-year cash buffer.
At Retirement (Age 65)
40-50% stocks, 35-40% bonds, 10-15% cash. Fully funded Bucket 1.
In Retirement
Maintain allocation. Refill cash bucket from bonds/dividends annually.
Don't Go Too Conservative
Key Takeaways