Critique my PP Plan

[LiquidSapphire]

I am about to quit my job and be semi-retired and I am considering implementing the PP.  I was hoping to get your feedback on my plan.  Percentages below are representative of a percent of total assets in all accounts.

TSP (Government equivalent of 401K)
20% G Fund (short term treasuries with long term treasury returns) aka Cash
25% C Fund (S&P 500 Index)

Roth IRA
7.5% TLT
7.5% IAU
(low percentages are a function of there not being much $ here)

Taxable
7.5% Gold American Eagles
10% IAU
7.5% TLT
10% 30Y Treasury Bonds from TreasuryDirect
5% Cash

The reason I am splitting taxable so much is for ease in rebalancing later.  I am concerned about rebalancing gold within a taxable account as well as what the effects will be of slowly drawing cash to pay my expenses. 

Does this sound like a good plan?  Any criticisms?  Thanks so much for the forum and the website; I have learned an awful lot and I think I'm a convert.

[AdamA]

I am about to quit my job and be semi-retired and I am considering implementing the PP.  I was hoping to get your feedback on my plan.  Percentages below are representative of a percent of total assets in all accounts.

TSP (Government equivalent of 401K)
20% G Fund (short term treasuries with long term treasury returns) aka Cash
25% C Fund (S&P 500 Index)

Roth IRA
7.5% TLT
7.5% IAU
(low percentages are a function of there not being much $ here)

Taxable
7.5% Gold American Eagles
10% IAU
7.5% TLT
10% 30Y Treasury Bonds from TreasuryDirect
5% Cash

The reason I am splitting taxable so much is for ease in rebalancing later.  I am concerned about rebalancing gold within a taxable account as well as what the effects will be of slowly drawing cash to pay my expenses. 

Does this sound like a good plan?  Any criticisms?  Thanks so much for the forum and the website; I have learned an awful lot and I think I'm a convert.

I think all of your funds/investment vehicles are appropriate. 

Having so much cash in your tax deferred account might make withdrawing money to live on difficult.  This obviously depends on much you spend and how big you account is dollar-wise, though, and also on your age (can you withdraw money from your TSP yet?).

[BearBones]

Too bad you can't get more of the LTTs tax deferred, but there probably isn't the appropriate vehicle through your TSP. Otherwise, this looks very well thought out to me. Nice how you are using both TLT and for LTTs in taxable act, since it may be a bit unwieldy to sell 30 yr bonds through TD. You will still have to transfer bonds out of TD once a year (when one reaches 20 yr maturity), right?

[LiquidSapphire]

Thanks for the responses!

Basically the amount of money available represents 20 years of expenses and I will be withdrawing about 5% a year if I make no extra money on the side.  I hope to make money on the side and make the withdraws smaller but I haven't figured that part out yet.  However, the work situation is untenable and I am leaving and that is a final decision. 

I am a good 30 years away from 59.5 years of age... I am aware of the 72(t) rule but would not like to exercise it at this point in time.

I am aware that doing a TSP-->IRA rollover is a possibility but the G fund is such a strong investment for "Cash", I would like to keep all the $$ in TSP as I can, so I can always keep the bulk of "Cash" in the G Fund.  The TSP options are EXTREMELY LIMITED in that you have basically 5 options:  an S&P500 index, a small cap index, an international stock index, G Fund, and a bond index (not government bonds, not long duration enough for HB's liking).  So to access other invesments, I'd have to do a rollover.  Is it worth it to do this to shelter more LTT and Gold, meanwhile giving up "space" for the G Fund?

I plan to keep about a year's worth of expenses on hand, but I haven't figured out how I am going to draw cash from this yet after I've burned through that cash.  I guess rebalance annually and cash out, regardless of if I have hit a 10% band or not?  I would really love to hear some suggestions. 

[Xan]

For withdrawing, I would withdraw from everything proportionally.  You've got a lot of different accounts, so that may not be practical, but from my viewpoint, I don't want my withdrawals to affect the timing of my rebalances at all.

[LiquidSapphire]

Withdrawing proportionally each year at this point would probably entail me having a mini-PP inside of my taxable account (I'd like to preserve my Roth for as long as possible).  My taxable account is currently about 39% of total assets.  I suppose that is easy enough to implement, though the tax implications of such are a little scary and I'll have to think it through more.  The problem is that then I will be overweighted inside my TSP on stocks and cash unless I roll it over partially to an IRA and put more assets into bonds and gold in that IRA.  Should I do that and give up that tax deferred TSP space for the G Fund?  I will likely never be able to add to the TSP ever again.  My TSP is about 45% total assets.  

I guess here is my dilemna.  I am able to strike 25/25/25/25 right now between the offerings of my Roth, Taxable, and TSP accounts without any rollovers.  I have access to all 4 asset classes in Roth and Taxable but not TSP.  Since I will be withdrawing cash from taxable to start, I will likely have to sell out to add back to the cash bucket within 2-3 years (if not sooner), and that cash will need to end up in a taxable account.  Of course if Gold or Bonds are the asset to sell, that's easy, that's already in my taxable account.  But if stocks/cash are the asset to sell, I guess I will need to sell, rollover the cash to an IRA, purchase bonds/gold in the IRA, THEN sell the bonds/gold in my taxable account for cash.  So I guess no matter what every 1-3 years I will be selling something in my taxable account.  My marginal tax rate should be low (0-15%).  It makes me tempted to hold cash in taxable (it doesn't have capital gains) and hold the other 3 assets in tax advantaged vehicles, and eschew the G Fund entirely.  I don't know, just brainstorming here.  Thoughts?

[BearBones]

Since you are living off of this, it may be nice to have the LTTs in taxable act as you have done, especially if in low tax bracket.

[BearBones]

Basically the amount of money available represents 20 years of expenses and I will be withdrawing about 5% a year if I make no extra money on the side.  I hope to make money on the side and make the withdraws smaller but I haven't figured that part out yet.  However, the work situation is untenable and I am leaving and that is a final decision. 

I am a good 30 years away from 59.5 years of age...

So you are almost 90?  If on the 30 year old side, I'd have to say that your career is still your most valuable asset, especially if you are withdrawing at unsustainable level from your assets. So, my best advice would be to leave the TSP alone if you like it, minimize drawdowns from your estate, and find a career that you like.