Advice Please

[Arch]

Age 64, wife 6 years younger and employed.  I will have both pension and social security, which will cover 2/3 of our current living expense.  If I retire at 66 will draw pension (it will not get any bigger) but hope to wait until 70 to draw SS.  Will live off her salary, my pension, and any part-time income I generate, if I actually do retire.  Do not anticipate drawing down investment proceeds until she retires 8 years from now.  She will have a very small pension (plan discontinued and will not grow beyond 4k per year.)

I am considering setting up the bucket strategy, letting it work for the next 8 years, then draw as needed. Would appreciate any comments on set up or funds you would consider, any thoughts are welcome.     
Looking at 4 buckets: 
#1 held at local bank....MM and laddered CDs..... 4 years of income;
#2 held at Vanguard.... tax-def. 1/3 in short-term (1-3 year) bond fund; 1/3 in shorter intermediate (5-7) bond fund; 1/3 in LC Value and or maybe some
    utilities.....7 years of income;
#3 held at Vanguard.... 50% LC Growth or G&I;  20% Mid Cap US;  15% REIT;  15% LC Int'l; all taxable, because we out of tax-def. space in IRAs...6 years income
#4 held at Vanguard.... taxable, a smaller amount in more aggressive....Sm Cap US; Sm Cap Int'l; IAU....1 year of income

We still have approx. 4 years of income in an active 401K accounts, currently all in OAKBX & Vanguard 2020 fund, not great options outside these.
Have taxable account 2 years of income also in OAKBX
Small Roth, 1 year of income in VWINX

[Pointedstick]

Hi Arch! Welcome to the forum. Have you considered using the Permanent Portfolio for your financial needs? That strategy looks very complicated to me. Trying to keep those percentages fixed as the value of the many individual assets fluctuate seems like it would be a pricey challenge, and I can't imagine the sliced-and-diced stocks will beat a much simpler (and cheaper) total US or total world stock market fund or ETF. I would also replace the MM fund with T-bills unless the MM fund is REALLY awesome and substantially beats the yield on a T-bill.

Are you sure a PP wouldn't beat this allocation with a lower volatility?

[notsheigetz]

I agree with Pointedstick.

Folks here are mostly sold on the idea of a particular strategy that is much simpler than yours and has a proven track record. I could tell you that maybe the 15% REIT should be more like 16.5 or 17% but since I don't even know what REIT is you would be getting exactly the advice you paid for.

[sophie]

Third.

It looks like most of your savings is tax-deferred, and you're 6 years away from required minimum distributions.

If my addition is correct, you have 25 years of income saved up.  By "year of income" do you mean "one year's worth of expenses"?  If so, you already have enough savings for both of you to retire now, and that doesn't even count your pensions and social security.  Congratulations!

I would definitely start consolidating all those accounts into one simple portfolio.  We have a default preference here that just happens to be perfect for retirement savings that need to stay safe :) but there are other low-cost portfolios you can consider.  You can get a lot of information from the "FAQ" posts, and then trundle over to the Bogleheads forum and read theirs.  If you elect to retire now, you can start taking withdrawals from the tax-deferred accounts, so that you don't get an unpleasant surprise when you turn 70.

[Arch]

Those "years" of income only represent the missing 1/3 not covered by my pension and SS. 
So we have to make sure that investment does not go down the drain, but at the same time
need enough growth to fill the income void, plus 25 years of annual increases for inflation. 

Yes I have considered the PP and if I were 34 vs. 64 I would be there.  But at this point I
do not see how I can generate enough income with 1/2 our money in short bonds and 1/4
in gold, which generates no income at all.

Believe me I would prefer to use VTI, no muss, no fuss, but there is no way to rebalance
the LC, MC, Value, or Sm Cap individually when they are all included in one share.  I years
to come I will need to sell the winners and reinvest in the losers, but cannot see how to
do that they are "all in one fund."
That is the reason for my post....if there is a way to accomplish these two objectives in a more
simplistic way, I would love to hear about it.
Thanks, Arch

[Pointedstick]

Since you're preparing to retire soon and have a pension and social security, it doesn't seem like you need to worry that much about your portfolio's growth, only preservation of capital and generation of real income. Even in a total financial catastrophe, 66% of your income is still safe. As a result, if you can earn a consistent 4-6 percent real return, then you can safely sell shares without diminishing the principal. If you include dividends and interest in your real return calculations, what really matters most is your real return itself, not where it comes from. So I don't think you should be too worried about selling shares to provide that income. At least that's how I see it.

One relatively simple way to make money off your otherwise static gold allocation is to do a trick MT frequently talks about, which is to split 50/50 between GTU and one of the other gold ETFs. Then whenever GTU is 55% of the total gold allocation (due to premium expansion beyond NAV), you rebalance them both back to 50/50. Instant free gain!

If you feel like you're disciplined enough to sell the winners of your sliced-and-diced stocks, more power to you! That kind of volatility capture, in a simpler form is one of the things that powers the PP. But do you really expect a huge difference between, for example, mid-caps and large caps? Domestic and international stocks I could maybe see (especially at a time like this), but that level of domestic granularity doesn't seem like it would really add a lot except complication. If dividends are important to you, how about a dividend growth fund instead of a few of those sliced-and-diced funds?