Question about setting up PP for withdrawal phase

[thisisallen]

If dividends cannot cover all expenses then is it OK to use only ETFs for the 4 sections of the PP (since it may be easier to withdraw from these vs physical gold and long term bonds)?
This setup goes against the principles of the traditional PP and introduces additional risks.
Is there a better way to reach the goal of being able to easily and conveniently withdraw on a regular basis while at the same time maintaining the safety factors of the traditional PP?

[sophie]

Don't overthink this!

The PP is designed to generate minimal cash, but at the same time it is very easy to manage during the withdrawal phase. Just withdraw as needed from the cash allocation. When you hit a rebalancing band (any asset below 15% or above 35%), rebalance the portfolio. This will happen every 2-3 years, depending on the percentage of your portfolio you are withdrawing each year.

Many people use gold ETFs for convenience. Totally up to you. For what it's worth, I tax loss harvested my physical gold a while back. It required sending in my coins and getting the same number of coins sent back, but it was super easy. It took one phone call, a trip to the post office to send a registered package, and a trip down to the front desk to pick up the package they sent back to me.

[thisisallen]

Thx. follow up question:
if withdrawing the cash then it is likely to cause the re-balancing of the portfolio more often, and don't both the coins and the bonds having specific values kinda present a challenge to easily shift things around/re-balance?
Perhaps it will be trial and error and learning experience for the first couple times.

(gee, if I keep overthinking things maybe this PP is not a good choice pour moi).

[Tyler]

I ran some calculations a while back, and IIRC withdrawing from cash actually triggers a rebalance a lot less often than you think. More often than not, one of the three volatile assets hits a band first.

In any case, I personally have found that the PP is great in retirement and the different assets give you a lot of flexibility. Since my needed income is well below the limit for 0% LTCG taxes, I don't strictly spend cash first. Instead I usually sell some of the high asset, essentially perpetually rebalancing tax-free. But if I ever need the cash to ride out a market storm without selling anything, it's terrific to have on hand.

Don't let the perfect plan get in the way of good enough. I personally use IAU. I still intend to buy a few coins at some point but I haven't let that get in between me and a good retirement portfolio.

[thisisallen]

^ Thx. Got it. Will do.
May I ask, do you also use TLT?

[Tyler]

My personal PP funds of choice are VTI, TLT, IAU, and SCHO. But the list of good funds is definitely longer than that.