This is a common strategy. However, my concern is, buying in tax deferred while selling in taxable will INCREASE your tax burden. So while the Roth and Taxable drop, you are buying in tax deferred to maintain your AA but at the same time increasing your future tax burden for when the market recovers.We are almost in the exact same spot (57 & 55, $80k/yr, ~3.1%, utilizing ACA, and maybe same state based on your username.) Next year, we will be withdrawing $60k from Taxable ($35k gains), and the remainder from IRA. We want to leave the Roth accounts until at least 59.5.
To answer your question, we will not be moving a portion of Taxable/Roth into more conservative investments. We’re at 60/40 with all 40% (Bonds) in 401k, and 60% (Stocks) in Taxable and Roth. If/when stocks drop and we need to withdraw, we’ll sell in Taxable and buy in IRA/401k at same time. Finally, our annual budget has lots of wiggle room if needed. At 2.9%, sounds like yours does too!
I am keeping some bonds in Roth for this. I know it goes against tax efficient allocation principles, but "when" the market does tank and I have to sell in taxable, I will then be buying back in the Roth and not adding more stocks to tax deferred. The reason is, I was using the method above for quite a while and I ended up with a much larger tax deferred account than I would have liked. Just some food for thought. I think everything depends on what the market does, so the best strategy cannot be known in advance.
Statistics: Posted by max12377 — Sun Dec 07, 2025 1:19 am — Replies 13 — Views 1215