So let's make this simple and just assume you are going to retire in 5 years, at which point you will need a 14-year bridge in taxable. This bridge can be designed to go to zero after 14 years. Note when calculating the necessary size of this bridge, you should account for any dividends from stocks you also have in taxable net of the bridge, as those will actually be the first things you want to spend.As I'm trying to explain, I am accumulating a large sum of money with my work in a short period of time (3-5 years) and want to quit doing that work by the time I'm 45-50. I'm currently 40+-. I have no tax-advantaged options available to me beyond a 401k, but the 401k is maybe 20% of what I'm saving per year before it's maxed. Income is too high for any of the others (roth, traditonal IRA, health plan doesn't allow HSA).
I will need to live off some of that portion that money to "bridge" to the the 59+- before the 401k becomes accessible.
OK, then one of the basic proposals being floated here is you start accumulating a 14-year TIPS bridge in your 401K. It isn't going to be there permanently, it is just starting there. If you like you can keep this simple and just use VAPIX or VTP which are more or less 13-year TIPS bridges. 5 years to accumulate 14 years means you need to contribute/convert around 3 years per year.
Meanwhile, your taxable is in stocks to minimize tax drag while you are still working and have a lot of taxable labor income.
OK, 5 years from now you have stocks in taxable and this 14-year TIPS bridge, we'll say all just VAIPX, in your 401K. You retire and then you sell whatever lots of stocks make the most sense in taxable to buy SCHP, which is the same sort of thing as VAIPX. In the meantime you sell the VAIPX in your 401K and buy near-equivalent stock funds to whatever you just sold.
Last thing you need to do is just manage your taxable SCHP like a 14 year ladder. After a year or two you're going to need to introduce at least one additional fund so you can start gradually reducing the average duration (this is a whole side discussion here, I can give details if you like). But after 14 years you have exhausted this position and are done.
What this is doing is basically just avoiding the tax drag during the 5 years your labor income and marginal rates are presumably high. You also might be pleasantly surprised how low your taxable income is once you retire. Just to begin with, you no longer need the extra income to fund savings. You do have your 14-year TIPS position generating spending money, but likely a bunch of that spending money is going to be untaxed return of capital. And in fact if your tax expenses are going down, you need even less income for the same post-tax spending on other things, so there is a sort of positive reinforcement effect where lower tax expenses mean less taxable income needed to pay taxes which means even lower tax expenses (obviously this converges to some stable point).
Statistics: Posted by NiceUnparticularMan — Sat Jan 03, 2026 8:12 am — Replies 29 — Views 2020