No. of Recommendations: 7
If you do use a "2029 price" target, bear in mind that you might not want to check the situation too frequently.
Why so?
If you check daily, you will sell at the very first moment that the estimated forward return goes negative, and never get any extremely high prices for what you're selling.
If you check only every (say) month or two, there's a decent chance that some of your sales will be at levels above your target because prices kept rising until you look at them. Most stretches of high valuation tend to last for at least a couple/few months, so you're unlikely to completely miss an opportunity. And of course it's much less work! For the same reason, I wouldn't just put in a good-till-cancelled sell order for the target price.
Another thought:
On the theory of "minimize maximum regret", you could also use this strategy, but sell only half of your future need the first time an opportunity arises, then wait for another opportunity a minimum of X months later before checking prices again and considering selling the second half. One of the two is certain to get you a better price than the other. If it's the first one, you'll be glad you sold the first half when you did. If it's the second one, you'll be glad you waited to sell the second half. Either way you feel like a genius for not leaving money on the table : ) The disadvantage is that there may be only a single stretch of rich valuations in the next few years--who knows what Mr Market will feel like? But it's not exactly fatal...you'd just sell the last chunk at the last minute, which is what you were probably figuring on doing anyway.
The overall strategy isn't specific to SEPP rules - having one target price for each future period could make sense for *anyone* living from a portfolio of periodically liquidated Berkshire stock. If you need $X000 to live in 2031, sell $X000 worth of stock as soon as the market price is above what makes sense as the best guess for 2031. Sit on suitable-term TIPS till then. If most of your sales are done at prices higher than the "likely" price at the date of future expenditure, it seems reasonable to expect that you're increasing your average realized price quite a bit. You should have a lot fewer instances of having to sell a a chunk at a temporarily low price because that's all Mr Market happens to be offering on January 1 that year.
Jim
