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View Poll Results: IF you do an age based asset allocation, what is your formula for equities?
90 or less - Age = % equity 1 1.06%
>90 up to 100 - Age 2 2.13%
>100 up to 110 - Age 5 5.32%
>110 up to 120 - Age 6 6.38%
>120 up to 130 - Age 4 4.26%
>130 - Age 0 0%
Other age based system (explain) 5 5.32%
I don't use an age based system 71 75.53%
Voters: 94. You may not vote on this poll

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Old 08-31-2017, 08:39 AM   #21
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Originally Posted by mathjak107 View Post
but you are changing over time if you are following age based .the fact would be you are bouncing around to different allocations as you age whether you want to change or feel a need to change . each year you would have less in equities being age based .

in fact that is the opposite of a rising glide path where each year you increase equities after initially reducing them entering retirement
I see the slight change in allocations each year due to aging as a soft landing and not bouncing.
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Old 08-31-2017, 08:41 AM   #22
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Originally Posted by mathjak107 View Post
but you are changing over time if you are following age based .the fact would be you are bouncing around to different allocations as you age whether you want to change or feel a need to change . each year you would have less in equities being age based .

in fact that is the opposite of a rising glide path where each year you increase equities after initially reducing them entering retirement
You've made your point. Please let others make theirs.
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Old 08-31-2017, 08:44 AM   #23
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You've made your point. Please let others make theirs.
A good idea. I don't use an age based allocation, but also would be interested in hearing why others use it. Simplicity is probably one reason.
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Old 08-31-2017, 09:10 AM   #24
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Could one of the mods please change the last option to simply "I don't use an age based system"? Thanks.
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Old 08-31-2017, 09:12 AM   #25
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A good idea. I don't use an age based allocation, but also would be interested in hearing why others use it. Simplicity is probably one reason.
For me, I use age based for simplicity and also keeps the target objective. Otherwise, my AA is based too much on a warm and fuzzy or gut feeling which I don't want.

Interested too in reading what "system" folks use who don't go age based.
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Old 08-31-2017, 09:16 AM   #26
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Now I'm curious what the rest of you do--something fairly static, like retire2020? It'd also be helpful to me if you say whether or not you're retired.

I'm not arguing for or against any system. This is a case where I'm not fully sold on doing this or what number to use.
I'm 48 and recently retired.

I am currently at 89/8/3 stocks/bonds/cash. I'm living off the cash so am headed towards 92/8/0. My very simple and very casual IPS is to be approximately at 90/10/x, where x is a few months living expenses. I allow myself to get 2% out of whack before rebalancing. I review my IPS once per year and in theory could make changes based on my goals and circumstances but honestly any IPS changes are pretty unlikely.

I intend to keep to this allocation until sometime after I've survived my first stock market downturn. At that point my current intention will be to go to 100/0/x, which will simplify things further as I won't have to do rebalancing.

I am on the younger side, have very low expenses, and a very low WR (currently 1.88%). I also have a high risk tolerance - remained 100% invested through 87, tech bubble, and great recession. So it works for me.
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Old 08-31-2017, 09:23 AM   #27
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I do (110-age) in stocks, and rebalance annually. Started doing this about 12 years ago, at age 43, with 67/33. Now at age 55, I'm 55/45. When I rebalance next year, I'll be 54/46. Nothing to think about, and it keeps emotion out of the equation.
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Old 08-31-2017, 09:28 AM   #28
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I guess I haven't given my reason for using an age based system yet.

My rationale is that I want to be pretty aggressive at 55, much more than I'll want to be when I'm 85. Using an age based system makes for a smooth transition to a more conservative portfolio--smaller yearly changes rather than realizing at some point, hey, I'm 70, maybe I should get halfway to where I want to end up at which point I might have to make a big change.

It also helps give me the discipline to stay with an AA. I won't panic sell in a downturn, and I'll take some gains off the table after an upturn. It keeps me from trying to time the market, which I've come to realize I don't have the skills to do. Of course I can do this with a fixed AA, but I can't make the smooth transition to being less aggressive I talked about before.

My situation is that I'd like to leave something to my son but it's not a top priority, so as I grow older the priority is more with preserving the nest egg.
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Old 08-31-2017, 09:38 AM   #29
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Right now I'm around 43% in equities at at age 59. it is likely the lowest I will go as I can tolerate this level of risk fine. I will not change it as I go into retirement, but might raise in after a couple of years if our projected expenses are on target. I might get more aggressive after DW and I start taking SS, as pension + SS alone may cover 99% of our expenses.
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Old 08-31-2017, 09:47 AM   #30
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50/50 since ER'd 15 years ago. Intend to maintain the same for the duration. Also use wide 10% rebalance bands so my investment activity practically all of the time consists of watching paint dry. ( last rebalance was 2007)
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Old 08-31-2017, 10:11 AM   #31
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I sort of used an aged based system, but no particular formula. 80/20 when I first started saving for retirement at age 38, ramping down to 60/40 when we retired at age 55/54.

Now at age 62, DW 61, I have our AA set at 50/50 and plan to keep it that way going forward.
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Old 08-31-2017, 10:13 AM   #32
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My Dad made it to 95. He aged into his allocation. Made all his money on a house and a cottage.
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Old 08-31-2017, 10:49 AM   #33
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I don't use age based system. DH and I are comfortable at 60/40 or 50/50 and plan to stay stay within that range.
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Old 08-31-2017, 01:58 PM   #34
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Quote:
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...

I knew not everyone used this kind of system but I'm surprised to see how many don't. And there may be more, since I was kind of discouraging people from voting if it didn't apply, which I realize now I shouldn't have done. I know market timers wouldn't use this, but I thought those were in the minority here. Now I'm curious what the rest of you do--something fairly static, like retire2020? It'd also be helpful to me if you say whether or not you're retired.

I'm not arguing for or against any system. This is a case where I'm not fully sold on doing this or what number to use.
Age is certainly a variable I consider and helps to set the max stock allocation. I use VPW a lot where current age and end age are variables. Market timing can still be used with age functioning to set the % of the portfolio which is traded e.g. sell down to 40% based on X being true or if older sell down to 30% based on X.

There are so many ways that age is factored in, not just a simple linear formula.
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Old 08-31-2017, 02:08 PM   #35
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65/28/7.I am 70 .
Your a young 70..
Im 80/20 with no thought of changing it. I picked that when I was 45, Full disclosure, Im a little braver because of a larger than currently needed pension.
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Old 08-31-2017, 02:09 PM   #36
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I'm 66 years old and currently have about a 60-40, equity/fixed income AA. I do what I am comfortable with and currently a 60/40 split is something I'm happy with.
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Old 08-31-2017, 10:11 PM   #37
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Too many factors here to answer, since whether you plan to leave assets or spend them is a yuge factor.
If markets cooperate, I plan to slowly increase bond allocation until mid 70s, then perhaps increase stock allocations when it's fairly clear bonds will last through my dotage, to pay for the drool cups and wipes.

However, if we see a 2002-3 or 2008-9 slump, that would change my mind on allocating cash and stock allocation, probably only temporarily. I would only tweak it, though. (3 of my grandparents made it to the mid-90's; Okie grandma died at 88 despite adult onset diabetes like Dad who made it to 86, 20 years after a quadruple bi-pass. Not healthy--but hardy.)
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Old 09-01-2017, 07:28 AM   #38
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Age 70 and 60/40...............not because of age but three pensions that cover all basic needs and more
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Old 09-02-2017, 10:52 AM   #39
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Used to use the 100-age thing but then read about need for inflation protection from 60-85ish, so have a very loose rule of thumb where %equities = (100-age) x 2 so at 65 would be about 70% in equities.

Please note that dismal return of fixed income is currently part of the logic as well, so having more equities allows more dividend income.
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Old 09-02-2017, 11:23 AM   #40
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Much of my assets are in a target date fund because that's the only exposure I can get in foreign equities through megacorps' 401k plan. This irritates me a bit, because I'd prefer to be wholly in equities and even the 2060 fund is something like 10% bonds.

I console myself by admitting I could be wrong and having some stake in bonds is the right way to go. But I'm confident in my risk tolerance and willingness to return to work if necessary, so I can't seem to convince myself.
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