Age based AA poll

[RunningBum]

IF you use an age based asset allocation what % equities do you hold?

If you use some age based scheme that doesn't fit the simple "Number - age = equity % allocation" scheme, pick "other" and explain.

If you don't use an age based system, you really don't have a reason to vote in this poll, but I added the last option for you.

 

[retire2020]

Age 52. 60/40 EQ/FI. will keep same AA until 60. Then will be 50/50 for rest of life.

 

[Katsmeow]

I didn't answer as nothing exactly explained. I don't use a hard formula. On the other hand, age is one factor that I qualitatively think about in setting an AA.

I note that DH and I are 6 1/2 years apart in age. So, in these hard formulas, I always get hung up on whose age to use. His or mine?

 

[mathjak107]

i think trying to age base an allocation is a terrible way to plan . one size never fits all

 

[DrRoy]

Don't use an age system.

 

[racy]

I'm 64 and have 50% in equities; planning to maintain that going forward.

 

[RunningBum]

i think trying to age base an allocation is a terrible way to plan . one size never fits all

It's not one size. 100-age is a totally different size from 125-age. That's fine if you use a different system and don't agree with this, but I don't understand your point against.

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.

 

[easysurfer]

100-age.

Use 100 because easiest math .

I made the wrong selection on the poll though. Should have chose >90 up to 100 - Age, but instead chose >100 up to 110 - Age (hate when that happens... sign of not paying attention ... Grrr! . Maybe one of the mods can fix. Thanks!).

 

[mathjak107]

at any given age- one size never will fit all and in fact may really fit few .

we all have different needs , different investing temperaments , we may want to do things based on the world around us at times , etc etc .

in fact some retirees may be investing for their income while others have pensions and are investing for legacy money which can be as aggressively invested as in their 30's .

this is why target date funds never made sense to me . telling a 25 year old with little pucker factor he should be heavy in equities so he bails and runs when we decline does no good .

telling a 65 year old with high pucker factor they need to not only have a high allocation to bonds but should increase it every year can be just as wrong .

especially if rates are rising and they have losses ..

think about the fact that target funds are all over the place allocation wise even for the same situation .

the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.


while age based investing covers wall streets butt it really is not such a great way to go in my opinion .

how we invest is really unique to all of us and anytime you try to get a simple answer to a complex issue it is likely going to be the wrong answer .

 

[Danmar]

at any given age- one size never will fit all and in fact may really fit few .

we all have different needs , different investing temperaments , we may want to do things based on the world around us at times , etc etc .

in fact some retirees may be investing for their income while others have pensions and are investing for legacy money which can be as aggressively invested as in their 30's .

this is why target date funds never made sense to me . telling a 25 year old with little pucker factor he should be heavy in equities so he bails and runs when we decline does no good .

telling a 65 year old with high pucker factor they need to not only have a high allocation to bonds but should increase it every year can be just as wrong .

especially if rates are rising and they have losses ..

think about the fact that target funds are all over the place allocation wise even for the same situation .

the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.


while age based investing covers wall streets butt it really is not such a great way to go in my opinion .

how we invest is really unique to all of us and anytime you try to get a simple answer to a complex issue it is likely going to be the wrong answer .

Well said. Excellent post.

 

[mathjak107]

i was on the 401k committee at work back in 2008 . we saw the youngin's bail and run because the target funds they were in were age based . they got so scared out they never returned .

 

[RunningBum]

at any given age- one size never will fit all and in fact may really fit few .

we all have different needs , different investing temperaments , we may want to do things based on the world around us at times , etc etc .

in fact some retirees may be investing for their income while others have pensions and are investing for legacy money which can be as aggressively invested as in their 30's .

this is why target date funds never made sense to me . telling a 25 year old with little pucker factor he should be heavy in equities so he bails and runs when we decline does no good .

telling a 65 year old with high pucker factor they need to not only have a high allocation to bonds but should increase it every year can be just as wrong .

especially if rates are rising and they have losses ..

think about the fact that target funds are all over the place allocation wise even for the same situation .

the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.


while age based investing covers wall streets butt it really is not such a great way to go in my opinion .

how we invest is really unique to all of us and anytime you try to get a simple answer to a complex issue it is likely going to be the wrong answer .

Your argument is primarily against target funds, which picks the number for you. That's not at all what I'm talking about. And I certainly never said age based allocation was for everyone. That's why I started with "IF".

 

[RunningBum]

I'm also interested in what investors HERE do, since most of us don't panic sell, unlike novice investors.

 

[mathjak107]

Your argument is primarily against target funds, which picks the number for you. That's not at all what I'm talking about. And I certainly never said age based allocation was for everyone. That's why I started with "IF".

no , my argument is against any fixed allocation based on age or retirement date without looking at all the other parameters that are important to most of us that need to go in to that decision . ..

 

[Corporateburnout]

Reduced equity exposure to 50% 2 years prior to retirement and it's been the same for the 3+ years of retirement. No plans to deviate from it for the foreseeable future.

 

[RunningBum]

no , my argument is against any fixed allocation based on age or retirement date without looking at all the other parameters that are important to most of us that need to go in to that decision . ..

Thank you. This makes the point that even of those who do age based allocation, it's probably not of much use to me since they may not match my risk level, goals of whether to leave an estate behind, or life expectancy outlook. Still, it's of use to know if I'm an outlier, and if so to make sure I have a good reason for it. Judging from the poll responses so far, I'm sort of an outlier just for using that system, and I should think about whether I'm ok with that.

Still interested in others' responses.

 

[easysurfer]

i was on the 401k committee at work back in 2008 . we saw the youngin's bail and run because the target funds they were in were age based . they got so scared out they never returned .

On the flipside, for me, an age based systems helps keep my emotions out of the equation so I don't bail and run when the market gets choppy. Plus, I stick to my number so I'm not say, 100 - age today, 125 - age or 90 - age tomorrow, bouncing around.

 

[38Chevy454]

I picked the age value that fits my allocation amount, but I don't use that as a value for past or for future allocation choices. I have always thought the generic "100-age" was too conservative for me.

 

[mathjak107]

On the flipside, for me, an age based systems helps keep my emotions out of the equation so I don't bail and run when the market gets choppy. Plus, I stick to my number so I'm not say, 100 - age today, 125 - age or 90 - age tomorrow, bouncing around.

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

 

[Moemg]

65/28/7.I am 70 .

 

[easysurfer]

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.

 

[RunningBum]

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.

 

[MichaelB]

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.

 

[RunningBum]

Could one of the mods please change the last option to simply "I don't use an age based system"? Thanks.

 

[easysurfer]

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.