"In Retirement" Portfolio's

[modhatter]

I am curious about those individuals currently "in retirement" or at least within two years of retirement - what kind of asset allocation you now have. (% of stocks, bonds, real estate, CD's, Reits, etc.) I am in the process of reading and enjoying Bernstein's book "Four Pillars", which has led to this question. .

Also curious,( to those same "age group" investors), knowing the inevitable rate hikes on the horizon and Greenspans "warning" in this area - how many of you are still holding REIT's?

And last (answering this question is optional) What percentage of your income comes from investments, vrs. social security and or pensions (Just wondering how I am faring compared to most)

[kz]

No REITs, no bonds.
Stock portfolio consists of only 5 companies. Buy & hold only.
457s and Roth IRAs are mutual funds of which 17% are international. We diversified the other 83% between large/medium caps, energy, financials, and health care.
We also have Roth CDs and Money Markets.
Add in a few more regular CDs and a few savings accounts and that's our plan.
Our main income is our pensions. (gov't)
Hubby just took a temp job 24 hrs a week for 14 weeks. (his choosing) the money is deposited into a savings account for future use. We don't need any investment money at this time.
We're much too young for SS. He's 53, I'm 50.

[Dawg52]

I do have a little in REITS but thats because I try to keep a certain amount in several asset classes and try to stay away from market timing. Roughly 33% stocks/33% bonds and the rest in other which includes cd's, reits, & commodities.(mostly cd's)

I still have several months to work but will have to live off dividends and interest* as I will be 53 when I retire.*

[grumpy]

My total net worth (excluding home equity) is allocated as follows:

Equities - 38%
Fixed Income - 57% (includes bond equivalent of pensions)
Cash - 5 %
No CD's
REITS are 1% of equities

70% of income is from pensions


Grumpy

[REWahoo]

Mod,

Stocks 45%
Bonds 40%
CD/Cash 15%
REIT/Other 0%
(Excludes home equity)

100% of current income is from CD/cash. Not yet drawing SS or pension, but when DW & I do, estimate source of annual income as follows:

Investments 55%
Pension 10%
SS 35%

REW

[Jarhead*]

Well, have patience here, and I'll try to "splain" our retirement investments.

I quit 19 years ago. Kids were pretty much raised. Wife was homemaker, and obviously no pension there. I did not have one either.

I left employment to relocate to an area that we wanted to spend the rest of our lives in. (I actually intended on getting back in harness, by starting a small business.

Long story short, I took the comparatively meager pile we had, and invested about 90% in equities. The markets were more than kind, and
kept "old Jarhead" on the unemployed ranks
all those years.

About a year ago, I changed game plans to a more age appropriate portfolio.

I plan no changes in the future.

About 29% equities.

The other 71% is my "chicken Pile"
Tips, CD's, Short-term Corporate, conservative hedge fund.

I have been drawing So. Sec. for almost 7 years now, and my wife qualifies for half of my benefit.

P.S. If I were younger, I'd probably drive Ha Ha and Greg nuts with PM's because I honestly think they have the right idea at this stage of the cycle. (Niche markets). However, for now, you two stay the hell away from me.

[Alan]

Mod,

35% Stock funds
50% Bond funds
15% Cash *(this includes I-Bonds which are more like CD's)

will retire at 55 and expect income sources to be
65% from company pension
35% from savings (2.5% of savings)

at 66 pension will have eroded with inflation but SS will kick in to more than cover.

Now that we are so close, I can almost taste it *8)

[SteveR]

I am still setting myself up for an income stream but here is where I am two years out:

Cash (CD, MM, other)= 18%
Equities (stocks or funds)= 60%
Bond (munis or funds)= 15%
RE (not primary residence)= 7%

Just sold a rental unit this week so the RE has gone down and the cash up a bit.

I did not break out pre vs post tax accounts.

Does not count any stock options that just might finally breath some air before then. *That would add to the cash pile and delay some equity sales for a couple of years.

After retirement:
Pension will contribute 30% of needed income. *The rest will be some interest, dividends, and a 72(t) if needed or from sales from my after tax stocks...depending on the market then. *

After age 59, adjust IRA to what I need but take it out early to avoid nasty income taxes.

[CyclingInvestor]

I am 0 - 2.5 years from retirement, but my portfolio is already pretty close to
target - about 87% REIT, 12% SP index, 1% bond. I do not care what happens
to the price of the REITs, the dividend stream will be plenty to live on. If I
perceive a danger to the dividend stream (above the normal risk of asteroid
strikes, etc), then I will consider moving part of the portfolio into IBonds.

My income until age 62 will be 100% dividends, then SS will kick in to
change it it 85% dividend, 15% SS (or so).

[RockMiner]

I'm planning to semi retire in about 1 year

My allocation:

Stocks (mutual funds): 30%
Bond funds: *20%
Cash equiv.: *50%

Equities are light right now due to DMT angst...long term goal is closer to 50%.
A little bit still in REIT's. Planning on a SWR of about 3.5% starting after 5 yrs.
Trying to stay flexible as interest rates change. *Strange times for the markets.

[greg]

Quote:

Originally Posted by CyclingInvestor I am 0 - 2.5 years from retirement, but my portfolio is already pretty close to target - about 87% REIT, 12% SP index, 1% bond. I do not care what happens to the price of the REITs, the dividend stream will be plenty to live on. If I perceive a danger to the dividend stream (above the normal risk of asteroid strikes, etc), then I will consider moving part of the portfolio into IBonds. My income until age 62 will be 100% dividends, then SS will kick in to change it it 85% dividend, 15% SS (or so).

Of course, you know REIT stock prices are highly suseptible to interest rate changes . Many are leveraged to a floating rate. If interest rates go up, the value of your REIT stock goes down. So you may end up buying only half the Ibonds with your cash remains from the REIT sale. A possibility if the market goes nuts one day and inflation rears its ugly head. No easy timing to my mind. But your portfolio allows you the freedom to concentrate your focus on the ups and downs of one sector.

--Greg

[ShokWaveRider]

I am 100% Cash (CD/IBOND style) Averaging about 4.5% right now. Waiting for the stock market to correct a little before going 50:50 or 60:40 Equities V Bonds.

SWR

[LOL!]

I find it strange that the responses above (except SteveRs') come no where close to a traditional 60% equity / 40% fixed income split.

I thought all the folks here were up on the teachings of Bernstein and other celebrated authors.

[Alan]

I was 60/40 for 9 out of the last 11 years (70/30 before that). However, now that we've amassed plenty for our needs and will only need a SWR of 2.5% I've become much more conservative in my thinking, hence the 35/50/15 split. Plus I also 3 other pension annuities from previous jobs in England that I expect to receive but have not counted in my calculations just in case they down pan out (total about $15k/year starting at 65)

Just chicken I guess.

[popyee]

Percentages don't really mean a lot for me. What is much more important is the actual dollar amounts. I'm 58, retired 1 1/2 years ago, have a CSRS pension of $48,000, $450,000 in Vanguard stock indexes, owe $150,000 on my house and live within my pension. Everything else is for "emergencies".

[AltaRed]

About half a year from retirement (planned retirement at 57). Investments are split about 65% equities, 5% income trusts and REITs, 5% bonds and 30% cash. In excessive cash currently because I don't want to be in 10 yr bonds with upward pressure on interest rates and there are few good bargains in equities. May be smart to commit to a CD ladder or ST bond fund though to leverage the cash better once retired and if no movement in interest rates.

Planning on non-indexed pension for about 75% of retirement income needs with the remainder coming from dividends and interest income. May need to eventually tap into capital by time I am 70-75 with no indexing on pension.

[MRGALT2U]

Fully retired since 1998. I have posted this several times, still here it is again, very
condensed:

Real estate (Including house)

45%

Bonds, junk and hy yield

35%

Cash, Government backed bonds and CDs

20%

One year to go for SS. Do not expect the above per cents to change
any time soon. My SS will mostly replace spouse's PT income.

JG

[CyclingInvestor]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON Of course, you know REIT stock prices are highly suseptible to interest rate changes . Many are leveraged to a floating rate. If interest rates go up, the value of your REIT stock goes down. So you may end up buying only half the Ibonds with your cash remains from the REIT sale. A possibility if the market goes nuts one day and inflation rears its ugly head. No easy timing to my mind. But your portfolio allows you the freedom to concentrate your focus on the ups and downs of one sector. --Greg

I started in REITs in 1997, and have watched values plummet and soar. I agree that REITs
are probably overpriced 5-30%, and could drop 30%+ at any time. I just do not care. All
I care about is that the companies are well-run, paying safe, sustainable dividends that
rise as fast as inflation (in a 10-20 year view, not necessarily for every year). Also,
if REIT prices drop because interest rates go up because the economy is booming, great.
A few more years of 10%+ dividend hikes certainly would not hurt.

I agree that in the worst case (collapsing economy, rising rates) if dividends get cut, the
REITs would sell for much less. I am fortunate enough to have enough slack in my budget
to handle even a 50% cut in dividend income. I would just have to drop my travel and
entertainment budget to 0 (painful, but not fatal).

[WilliamG]

Retired in 2000, still 2 years away from SS; no pension. *Have pretty much been comfortable with following allocation for couple of years. *Note REITs; do not plan on changing alloc here or with other asset types as will let the old rebalance process handle and try to maintain the hoped for benefits of diversification. *

7.5% small cap stock
7.5% reit
10% international *stock
12.5% large cap value
12.5% large cap blend

25% intermediate bond funds (high yield and gnma)

25% reserve (cash,tbills,ibonds,5 yr cd ladder)

[Cb]

I plan to retire in January, and my wife will likely follow within a year or so (due to a difference of opinion on what constitutes a reasonable annual withdrawal) . We're 45 & 46.

Pension + SSI will meet over >50% of our needs when they start in 14 - 17 years.

We own a ~$250K home in a stable midwestern RE market.

Our investment portfolio approximates:

~35% USTM
~35% Int'l TM
~15% US TBM
~15% PCRIX

In coming years we'll probably split the bond holdings to 7.5% USTBM and 7.5% TIPS Index

In coming years we'll probably move toward a LG + SmV "barbell" with our domestic equity (current employer fund options make these 2 moves impractical currently)

In coming years we'll probably move 10-15 of US and Int'l equities to a REIT index (a bit of market timing)

Cb