chinaco
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Feb 14, 2007
- Messages
- 5,072
I intend to retire @ 55. When I plan/devise/ponder a portfolio management strategy and expenditures, I tend to think in decades for example age 55 -to- 65 -to- 75 -to- 85 -to- 95.
Here is an approach I have been toying with. Divide the portfolio into 4 funding pools for 4 decades 55, 65, 75, 85.
50% of portfolio for decade 1 beginning @ age 55 invested in target retirement 2010
30% of portfolio for decade 2 beginning @ age 65 invested in target retirement 2020
15% of portfolio for decade 3 beginning @ age 75 invested in target retirement 2030
5% of portfolio for decade 4 beginning @ age 85 invested in target retirement 2035
Liquidate the house in the late years depending on health situation.
Let the fund auto-adjust the allocation. Most of these funds go to 20% stock about 5 years after the target date. So you can use the target date to adjust the risk profile of the portfolio to the decade.
This would be employed along with a cash (MM or CDs) account to be used as a buffer. The cash account would be seeded with enogh money to cover 2 to 3 years of [minimum] expenses beginning at 55 which is replenished oppotunistically during the good years all along the way. If we have to tighten the belt in one decade, we do not jeopardize the funding for the following decade. In otherwords, limit the expenditures in a decade to the pool of money allocated for the decade.
Please share your thoughts and criticisms.
Here is an approach I have been toying with. Divide the portfolio into 4 funding pools for 4 decades 55, 65, 75, 85.
50% of portfolio for decade 1 beginning @ age 55 invested in target retirement 2010
30% of portfolio for decade 2 beginning @ age 65 invested in target retirement 2020
15% of portfolio for decade 3 beginning @ age 75 invested in target retirement 2030
5% of portfolio for decade 4 beginning @ age 85 invested in target retirement 2035
Liquidate the house in the late years depending on health situation.
Let the fund auto-adjust the allocation. Most of these funds go to 20% stock about 5 years after the target date. So you can use the target date to adjust the risk profile of the portfolio to the decade.
This would be employed along with a cash (MM or CDs) account to be used as a buffer. The cash account would be seeded with enogh money to cover 2 to 3 years of [minimum] expenses beginning at 55 which is replenished oppotunistically during the good years all along the way. If we have to tighten the belt in one decade, we do not jeopardize the funding for the following decade. In otherwords, limit the expenditures in a decade to the pool of money allocated for the decade.
Please share your thoughts and criticisms.