Preservation stage vs accumulation

[Carol1862]

What great replies. We’ve read all so far and are formulating a plan. You’ve given much to think about and to read. It is all so appreciated!

 

[Independent]

SS and and pensions cover most of our retirement expenses so we invest mainly for capital preservation. Any real return is party time.

If your portfolio just keeps up with inflation, the 30 year safe withdrawal rate is 3.33% (100 / 30 years = 3.33%). TIPS are currently at 1.11% - 1.36% real yield, so that ups the safe withdrawal rate even more. TIPS and I bonds are pegged to inflation.

Sounds like us. Though, we allocate the real gain to keeping up with LTC inflation.

We own our TIPs in Vanguard's mutual fund.

They are inside an IRA so I don't pay current taxes on the inflation driven principal growth

 

[GR111]

Larger Cash position might be good this late in the market cycle. But when market corrects, moving more to equities could be prudent. Inflation discussion above was informative and a bit scary.

 

[RAE]

I always used 40% to be conservative. Today I put in 10% after reading some responses and it still gave 100%. I also put in the “investigate” tab and see how much I can safely spend a year. Thankfully, unless we have a catastrophic issue we aren’t near that.

If you plugged in 10% equities and you are still at 100%, then you are definitely in very good shape. This is kind of what I was getting at in my earlier post..........if you have a good handle on your expenses (which you apparently do), and you have the assets to cover those expenses for XX years (with income from CDs and Soc. Security), then there is really no need to increase your equity exposure, if doing so makes you uncomfortable. Yes, you might be able to do better over time with more equities, but unless you are trying to leave an inheritance or something, there is really no compelling reason to do that. The only caveat I can see is health care expenses........you mention that you have that covered for now, but it is hard to predict what might happen with health care expenses in the future. So just be sure you have enough cushion to allow for that.