Read an interesting article in a Canadian business newspaper, the Financial Post
, that talked about increasing equity exposure in retirement instead of the common rule of thumb of reducing it (ie ~100-Age=Equity exposure). It was written by Jason Heath, a CFP who is a regular contributor to a number of personal finance sites.
I likely don't do the article justice but in a nutshell...
The article is based on a publication by Wade Pfau and Michael Kitces in the Journal of Financial Planning: “Reducing Retirement Risk with a Rising Equity Glide Path
”. He notes the common rule of thumb is that the success of your retirement portfolio is dependent on your sequence of returns; good returns in your early years will hopefully make poor returns in later years insignificant. However, reducing equity exposure in later years may prevent your portfolio from recovering if you experience poor returns in your early years. Increasing equity exposure allows you to capitalize on returns when the markets recover. Pfau and Kitces' research apparently seems to indicate that overall, a rising equity glide paths from conservative starting points can achieve superior results compared to steady or declining equity ratios.