anybody else super conservative?

[Happyras]

Latest US Average Life Expectancy At Birth Figures:

80.0 Years: Central Intelligence Agency (CIA).
78.6 Years: Centers for Disease Control and Prevention (CDC).
78.5 Years: Organization for Economic Co-operation and Development (OECD).

Both sexes: 76.4 years
Males: 73.5 years
Females: 79.3 years
Mortality in the United States, 2021 (Figure 1)

For men only it is much lower, however, depending what year you were born it can vary. Assuming average age at death is 76.1, someone 66 would have about 10 years, I am a bit older.

Conclusion; Rounding data maybe a good 20 years and another 5 crappy years at best, but more likey for me <20 or live to 89 maybe?

You are so correct the WD rate is fine, I meant to address only risk on equities versus other lower risk investments strictly over the next 10 to 20 years. Data for that chart spanned a much longer period I believe but there was no reference in that post. A conservative investment has low risk or guaranteed principle, and growth > inflation.

To me, using a 30 year data set for a 10 to 20 year comparison, is not a valid assumption without some statistical variant to adjust for the duration.

 

[Gumby]

It's important to note that in this case, they define "risk" as volatility. Look back at the chart Midpack posted, and we see that using "success" as a definition, 100% stocks are far less 'risky' than 100% bonds.

But it is still very interesting and useful from that angle - a 33% stock allocation results in lower volatility than a 100% bond allocation. Often, the proponents of 0% equities do seem to be concerned about volatility. So 33% equities should be of interest to them, not 0% equities.

-ERD50

Yes. I noticed long ago that I could achieve the same volatility as a 0/100 portfolio by using a 65/35 portfolio and enjoy about 2% greater return, so that's what I have done.

 

[COcheesehead]

A point that is never included in the discussion is "60/40 % splits OF WHAT".
A fat FIRE can have only 10% in bonds and it would still be larger than the entire portfolio of a lean FIRE.

This is true. I have less than 30% in equities, but it’s still a healthy 7 figure amount.

 

[Happyras]

This is true. I have less than 30% in equities, but it’s still a healthy 7 figure amount.

+1

 

[Gumby]

....move somewhere very far away from the people.

100,000 years of human history have shown that survival is almost always enhanced by being part of a community rather than being solo.

 

[Bikechuck]

I turned 70 this year and my wife is one year younger than me. We let our equities bob up and down between 40% and 50% and seldom if ever have to rebalance with this target. Midpack's chart reassures me that we are not doing anything foolish.

Our fixed income includes a ten year TIPS ladder, some iBonds, some guaranteed funds including TIAA Traditional with a blended average return close to 5% and Total Bond Market.

I began taking my SS this year. So far so good but I do confess to some occasional heart burn when equities drop in value.

 

[Spock]

100,000 years of human history have shown that survival is almost always enhanced by being part of a community rather than being solo.

There is a huge difference between being part of a community
and living in a community.
When things aren't going well, survival is enhanced when part of a community and survival is reduced when in the proximity of strangers.

 

[aja8888]

"........Assuming average age at death is 76.1......" = I am technically dead right now and can't count on too many more cognitive and productive years. Next month, I turn 80 and I am the oldest member of my family by a long shot (I got lucky, I guess).

So, I am heavily into bonds, CD's, treasuries, and a small percentage (maybe 10% max) of some equities I have a good sized taxable capital gain in.

I'm just laying low and enjoying every day that I can and not worrying about the market, the FED, or which politician is in office.

 

[pb4uski]

Latest US Average Life Expectancy At Birth ...

For this purpose one should use life expectancy at attained ages, not at birth. And they are significantly different.

 

[friar1610]

For this purpose one should use life expectancy at attained ages, not at birth. And they are significantly different.

As a 78 yo, that’s good to hear.

 

[REWahoo]

For this purpose one should use life expectancy at attained ages, not at birth. And they are significantly different.

^ This, otherwise I'm already past my use by date...

 

[Car-Guy]

100,000 years of human history have shown that survival is almost always enhanced by being part of a community rather than being solo.

I live pretty far out in the county. Does being a member here count as being part of a community?

 

[aja8888]

I live pretty far out in the county. Does being a member here count as being part of a community?

Are you current with your annual dues here?

 

[Car-Guy]

Oops, the check is in the mail!

 

[yhoomajor]

100,000 years of human history have shown that survival is almost always enhanced by being part of a community rather than being solo.

I think there is a middle ground between being part of a Large community and being Solo.

I don't think being part of a large community always work out for good. Definitely didn't work out well for Native Americans when newly arrived Europeans decided to make them part of "community".

Also in the past, whenever there were wars, winning army would generally wipe out the losing side completely. The whole community.

On the other hand, if there was a small group of families, living off of land away from big community, they were mostly left untouched. Thats how many generations survived in hills of India and China over thousands of years. Even though there were waves of Greek, then Mongol attacks, then Islamic Arab invasions and later European invasions. Each of these invasions resulted n most of existing "big community" getting decimated.

Forgot to add, even European settlers were escaping the big communities in Europe.. when migrating to America.

 

[audreyh1]

I like to hedge my bets, so I’m 50/50 equities and fixed income and rebalance annually. I’m not conservative by that measure. Retired and living off investments for over 20 years now. Our retirement investment approach hasn’t changed either - so obviously comfortable.

I’ve run enough historical models. My main long-term concern is keeping up with inflation over the long run. For that reason I will probably always hold at least 30% equities.

I’ve been sleeping just fine. We haven’t managed to spend all our withdrawals each year so as suspenders we have quite a cash cushion built up.

I ignore politics and news. That certainly improves quality of life.

 

[audreyh1]

The Lost Decade, Revisited - AMG Funds
The term “Lost Decade for Stocks” refers to the ten-year period from 12/31/1999 through 12/31/2009, when the S&P 500® generated an annualized total return of -0.9% over the period. This was only the second time that the market actually had a negative total return over a decade period. Let see if a third time is coming?

Interesting example. I retired in 1999, but not with 100% stocks for my retirement portfolio so I didn’t experience this personally. I was rebalancing. Yeah by March 2009 things looked bleak, but recovery was swift and by mid 2010 staying invested I was well out of the hole. 2010-2020 was a huge long bull market that got me way ahead of inflation growth wise.

Latest US Average Life Expectancy At Birth Figures:

Using life expectancy from birth is way off base for talking about death rate for older/retired folks.

 

[RetireAge50]

One conservative thing we did was fill our “gap to SS and Pensions” with cash (CD’s and MM at the moment). This resulted in an overall 70/30 portfolio.

All of our expenses (up to about 100k/year) are now completely covered using this cash, pensions and social security.

The remaining 70% of portfolio is in stocks and will be used for whatever comes along in the future.

 

[pb4uski]

Are you current with your annual dues here?

I prepaid for life a few years ago.

 

[CincyDave]

Other than the late 70s early 80s when CDs were paying mid to high double digits, I've always been heavily in equities (90% or so). Two years into retirement, I'm still around 70% stocks. NW is higher than I'd ever imagined, so I'm going to dance with the one who brought me. That being said, the 30% I have in cash and bonds would last 10 years.

 

[marko]

I've posted this chart here a few times. A bit dated but still relevant I think. Interesting that a 60/40 has almost the same risk as 100% bonds but with better returns.

As far as lack of competence in our government, that's hardly anything new. I firmly believe that the market has its own inherent competence independent of what our leaders do. I've often opinined that the only truth left is in sports statistics and the stock market. The market is essentially a huge collective poll on world affairs in a way and tends to overlook the foolishness around it. Right now, the market doesn't seem overly concerned. Just one man's view...YMMV

 

[RetiredAt49]

Enjoying this thread… there are many like it on Bogleheads too. I understand all viewpoints. Honestly the only thing that matters is that each of you believe in your own AA based on your needs/desires and that’s all that matters. I personally have a very high equities AA. Why?Because I’m only 51 and if needed I would only need to pull about 1% from my equities portfolio. Because I was 100% equities for all of my career, my portfolio grew handsomely to allow me to live comfortably. Also - No debt + no mortgage = freedom.

 

[Ready-4-ER-at-14]

We are among the conservative camp and in the "won the game" mentality also, except I call it "escaping the rat race".

A long time ago one of the first things I read about social security said that retirement planning was a three-legged stool. Savings, pension, and social security. Pensions pretty much went away so I substituted annuities for that.

I broke savings into fixed income and equities. So now I had four categories. And four separately trackable income streams. If i calculate and substitute the social security payment into annuities or cd's and compare that we are roughly 25% in each of those, so using this threads sort of negating that social security amount, I get 33% in equities although this September is seeing that number shrink by large tech shrinkage.

 

[FREE866]

"do I need a therapist"
That was good. Don't we all?


Having a zero equity allocation really requires you to have truckloads of money , which apparently many on this board do so lucky for them.

However, if you want or need growth equities are required. A heavy equity portfolio has had outstanding returns for decades and I'm a believer that will continue to be the case. When I run my numbers if equities do just 50% of what they've done historically ( which is a very pessimistic outlook) then I'll still be fine so that's what I'm comfortable with.

 

[target2019]

I'm 54, have had a good career and built up a decent net worth. FireCalc and NewRetirement say I can retire and be in good shape 99%. But....I am a very conservative investor. Portfolio is roughly 45% bonds (pretty short term, with almost half maturing over next year), 15% preferred stocks (including half that have maturities in 3-5 years), 10% common equities, 15% cash/money market, and 15% real estate (rental property). I am educated, MBA in finance, have worked in the investment industry for 25+ years. I know all the statistics and strategies on equities, asset allocation, historical returns, etc.

But.... I just cannot hold a big allocation to equities. I fundamentally don't trust the people running the country (or states or locals, for that matter), don't trust the Fed, etc. Maybe "don't trust" is not the best word, a better description is that I believe they are all incompetent, or the system is so entrenched that its impossible to make any real change. (This is not political, it seems to be the case no matter which party is in power.) [Mod Edit]

Curious as to other people feel like this? How do you hold 60% equities in this kind of world and sleep? Like I said, I know that long term historical returns, etc etc etc. but it seems very likely the next 30 years are going to be very different from the last 30 years. Am i wrong? Do I need a therapist? What am I missing? Or do we just hold our nose and invest in 60/40 because that has worked for the last 30 years?

Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive are the standard terms for portfolio categorization. https://www.investopedia.com/managing-wealth/achieve-optimal-asset-allocation/

You state that you are super-conservative. I interpret that to mean 0% equity. You are not that. You may be closer to Moderately Conservative, but your definition of asset classes could be different from the standard ones.