Asset Allocation

[Sconie]

Age 70....
60/32/8

 

[tsturbo]

Just turned 60 and retire this Monday, 12/02/2019. Spouse is almost 62 and has been retired 3 years. AA Goal is 40/55/5; current AA is 43/52/5. I will rebalance when or if it hits a 5% difference. The Market has been great??

 

[JohnnyBGoode]

Age 53, FIRE'd 2 years ago. AA 70/6/20/4

I am not a fan of bonds - I'd rather invest in CD's for my fixed income needs. The "4%" in my AA number is investments in commercial real estate through EquityMultiple and Peerstreet.

I am in it for the long term and I am comfortable that my equities (S&P 500 index funds) will continue to do well. If it drops it drops - I believe it will follow the historical upward path over time.

 

[Retired Expat]

I'm adjusting my AA to less pct equities. Curious to see AA of the members of this group. I'm reading that pct equities should be 100 - your age. I don't know anyone with equities pct that low.

So what is your AA and approx age?

I'm at 46,42,12 at 64 years old. I'm thinking of going to 36,60,4

60 years old and retired 7 years. 2.5% cash or equivalent, 46% equity, 20% long term and 32.5% real estate not counting primary residence and they are all income producing.

 

[audreyh1]

Thanks for the responses. I'll have to think about this more on my own. I don't have a good answer for why I should have a declining equity tilt, other than less time to recover from a sharp downturn. But since I probably have enough to weather that, it may not be a good enough reason.

I also think of declining equity tilt as a way to handle there being less market recovery time as one ages. Assuming one is quite dependent on the nest egg for living expenses.

If most of the funds are going to heirs instead, then it’s a different issue.

 

[Third Son]

I'm adjusting my AA to less pct equities. Curious to see AA of the members of this group. I'm reading that pct equities should be 100 - your age. I don't know anyone with equities pct that low.

So what is your AA and approx age?

I'm at 46,42,12 at 64 years old. I'm thinking of going to 36,60,4

I am at 80/15/5 after rolling my 401K into an IRA. I am retiring March 1st 2020 and will also receive a lump sum pension that I will use to re-balance a bit as I start to do some Roth conversions. I will be 60 next month.....

 

[big-papa]

I also think of declining equity tilt as a way to handle there being less market recovery time as one ages. Assuming one is quite dependent on the nest egg for living expenses.

If most of the funds are going to heirs instead, then it’s a different issue.

Possibly, but like lots of "rules of thumbs, this one was somewhat based on assuming that the retiree was using SWR as his withdrawal method vs. one of the myriad variable withdrawal methods.

An interesting article on the subject of age-in-bonds (one of many, actually)
https://www.forbes.com/sites/phildemuth/2013/07/29/is-age-in-bonds-dead/#5e63f47846c6

 

[Spanky]

Given the great market return since 2009, the sentiment toward a high equity allocation is totally understandable. It was a great decade. I prefer to stay with a somewhat moderate portfolio:
50-55/35-40/5-10(equity/fixed/cash)

Good luck to those with > 80% equity allocation. In the long-term (20+ years), it "should" end up with a much higher balance based on historical data if you are still around. Some may argue that they want to leave leave an inheritance for their children, grandchildren, or charity. That's perfectly fine. A friend in our pickleball team just passed away at the age of 72 - a great reminder that life is short and an aggressive portfolio may end up lower in value than a conservative one.

 

[OldShooter]

... Some may argue that they want to leave leave an inheritance for their children, grandchildren, or charity. That's perfectly fine. A friend in our pickleball team just passed away at the age of 72 - a great reminder that life is short and an aggressive portfolio may end up lower in value than a conservative one.

Violently agreeing here that every situation is different. In our case, we are creating trusts and I want to signal clearly to the trustees (by the portfolio they get) that we are aggressive but passive investors and we are investing for the long term. Trusts will pay for grandkids education and supplement DS's retirement. So the initial value of the bequests is not critically important.

 

[mickeyd]

@ AGE 75 I have been riding @ 45/45/10 for about 10 years or so.


Simplicity!

 

[SDHiker]

Early 60's, Equities 55/Bonds 5/REITs 30/Cash CDs MM 10

 

[Lstansbury]

It is so situational. For those with very well funded retirements, you could make an argument that equities should increase as one ages and not decrease, because a lot of that money will never be spent and will be inherited, and therefore should be invested as if it was own by the heirs. OTOH, for those with marginally funded retirements, there is little room for investments losses... even temporary paper losses... so retirement funds should be invested more conservatively.

Thank you for expressing my AA in words so well! 62 here, still working for a few more months.

I am 13% equities/42% bonds/45% cash. The cash and bonds will cover my needs. the 13% I can afford to lose. The cash is enough to cover 2.5 years of living expenses when I retire to hopefully help me side-step sequence of returns risk. And so that I can backdoor a couple of roth conversions.

 

[vgopalas]

Age 56- FIRE’d one year ago.
Equities 60
Bonds 25
Cash 5
REIT 10

 

[Lstansbury]

It is so situational. For those with very well funded retirements, you could make an argument that equities should increase as one ages and not decrease, because a lot of that money will never be spent and will be inherited, and therefore should be invested as if it was own by the heirs. OTOH, for those with marginally funded retirements, there is little room for investments losses... even temporary paper losses... so retirement funds should be invested more conservatively.

Exactly!

Personally I am beginning to prepare for my declining years and eventual death. Although I am fine now, seems like a lot of people die in their 70's and many get pretty "drifty" during those last few years, or are too preoccupied by health issues to pay much attention to how their equity investments are doing.

So, to me it makes sense to move slowly into less volatile investments as I age, even if it means my ultimate portfolio size will be smaller. It's already way more than I need.

Yes! -- I've been wondering about how to handle this. I'm single, one child who I doubt will be able to help me in my late 70s and on, if I make it that far. If I annuitize everything before I go too far south mentally, ... one less thing to worry about. Great point.