I'm taking SEPP from a Fido IRA to the tune of about $2,100 a month. Lately, with valuations fairly high, I've taken to selling $2100 in equities each month to effectively "fund" my withdrawal until I get my AA back down closer to 55/45 which is where I want it. I haven't fully rebalanced in a couple years so my AA is a bit on the high side, especially since my money market fund has been liquidated to make the payments.I'm a boomer 5 years into retirement and at 77% equities. Not changing anything, but selling equities in IRA for cash.
Isn't this warning too late for Boomers ?
It should have happened about 10-15 years earlier, as many (most) Boomers are now retired and not age 55.
We are retired already, about 90% (rough guess) in equities. But got lots of CD money to last out a downturn.
However, since the market is at a high point, maybe I'll be a DMT and sell some big amount to stuff into some 2% CD/bonds
Link to Fidelity blurb?
Fidelity compared average asset allocations to an age-based target date fund and found nearly a quarter (23.1%) of 401(k) savers still have a higher percentage of equities than recommended, including 7% who are 100% equity. Among Baby Boomers, the over-allocation of stock was even higher – 37.6% have too much equity, including 7.9% who are in 100% equities.
Isn't this warning too late for Boomers ?
It should have happened about 10-15 years earlier, as many (most) Boomers are now retired and not age 55.
I don't understand what you are saying here. Why would this be?I'm going by the premise that it'll be harder to rebalance at a higher AA in equities. Sticking with 60/40. ...
What I meant is that if I have to buy more equities to get back to my AA in a down market, it will be a lot easier if I had more bonds. I will have more bonds with an AA of 60/40 than 70/30.I don't understand what you are saying here. Why would this be?
Got it. Agree.What I meant is that if I have to buy more equities to get back to my AA in a down market, it will be a lot easier if I had more bonds. I will have more bonds with an AA of 60/40 than 70/30.
What I meant is that if I have to buy more equities to get back to my AA in a down market, it will be a lot easier if I had more bonds. I will have more bonds with an AA of 60/40 than 70/30.
More broadly, I think that the point is that it is a bad idea to be 100% in stocks when retired for the simple reason that if you need to sell a part of your portfolio regularly to live on, you will sell at a loss in a big, long downturn.
A retired relative learned this harsh lesson in the 2009 recession - he was 100% into stocks and had to take out a home equity loan to avoid selling stocks at a big loss. He wrongly thought that dividends would tide him over, but they were inadequate.
Beyond that, the article sounds like market timing.
OK. Found the original report here:
https://www.fidelity.com/bin-public...elease/quarterly-retirement-trends-111419.pdf
An excerpt:
For what it's worth, I am increasingly hearing 120% minus age now. Is that just bull market recency talking? Perhaps, perhaps not. But yeah, by the time you hit 60 or so, you can easily look at your situation and decide if you can afford to take more than 40/60 risk, which is what the old '100 minus age' would tell you, and if you can, and you can stomach volatility, it's *probably* a good idea to do so.The old conventional wisdom was to hold 100% less your age in stocks. In my case, I would have been 30 % in stocks in 2008, and 20 %. now. I would have missed the run up in those 10 years big time.
BTW, I am 100% in equities..now and then.
+1I am at Fidelity and at 2 years retirement and am already at 55% stocks, but would not consider 70% and above at retirement.
I think a large part of this decision is how dependent one is on their portfolio for living expenses.
That's why our bond holding is in TIPS.Isn’t inflation as big a risk to greater bond allocation, given the insane Fed actions since 2008 or so?
I thought TIPS were essentially nothing more than T-bills, which pay almost nothing. If so, non-inflation of nothing doesn't really address the end goal: preserving your money's actual purchasing power. Does it?