i agree to an extent with bill's philosophy as to why keep playing when you already won the game.
for decades i used the growth model from the fidelity insight newsletter.
as i got closer and closer to what i thought was a workable amount for retiring i shifted gears about 5 years ago to their income and capital preservation model.
no longer was my focus about growing richer, now its shifting to not growing poorer as a goal.
i do disagree on not owning equities totally with bill as historically time has smoothed out market risk to the point to date it has been very predicable.
like i said in an earlier thread 15 years seems to be the magic number for turning out okay in equities.
could tht change? sure it can but all things being equal i prefer to plan around what was ,what is and what stands a good chance of continuing.
My reaction to Bernstein's new philosophy was shock and horror, really. Because he blows off loss of spending power in this new perspective, and I think it's been shown pretty clearly that portfolios with low equity exposure (less than 20%?) don't survive long term for this very reason (inflation).
Like you, my original "game" was to have a super high equity exposure because I had a long time period to invest and I was working, and thus adding to the pot and not dependent in the nest egg to cover living expenses. The goal was about maximizing long term gain. "Winning the game" was being able to retire. Once I retired, the game did change. Now the goal was to trade off between short term volatility and long term portfolio survival, and to be able to "sleep at night". But just because I have ~50% in equities doesn't mean that I am playing the same game as before. Now I am playing the "long term portfolio survival" game. It's not the same game at all.
I really think Bernstein's new point of view is because so many people bailed in 2008/2009, "near the bottom" and then made their losses permanent by not getting back in, in a timely manner. But a lot of other people did not do that. Some rebalanced, some white-knuckled it through, some bailed, but got back in before making their losses "permanent".
IMO this new philosophy is for the folks who will sell risky assets anyway after a market crash, so they might as well keep their equity exposure super low. For longer periods, portfolio survival really suffers using this approach. You end up needing a larger portfolio until you have enough to put a reasonable chunk into equities. But 20 to 25 years in expenses in fixed income? And only then adding the inflation hedge of equities?
He's an advisor, though, he has to sell clients plans that he thinks they will stick to. I guess he's now telling them that they have to save a lot more? Because I can't imagine encouraging someone to retire with 25 years expenses and 0 equity exposure to protect against 25 years of loss of spending power.
Personally 12 years is my number of minimum expenses in fixed income to live off of if we go through another extended swoon in the equity markets. I can't get my mind around needing more than that. And I have more than 12 years expenses now in fixed income, but to me that just means I can use the excess to rebalance like we are supposed to when an asset class takes a hit. I actually arrived at that min 12 year number, as my personal number, when I held my nose and rebalanced in late 2008/early 2009. (I also usually have an additional 2 years expenses set aside in a separate account from my retirement fund - belt and suspenders)
And the last two crashes, though brutal, weren't extended at all. Or maybe not to those who didn't bail at the bottom and then stay out.
