I use T. Rowe Price Advisory Planning Services for my retirement asset allocation. I am 41, I hope to retire anywhere within the next 4 to 9 years if possible. The recommended asset allocation plan is premised on me working until 65, but I was told that even if I want to retire early, the asset allocation would not change too much, because the early retirement would mean I would need my investments to last for a longer period of time, and I would need to take on more risk (stocks) to help make my retirement assets last as long as I do.
Here is the recommendation (I get close to the target with a combination of taxable, 401k/deferred compensation, and ROTH IRA investments):
Stock
Large Cap 48%
Mid/Small Cap 16%
International 16%
Specialty 0%
Bond
Investment Grade 15%
High Yield 0%
International Bond 5%
Cash
Short Term 0%
I abrogate a little from this recommendation. I have a REIT fund, since I do not own real estate, I thought it was a good idea to have some exposure to the real estate market. If I purchased real estate, I might get out of that. In the meantime, I consider it under the Mid/Small Cap allocation.
I do keep money in a Vanguard short-term bond fund for an emergency cash fund as well as a future real estate purchase fund.
I have a defined benefit pension coming to me at age 60 that might cover about 10% of my cost of living at the time I will start to receive it. Some say that a pension like this should cause me to change my stock/bond asset allocation. I am not sure about this.
I have a medium-level of risk tolerance, and I pretty high desire to become financially independent as soon as possible.
Is there a way for me to assess what the over-all or yearly rate of return and standard deviation on this type of asset allocation has been in past? Is there a calculator that will do this?
Do you think this is a good asset allocation considering my goals, risk tolerance and any other relevant factors? I appreciate your advice.
Here is the recommendation (I get close to the target with a combination of taxable, 401k/deferred compensation, and ROTH IRA investments):
Stock
Large Cap 48%
Mid/Small Cap 16%
International 16%
Specialty 0%
Bond
Investment Grade 15%
High Yield 0%
International Bond 5%
Cash
Short Term 0%
I abrogate a little from this recommendation. I have a REIT fund, since I do not own real estate, I thought it was a good idea to have some exposure to the real estate market. If I purchased real estate, I might get out of that. In the meantime, I consider it under the Mid/Small Cap allocation.
I do keep money in a Vanguard short-term bond fund for an emergency cash fund as well as a future real estate purchase fund.
I have a defined benefit pension coming to me at age 60 that might cover about 10% of my cost of living at the time I will start to receive it. Some say that a pension like this should cause me to change my stock/bond asset allocation. I am not sure about this.
I have a medium-level of risk tolerance, and I pretty high desire to become financially independent as soon as possible.
Is there a way for me to assess what the over-all or yearly rate of return and standard deviation on this type of asset allocation has been in past? Is there a calculator that will do this?
Do you think this is a good asset allocation considering my goals, risk tolerance and any other relevant factors? I appreciate your advice.