I'm to some degree piggy backing on my previous "Wrestling with bond allocation..." post, but thought it warranted a new thread. I have read a number of different philosophies on AA strategies employed by you all and as is obviuos, multiple factors play into these personalized strategies (i.e. Risk tolerance, available RE assets relative to target, any RE pensions relative to expenses, projected inheritance, legacy objectives). While 1 size does not fit all, after reading much from you all, here is where my logic for my own AA has taken me...
Financially, within 3 yrs of hitting FIRE with some lofty RE income projections based on wants, not required needs (currently 52). Not sure I will do it then, but it would be for primarily non-financial reasons if I kept working in some capacity. No backstop in my case (i.e. DW stay at home, no pension) so all my assets (401k, brokerage accts, income producing Real estate) will produce 100% of my RE income. I ratcheted down my AA from 80/20 to 70/30 to reduce some volatility in the last 2 yrs. My thought has been since I am still working and putting away $$ for the next 3 yrs, I can afford to keep some volatility. OTOH, I get the argument one should consider playing more defense as they get closer to FIRE, particularly if they have "won the game", and get even more conservative say 60/40. As someone who has been self employed most of my working life and accustomed/wired as a "hunter/gatherer", part of my struggle in leaving the accumulation phase to the draw down phase is this fear of giving up my comfort in generating income as my "backstop" and turning my financial future over to my assets. My instincts tell me I need to be/stay more aggressive with my AA to fill this void... a little whacky thinking, I know. Additionally, I suppose what affects this is the feeling of moving to a "fixed income" in RE whereas my income today can vary greatly above my expenses giving me significant margin to save significant $ or make more significant 1 time purchases. I know some of you are riding 95/5 AA all the way thru your RE while others have dropped to 50/50 or less. I guess my question is how did you reconcile your AA during the different phases of life and how did your own personal psyche/how you are wired affect how you adjust your AA despite the fact the math said you were good with perhaps something different/more conservative?
Financially, within 3 yrs of hitting FIRE with some lofty RE income projections based on wants, not required needs (currently 52). Not sure I will do it then, but it would be for primarily non-financial reasons if I kept working in some capacity. No backstop in my case (i.e. DW stay at home, no pension) so all my assets (401k, brokerage accts, income producing Real estate) will produce 100% of my RE income. I ratcheted down my AA from 80/20 to 70/30 to reduce some volatility in the last 2 yrs. My thought has been since I am still working and putting away $$ for the next 3 yrs, I can afford to keep some volatility. OTOH, I get the argument one should consider playing more defense as they get closer to FIRE, particularly if they have "won the game", and get even more conservative say 60/40. As someone who has been self employed most of my working life and accustomed/wired as a "hunter/gatherer", part of my struggle in leaving the accumulation phase to the draw down phase is this fear of giving up my comfort in generating income as my "backstop" and turning my financial future over to my assets. My instincts tell me I need to be/stay more aggressive with my AA to fill this void... a little whacky thinking, I know. Additionally, I suppose what affects this is the feeling of moving to a "fixed income" in RE whereas my income today can vary greatly above my expenses giving me significant margin to save significant $ or make more significant 1 time purchases. I know some of you are riding 95/5 AA all the way thru your RE while others have dropped to 50/50 or less. I guess my question is how did you reconcile your AA during the different phases of life and how did your own personal psyche/how you are wired affect how you adjust your AA despite the fact the math said you were good with perhaps something different/more conservative?