Poll: Equity Allocation for the 1st 10 years of RE

[DrRoy]

AA gets discussed a lot, but has not been polled for a long time that I could find. Please choose the figure that is closest to your average equity allocation for the first 10 years of RE. You might comment if you changed it after 10 years.

 

[DEC-1982]

I expect I will be at 60% for life but only time will tell.

 

[Dtail]

Voted for 55%. Started at 50%, but only retired for 1 year. Still learning in this area from many on the site.

 

[scrabbler1]

I have different AAs for my IRA versus my taxable account. That is because I am using only the taxable account to pay my expenses whereas the IRA is growing until I need it starting at age 60, 5 years from now.


Given the choices in the poll, it actually didn't matter which AA I used, the taxable-only one or the overall one, because they are both 45% or less. Had the poll's choices included a 40%, 35%, etc., I would have had to make a decision.

 

[Oz investor]

my number is a bit deceptive , because i went heavily into interest bearing securities in 2011 , 2012 and 2013 thinking the market would crash , but by the end of 2015 most of those securities had ever matured or been redeemed prematurely ( as investments paying 10% plus a year do in low debt environments )

since 2015 the quality ( increased risk v. reduced reward ) has declined and now am roughly 95% in equities ( shares ETFs and REITs ) some perpetual investments remain, but i can't find suitable replacement for the bond allocation .. so far

PS ( this calculation ignores property values which are inflated guesswork anyway , does include the income from the properties after expenses )

AND i am still in the first 10 years of planning my retirement

 

[pb4uski]

I transitioned from 100/0 to 60/40 over the last 10 or so years that I worked... mostly through directing income and new money contributions to fixed income. Was 60/40 when I retired and after a year changed to 60/34/6 for peace of mind and it was easier for me to manage withdrawals through cash... later changed to 60/35/5 as I became more comfortable with managing our nestegg in retirement and a small pension came online.

I may shave the cash down when we start SS but I think the target will always be 60/40.

 

[CyclingInvestor]

Retired 12 years, 98+% equities since 1993

 

[kevink]

I know this book has been mentioned here and there on these forums but FWIW just wanted to say that Michael McClung's "Living Off Your Money" has helped me understand this all-important decision better than anything else I've read. It's a massive tome (so much so that even the hard-core gang over on Bogleheads mostly fesses up to skimming much of it) but that's mostly because it is so thorough and data driven.

I'm a lot more risk-averse than most folks I see posting here but McClung has really helped me see why going less than 50% in equities is likely to be a bad idea for all but the super rich.

Investing During Retirement

 

[REWahoo]

I was 60% equities before retiring in 2005, then moved to 50% when I rolled over my 401k to an IRA. The market gyrations of 08/09 reduced the number to the upper 30's and during the recovery I adjusted to 40% - 45% as my comfort range.

 

[Cobra9777]

We were usually 100% equity while working. My initial conservative plan for retirement was 30/70, but some of the fine folks here convinced me otherwise. I voted 70%. Pure equity is actually 55% and real estate is 15% (one rental property plus some REIT ETFs). Bonds are 27% with 3% cash.

We have two pensions. They don't really function as bond-equivalents but they do reduce our reliance on the portfolio. So I feel like we can take more risk in the portfolio to potentially offset our main long-term concerns... inflation, LTC, and longevity. Over time, I'll let equities naturally drift higher.

Currently, about 80% of our spending is covered with pensions, rental income, and dividends from the taxable account. In theory, that figure goes to over 100% when SS starts.

 

[easysurfer]

I use 100 - age for my equities allocation.

For this poll, I chose 50% as that's a nice round number. But as each year goes by, my allocation should decrease by 1% .

 

[Corporateburnout]

Currently at 55% equities and will stay around 50-55 for the duration. Was 70% when I left work. Living off investments with only SS in a couple of years and no pension made me more conservative.

 

[Osprey]

My husband is retired and I am retiring in January 2019. We are at 50/50 and plan to glide up to 60s/40B over the first 10 years.

 

[pb4uski]

^^^^ I like that approach... I wish that I had know about it prior to retiring.

 

[unclemick]

1993 to 2006 ballpark 60/40. Then went full auto target retirement 2015. Slightly below 50% now. But I cheat with 'excess' cash and buy 'a few good' stocks periodically as a hobby mind you.

heh heh heh - best guess about 48% stock in my 25th year of ER.

 

[davebarnes]

Ages 69.8/60.7.
I was/still am comfortable with 86% stocks.
But, during our annual visit, our free advice Fido rep recommended 65% and he made my wife really nervous, and so stocks are down to 78%.
Our cash/short-term bond position is equal to 6+ years of planned withdrawals.

 

[jollystomper]

Just retired at age 60. Currently at 40% equities. I'm happy with the returns at this level. If we end up over budgeting for our retirement, we may reinvest the excess and raise the equity allocation.

 

[flyingaway]

Not retired yet, in the first OMY period. Currently around 70/30, plan to move gradually to 60/40 as the market goes up.

 

[ncbill]

I favor the "rising equity glide path" approach.

Start around 30% equities but increase every year to mitigate sequence-of-return risk in the early years of retirement.

 

[W2R]

My AA has been 45:55 (equities:fixed) for over a decade. I retired in 2009 at age 61.

45:55 works for me. I didn't cave in and sell low during the Great Recession so I feel it has been battle-proofed. I have no plans to change it any time soon. When am in my early 80's I might, as I prepare for my inevitable and probably imminent demise.

Right now, despite avoiding any investments with high risk+reward, despite living mostly off of my nest egg for the first 9 years of retirement, and despite buying a car and my dream home both in cash, my nestegg is still 35% higher than it was the day I retired. Good sequence of returns.

 

[Alan]

We retired January 2010 and our allocation to equities was 60%. We are now at 50% as of a couple of years ago, and for the foreseeable future I don’t plan on changing it.

 

[RobbieB]

Started at 80%, now at 69% after 4 years.

 

[MichaelB]

One critical aspect to keep in mind when comparing equity allocations is knowing how much of the budget is covered by non-portfolio income. Someone with pension & SS covering 1/2 of total spending has a much different risk profile vs another with no pension or SS income, even if both have the same equity allocation.

 

[wmc1000]

90/10 but only because we are fortunate not to need withdrawals for the first 10 years of retirement.

 

[Dtail]

I favor the "rising equity glide path" approach.

Start around 30% equities but increase every year to mitigate sequence-of-return risk in the early years of retirement.

I read the Kitces article on this concept. If one retires into a "low valuation" market (not now), then can one miss out on the rising market and then with reversion to the mean, be at a high equity valuation in later years with a down market and psychologically be able to handle it at 75-80 years old?