Poll - Retired, Should I rebalance with this market?

[perez99]

Hello All,
I just retired in January at 58 with a 70%/30% AA.
Given the market performance, I'm now at around 64/36.
Always rebalanced during accumulation stage. But with this year so far, I'm undecided if I should do. I do plan to be always at or above 60% stock, so fully understand that volatility is part of that.

Wondering if most are holding off rebalance or just implementing their plan regardless of the level of concern with the market / economy.
Assuming you are happy with your AA and retired , have you rebalanced or intent to rebalance?
Thanks

 

[Montecfo]

Hello All,
I just retired in January at 58 with a 70%/30% AA.
Given the market performance, I'm now at around 64/36.
Always rebalanced during accumulation stage. But with this year so far, I'm undecided if I should do. I do plan to be always at or above 60% stock, so fully understand that volatility is part of that.

Wondering if most are holding off rebalance or just implementing their plan regardless of the level of concern with the market / economy.
Assuming you are happy with your AA and retired , have you rebalanced or intent to rebalance?
Thanks

I look at my AA at least annually, then I rebalance tactically.

It does not seem crazy to rebalance now, or wait till what may be lower equity prices.

 

[audreyh1]

I don’t rebalance often and will probably wait until January when I take my withdrawal. I did add to equities in June.

Do you intend to rebalance back to 70% or leave it closer to 60%? In other words what is your target allocation now that you’ve retired?

 

[Lawrence of Suburbia]

I never rebalance.

Three of my accounts are in balanced funds (VWIAX, VTTVX, DODBX), the fourth in a cash account with 3 years' living expenses, the fifth in SCHD-- all stock, that's my 'rising equities glidepath'. Or falling equities glidepath, these days.

Anyway, I leave my rebalancing chores to Vanguard and Dodge & Cox.

 

[Midpack]

I always use bands to rebalance regardless of what markets are doing, thought that’s what they were for? That’s continuously served me very well since 1987, so why change now…

 

[jebmke]

I always use bands to rebalance regardless of what markets are doing, thought that’s what they were for? That’s continuously served me very well since 1987, so why change now…

Me too; although in 2018 I removed the band on the upside so I no longer re-balance out of equity.

 

[perez99]

I
Do you intend to rebalance back to 70% or leave it closer to 60%? In other words what is your target allocation now that you’ve retired?

Current thinking is keep it a 70%.... Maybe too much risk... not sure. If I were to stay at 70%, then rebalance should likely be my next step..

Still considering letting it drift down to 60%.. Part of the problem is that most of my fixed income is in 401K. However my plan only have bonds funds for fixed income which I'm not so keen to get back in at this time.

 

[brett]

I believe that it comes down to your financial situation, your personality, and your aversion to risk.

I am in my early 70's. We have not re-balanced since retiring at 58. Some rebalancing did occur as we picked up some good equities during the downturn.

I still consider both of us to have a 20 year outlook. But...a sudden market downturn of 50 percent would not impact our life...only our respective estates. This makes a difference to our risk tolerance.

 

[Dtail]

I always use bands to rebalance regardless of what markets are doing, thought that’s what they were for? That’s continuously served me very well since 1987, so why change now…

+1

 

[mrfeh]

Your IPS should tell you when to rebalance. It shouldn't be a matter of opinion.

 

[Montecfo]

Your IPS should tell you when to rebalance. It shouldn't be a matter of opinion.

But hold it, maybe their IPS says to consult with ER.org periodically for advice on rebalancing?

Or they are trying to craft or refine it.

In truth, everyone does not have or need an IPS though I agree it is a good idea for many folks.

 

[perez99]

Or they are trying to craft or refine it.

THIS!

 

[FlaMariner]

Our "rebalance" plan is this.....

In January....if market was up for the year, we sell some stuff and take some winnings.
If market is down for the year, we hold tight.

(Looks like we are on course to "hold tight" this January)

 

[perez99]

Yesterday I transferred funds within my 401k to add 2% to my stock allocation. Still at around 66% vs 70% current target. Maybe I will just slowly get into it if the market keeps going down....

 

[TheWizard]

I'm in my tenth year of retirement. I have three monthly retirement income streams: pension/annuity, SS, RMD, from largest to smallest.

I have significant excess income from those streams almost every month. Beyond $10k in checking, I invest 100% of that excess income into stock index funds in my taxable account.

I don't call this rebalancing because it isn't. It's more of a transitioning process to a higher stock allocation over time...

 

[scrabbler1]

In my rollover IRA, an account I am not quite yet old enough to access (and have no need to do so anyway), I have a desired AA range which I will rebalance into when it becomes significantly outside of that range. In my 14 years of retirement, the AA range has been moving gradually away from stocks and toward bonds as I have aged.

In my taxable account, I very rarely rebalance. This is because I have an income target, mostly from the bond side. It is only when I am not meeting the overall income target will I do some rebalancing to get back toward that target.

 

[SecondCor521]

I have a formula that determines my target AA. The formula is based on my expected lifespan, my spending, and what AA would have resulted in maximum safety and portfolio ending balance based on historical data from FIREcalc.

The result of that formula at the moment is a 1.37% bond allocation.

I then have rebalance bands of 1.37% +- 25%(1.37%). My IPS is that I must reallocate to within those bands if I discover that I am outside of them, and that I may rebalance to my target whenever I feel like it if I am within them.

Currently I am within the band, and fairly close to the center, so I'm not rebalancing at the moment.

 

[jollystomper]

I will look at my AA at the end of the quarter (as I do every quarter) to see if is outside my target range. If it is within, I will do nothing, if it is outside, I will rebalance to get it back in the range.

 

[MarieIG]

I don't "rebalance" although my AA has vacillated. In preparation for retirement, I built up a cash cushion. Earlier this year I sold bond funds, so my bond holdings went down. Then I started buying individual treasuries, so they have been going up. With regard to stock, I sold off a mutual fund which I had for years, but had a high management fee, and spewed out capital gains. I sold a portion of another holding to harvest a loss. With regard to stock purchases, I put in limit orders for small amounts of stocks or ETFs which may or may not have executed, but thus far, these purchases have been small.

 

[perez99]

Thanks to all who responded. Seem we have a fairly disciplined investors here.

 

[Al in Ohio]

Rebalance once per year on a certain day or week, but NOT after a major market correction or during volatility.

 

[GaryInCO]

The idea behind rebalancing is to buy low, sell high. Stuff that has gone down can be bought cheaply, and vice versa.

This usually works well because stocks and bonds tend to move in opposite directions. So you could sell expensive stocks to buy cheap bonds. But this year, it's not working quite as well. Stocks and bonds are BOTH down. Right now SPY is down about 23%, and TLT is down 30%.

If they were both down the same amount, there would be nothing to rebalance. A 7% difference might make it worth the effort, but IMO it's not critical.

 

[Jeb-NY]

I have modified my rebalancing rules once my cash flow was such that I didn't have to maximize my returns as much. As I approached retirement I worked to a 50:50 AA. That worked for me at the time. I couldn't bring myself to rebalance as often during the big bull market so I changed to a plan where equities can float between 50 and 60%. I was above 60% back in January and pulled enough out of stocks in to cash to draw at least 3 years of RMDs. I like to think that was great insight but it was just following my rules. I now have enough cash that I can ride out at least 3 years of down turn without selling anything. If my equities drop below 50% I will put some of the extra cash back into the market. With stocks and bonds both going down my AA does seem to be changing much right now.

 

[Al in Ohio]

The idea behind rebalancing is to buy low, sell high. Stuff that has gone down can be bought cheaply, and vice versa.



This usually works well because stocks and bonds tend to move in opposite directions. So you could sell expensive stocks to buy cheap bonds. But this year, it's not working quite as well. Stocks and bonds are BOTH down. Right now SPY is down about 23%, and TLT is down 30%.



If they were both down the same amount, there would be nothing to rebalance. A 7% difference might make it worth the effort, but IMO it's not critical.

In a non volatile market that’s true and why you should do it annually or on an interval that you like. In a volatile market correction you’re behind the eight ball. ( too late to make it most effective for you ). Soon it will just correct quite a bit upwards again and now your AA is all askew again. Doh.

 

[SloHan]

Will probably wait till the end of the year and rebalance while making yearly spending withdrawal.