Nope. Your scenario does not match what our circumstances were in 2008 or my attempt to explain what our plan was.Doc wrote:It sounds like you have an "ability and need to take risk" dilemma. You want a 50/50 portfolio to fund your post SS retirement but you want to set aside $X to fund an early retirement. Since your total dollars are limited you make the choice of not rebalancing during a market crash so that you don't jeopardize your early retirement by eating up your set aside. But by not rebalancing you are not buying stocks during the downturn and therefore will have fewer $'s after the recovery so your plan protects your early retirement but at the possibility of having fewer assets than desired post SS.jeffyscott wrote:I disagree. We were at 50/50, the decline in stocks was far more than 40% and who's to say it might not have gone to -80%. As it happened we remained at 50/50, but I was not about to ruin my retirement plans to satisfy some sort of asset allocation purity test by continuing to buy into a declining market without limit. The timing of that decline began 7-9 years prior to planned retirement, I was not going to bet my early retirement on the "certainty" that stocks would recover by then.
A "better" plan might be to just reduce your AA to maybe 45/55 and use part of that money to fund your pre-SS needs but also to rebalance. Putting a limit on how much you are willing to use to rebalance is an option but you need to consider that those stocke you didn't buy at the "low" will not be there 20 years from now.
Hard choices.
In any case, we now have assets far beyond our needs and wants and any conflict would be between ability and willingness to take risk. Our need to take risk is essentially now 0.