Do you have an allocation more conservative than 50/50 ?? What is it? Why? How Bogleheads are getting it done.

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Sandtrap
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Do you have an allocation more conservative than 50/50 ?? What is it? Why? How Bogleheads are getting it done.

Post by Sandtrap » Sun May 26, 2019 5:06 pm

Over time, it seems that the greater majority of "bogleheads" have an allocation no more conservative than 50/50. And, from that point out to higher equity percentage. IE: 50/50 . . 60/40 . . 70/30. . etc.


Does anyone here have an allocation that is more conservative than 50/50?

What is your allocation?

(actionably)

Why? (are you following age in bonds, target retirement fund, etc)?

Age? (or age range. . and retired/not retired)

*This thread encourages real life examples of "Bogle Concepts" in action :D to benefit the forum with actionable content. :D

Thanks everyone.
j :happy
Last edited by Sandtrap on Sun Jun 02, 2019 6:54 pm, edited 7 times in total.
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stan1
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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by stan1 » Sun May 26, 2019 5:11 pm

Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)

visualguy
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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by visualguy » Sun May 26, 2019 5:11 pm

It would depend on the size of your portfolio and how close you are to needing the money potentially... There's no generic answer for these things - a lot depends on the details of the individual circumstances.

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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by Sandtrap » Sun May 26, 2019 5:13 pm

stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
This is something that's not discussed as much when it comes to allocation.
Not only age and asset size, but when assets are substantial or "more than enough".
What is your allocation range?

thanks
jim :happy
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sambb
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by sambb » Sun May 26, 2019 5:15 pm

if risk tolerance has changed, due to earnings, market forces, etc. and youre close to winning the game, then why not go conservative.

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Phineas J. Whoopee
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Phineas J. Whoopee » Sun May 26, 2019 5:21 pm

This is what I did and why, and a couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation approach will be far more practical for most investors to commit to and implement.

PJW

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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by stan1 » Sun May 26, 2019 5:25 pm

Sandtrap wrote:
Sun May 26, 2019 5:13 pm
stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
This is something that's not discussed as much when it comes to allocation.
Not only age and asset size, but when assets are substantial or "more than enough".
What is your allocation range?

thanks
jim :happy
We are at about 45/55 I think (I don't know the exact amount, haven't calculated it in years). I expect it will stay that way until we are in our 80s maybe. We bought some equities on December 26th this year. If the market drops again I'll buy more. More than enough is subjective but having pension income helps (including one COLA'd military pension). We definitely don't have 50x expenses in investing accounts without taking pension income and SS into account which some people on this board seem to do.

Note my approach works for us. I'm not recommending anything I do to anyone else.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by 7eight9 » Sun May 26, 2019 5:37 pm

Allocation is approximately 20/80 (most of the 80 is CDs and money market (which will soon be moved to Prime MM - thanks Kevin M)).

As can be seen by our portfolio (link below) we aren't necessarily following any particular strategy in general or overall. Just not exactly comfortable with investing in stocks. Low level of spend which to a degree mitigates feeling of need to take more risk.

viewtopic.php?f=1&t=281420&p=4551153#p4551153

53/50

Not retired
I guess it all could be much worse. | They could be warming up my hearse.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Blackwood » Sun May 26, 2019 5:37 pm

Currently 45.5% fixed income, but the planned glide path is [age - 20] fixed income up to a maximum of 70% fixed income.

The (somewhat fuzzy) reasoning is that there is less need to take risk as life expectancy decreases (hence age - 20), but unless your days are truly numbered, there is always a need for the higher expected return of stocks to keep ahead of inflation (hence max 70% fixed income).

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Rob54keep » Sun May 26, 2019 5:38 pm

I am currently at about 40/60. I have about 30x annual expenses in short-term instruments (bonds, CD's I-Bonds, Stable Funds) to age 95 and the remainder in stocks. I have no desire to take on more risk just to possibly create a larger legacy asset. I rebalance the AA as stocks become inflated and annual withdrawals.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Sun May 26, 2019 5:51 pm

Phineas J. Whoopee wrote:
Sun May 26, 2019 5:21 pm
This is what I did and why, and a couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation approach will be far more practical for most investors to commit to and implement.

PJW
Thanks for responding.
Yes, I've read your posts on this and always look forward to your astute input at any time.
Thanks for posting the links. Great reading and info to ponder on.

Thanks whole bunches.
Aloha
jim
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Phineas J. Whoopee
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Phineas J. Whoopee » Sun May 26, 2019 7:55 pm

Sandtrap wrote:
Sun May 26, 2019 5:51 pm
Phineas J. Whoopee wrote:
Sun May 26, 2019 5:21 pm
This is what I did and why, and a couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation approach will be far more practical for most investors to commit to and implement.

PJW
Thanks for responding.
Yes, I've read your posts on this.
Aloha
j
I didn't mean to imply you personally hadn't visited the links before.

I include them in the frequent threads asking the same question so other people, including non-registered new lurkers, can access them in context.

PJW

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Sun May 26, 2019 8:57 pm

Phineas J. Whoopee wrote:
Sun May 26, 2019 7:55 pm
Sandtrap wrote:
Sun May 26, 2019 5:51 pm
Phineas J. Whoopee wrote:
Sun May 26, 2019 5:21 pm
This is what I did and why, and a couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation approach will be far more practical for most investors to commit to and implement.

PJW
Thanks for responding.
]Yes, I've read your posts on this. And I really appreciate your input
Those are great links. Read them. Awesome material to ponder on and many should consider something like that perhaps.
Aloha
j
I didn't mean to imply you personally hadn't visited the links before.

I include them in the frequent threads asking the same question so other people, including non-registered new lurkers, can access them in context.

PJW
Edited. (clarification above)
Always look forward to your astute input and appreciate it.

With your (PJW) permission, here's an excerpt from your link.
I encourage anyone who hasn't read the two links that "PJW" provided to look them over. Some good stuff to chew on.
Like this:
Up to 25 times expenses: 70/30
Above 25 but below 30 times expenses: 60/40
Above 30 but below 35 times expenses: 50/50
Above 35 times expenses: 40/60
This is one of the few times where an allocation slope per increasing assets above 25X retirement expenses has been put in this concise way.

Mahalo,
jim :D
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by alexfoo39 » Sun May 26, 2019 10:52 pm

Hehe... Most bogleheads are more Conservative than we think. Where's the 90/10 folks?

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by sport » Sun May 26, 2019 10:59 pm

My target allocation is 35/65. My primary goal is capital preservation, not capital gains. The 35% should be enough to keep up with inflation, plus some growth. If the stock market drops 50%, then my loss will be in the 17% range. I feel that is something I can live with. My reasoning is "don't take risks that I don't need to take"
stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by AKalltheway » Sun May 26, 2019 11:56 pm

My allocation is 60/40 bonds/stocks. I'm semi-retired and work a part-time online job from home teaching college classes. I live off pension and rental income and defer all my teaching income into my 403(b) and traditional IRA up to the limits. The 60/40 allocation lets me sleep well at night. Might be too conservative for some, but it works for me.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by bayview » Mon May 27, 2019 12:06 am

30/70 due to DH’s comfort levels. I’d be happy with 50/50.

I go with DH’s preferences (“happy husband, happy...” umm; I have no rhyme). If it were only me, I’d probably be at 50/50, under the guidance that I’d you don’t know whether to tilt toward equities or fixed income, go with both. But really, there’s not that much difference between 50/50 and 30/70, and I decided to let it go.

I would note that DH’s default savings would be cash under the mattress, so this compromise is a win in my opinion. :beer
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by CarpeDiem22 » Mon May 27, 2019 12:18 am

I'm currently at 45/55 stocks/bonds. My target allocation is 65/35 based on age in bonds (approx.). Being 20% below my target stock allocation is my tactical asset allocation, which late Mr. Bogle permitted.

Being a India resident, I get about 8% nominal return from high grade fixed income (retail inflation at 3% currently, so 5% real return in local currency), and the largest stock index is today trading at about 29x trailing earnings which is higher than 2007-08 peak.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Dandy » Mon May 27, 2019 4:44 am

I also feel I have won the game. (luck, living below our means and thanks to Mr. Bogle)
Retired age 71
Pension and SS about equal our expenses, no debt/mortgage
Should be enough for heirs - actually gifting to them annually
No need to take extra risk for extra growth
Enough "safe" fixed income (a la Dr. Bernstein) to cover spouse if I die first (50% reduction in pension, only my SS, etc.)
Currently about a 43/57 allocation. Facing a rising equity allocation as RMDs deplete fixed income heavy TIRA and Taxable
equity heavy account grows.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by nativenewenglander » Mon May 27, 2019 5:33 am

We are 95% in Wellesley Income Fund so a 35/65 split.
2.5% SCHO short term treasuries
2.5% Cash
That gives us 2-3 years cash.
Some accounts all dividends and capital gains get reinvested, other accounts only capital gains get reinvested and the dividends go to in cash.
I am 58 and 75% retired, my wife says 90%. She still works three days a week plus a day or two in our home based business. My wife is 5 years younger and will retire some time in the next 5 years.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by LadyGeek » Mon May 27, 2019 5:50 am

This thread is now in the Investing - Theory, News & General forum (general discussion).
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by beyou » Mon May 27, 2019 5:52 am

Blackwood wrote:
Sun May 26, 2019 5:37 pm
Currently 45.5% fixed income, but the planned glide path is [age - 20] fixed income up to a maximum of 70% fixed income.

The (somewhat fuzzy) reasoning is that there is less need to take risk as life expectancy decreases (hence age - 20), but unless your days are truly numbered, there is always a need for the higher expected return of stocks to keep ahead of inflation (hence max 70% fixed income).
Close to Vanguard Target Date allocation, more aggreesive than age-in-bonds but a floor on equities of 30%.

I personally have been following age in bonds, but part of my reasoning is the simplistic (if you win stop playing). I am considering the v shaped glide path in the future, meaning increase from some point. Have not decide that inflection point, but loosely correlated to medicare and SS benefits. If you retire early, with many years to such benefits, seems prudent to avoid sequence of return risk. But when I reduce my expenses (medicare) and increase my income (SS), seems one can take more risk to either insure longevity or potentially leave more to heirs. I do like the PJW plans around income multiplier. I am thinking one should maybe have 20x in fixed income and 20x in equity if one is 50 planning for 90. But as you hit 70, having 20x in fixed income is sufficient for your own needs, why not let it ride in equities ? That plus SS at 70 should keep you in good shape when combined with the equity port growth from 70 to 90. This strategy puts one at roughly 50/50 at 50 (age in bonds) but then as you get older MAY equities drift up (I want to maintain 20x in bonds so this may occur by selling equities initially, but only to fund expenses, not to reduce AA, so when SS and medicare kick in, will sell less equities, causing potentially higher equity allocation). At 80 one might consider 20x in fixed income no longer necessary, due to SS and reduced longevity potential, potentially allowing more in equities, but at that point you may be doing so for your heirs. This theory depends on having more than 20x total assets. If not one should consider working longer or reducing expenses (or both).

So I am nearing retirement, below 50 but not planning to stay below 50 forever. At least AA is no longer the primary target, but rather safe spending cumulative capacity which reduces as you age, allowing more risk eventually.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by 3-20Characters » Mon May 27, 2019 6:06 am

I stick with 50/50. Simplicity. I just don’t see much difference in going lower unless you go a lot lower and then, you run into a different risk. It really depends on individual circumstances and unless everyone posts their age, portfolio, spending, and goals, it’s hard to draw any useful information from other people’s preferences.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by smitcat » Mon May 27, 2019 6:10 am

beyou wrote:
Mon May 27, 2019 5:52 am
Blackwood wrote:
Sun May 26, 2019 5:37 pm
Currently 45.5% fixed income, but the planned glide path is [age - 20] fixed income up to a maximum of 70% fixed income.

The (somewhat fuzzy) reasoning is that there is less need to take risk as life expectancy decreases (hence age - 20), but unless your days are truly numbered, there is always a need for the higher expected return of stocks to keep ahead of inflation (hence max 70% fixed income).
Close to Vanguard Target Date allocation, more aggreesive than age-in-bonds but a floor on equities of 30%.

I personally have been following age in bonds, but part of my reasoning is the simplistic (if you win stop playing). I am considering the v shaped glide path in the future, meaning increase from some point. Have not decide that inflection point, but loosely correlated to medicare and SS benefits. If you retire early, with many years to such benefits, seems prudent to avoid sequence of return risk. But when I reduce my expenses (medicare) and increase my income (SS), seems one can take more risk to either insure longevity or potentially leave more to heirs. I do like the PJW plans around income multiplier. I am thinking one should maybe have 20x in fixed income and 20x in equity if one is 50 planning for 90. But as you hit 70, having 20x in fixed income is sufficient for your own needs, why not let it ride in equities ? That plus SS at 70 should keep you in good shape when combined with the equity port growth from 70 to 90. This strategy puts one at roughly 50/50 at 50 (age in bonds) but then as you get older MAY equities drift up (I want to maintain 20x in bonds so this may occur by selling equities initially, but only to fund expenses, not to reduce AA, so when SS and medicare kick in, will sell less equities, causing potentially higher equity allocation). At 80 one might consider 20x in fixed income no longer necessary, due to SS and reduced longevity potential, potentially allowing more in equities, but at that point you may be doing so for your heirs. This theory depends on having more than 20x total assets. If not one should consider working longer or reducing expenses (or both).

So I am nearing retirement, below 50 but not planning to stay below 50 forever. At least AA is no longer the primary target, but rather safe spending cumulative capacity which reduces as you age, allowing more risk eventually.
"But as you hit 70, having 20x in fixed income is sufficient for your own needs, why not let it ride in equities ?"
Agreed absolutely - once you have enough in fixed 'safe' income investments for you to live a typical life than why not let any balance of investments ride for future heirs and/or charities.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by UpperNwGuy » Mon May 27, 2019 6:33 am

alexfoo39 wrote:
Sun May 26, 2019 10:52 pm
Hehe... Most bogleheads are more Conservative than we think. Where's the 90/10 folks?
They're not posting because the question was phrased in such a way that only those below 50/50 were asked to respond.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Watty » Mon May 27, 2019 6:34 am

Retired in 2015 and have most of my investments in The Vanguard 2015 Target date fund which is 45% stocks/55% bonds.

I also have a few things like old high interest rate iBonds and money in a money market fund so my overall stock percentage is less than 40%.

I am early in retirement and the next few years will be some of my most expensive years for my portfolio to support since I have not started Social Security and Medicare yet and we are still doing things like a lot of travel which will likely slow down as we get older. In a few years I expect our portfolio withdrawals to be a lot lower as long as our health holds up.
Sandtrap wrote:
Sun May 26, 2019 5:06 pm
Over time, it seems that the greater majority of "bogleheads" have an allocation no more conservative than 50/50. And, from that point out to higher equity percentage. IE: 50/50 . . 60/40 . . 70/30. . etc.
I am not sure that is true and even if it is a lot of people have decades until they will retire so comparing their asset allocation to people in various phases of retirement does not mean a lot.

There have also been a lot of "it is ok to be 100% stocks" posts which may have more to do with euphoria after a ten year bull market than good planning.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by AlwaysaQ » Mon May 27, 2019 7:10 am

Approximately 40/60 allocation and age is late 70s. There are planned large repairs to the home and grounds and unknown medical expenses ahead.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by dknightd » Mon May 27, 2019 7:27 am

We're currently about 25/75. Will be retiring soon.
About 33% of our "safe" money will be used to buy SPIA when I retire.
About 33% of our "safe" money will be used to get us through me claiming SS at 70.

That will leave about 50% of our money which will be 50/50 (or 25/25 of what we have now) which will be used for discretionary spending.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by goblue100 » Mon May 27, 2019 7:49 am

Sandtrap wrote:
Sun May 26, 2019 8:57 pm

With your (PJW) permission, here's an excerpt from your link.
I encourage anyone who hasn't read the two links that "PJW" provided to look them over. Some good stuff to chew on.
Like this:
Up to 25 times expenses: 70/30
Above 25 but below 30 times expenses: 60/40
Above 30 but below 35 times expenses: 50/50
Above 35 times expenses: 40/60
This is one of the few times where an allocation slope per increasing assets above 25X retirement expenses has been put in this concise way.

Mahalo,
jim :D
Also from the linked thread:
I forgot all about one part of the reasoning behind those numbers: They result in a fairly constant-size stock holding. In effect, the gains are being safely set aside in bonds, until I get up to 35 times expenses at which point the stock holding can start to grow again. I don't know how I came to leave that out. It was a very important factor in choosing the thresholds.
This is essentially what I'm doing. My plan is to lock in my equity holdings at their current level while moving the gains and current earnings into bonds until I get to 50/50. At 60/40 now. I don't think I would ever get more conservative than 50/50 but 10 years ago I would have told you 60/40 was it, so my attitude may change in the future.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Dandy » Mon May 27, 2019 7:56 am

Would it make sense to use instead of X times expenses, X times the drawdown required to meet expenses. There is a big difference if most/all of your expenses are covered by pension/SS vs little or none. The equity allocation/risk need can be vastly different.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Mon May 27, 2019 8:07 am

Watty wrote:
Mon May 27, 2019 6:34 am
Retired in 2015 and have most of my investments in The Vanguard 2015 Target date fund which is 45% stocks/55% bonds.

I also have a few things like old high interest rate iBonds and money in a money market fund so my overall stock percentage is less than 40%.

I am early in retirement and the next few years will be some of my most expensive years for my portfolio to support since I have not started Social Security and Medicare yet and we are still doing things like a lot of travel which will likely slow down as we get older. In a few years I expect our portfolio withdrawals to be a lot lower as long as our health holds up.
Sandtrap wrote:
Sun May 26, 2019 5:06 pm
Over time, it seems that the greater majority of "bogleheads" have an allocation no more conservative than 50/50. And, from that point out to higher equity percentage. IE: 50/50 . . 60/40 . . 70/30. . etc.
I am not sure that is true and even if it is a lot of people have decades until they will retire so comparing their asset allocation to people in various phases of retirement does not mean a lot.

There have also been a lot of "it is ok to be 100% stocks" posts which may have more to do with euphoria after a ten year bull market than good planning.
Good points. Thanks.

I retired in 2012 and on a similar track like yourself. Yes. the gap between SS and Medicare (especialle Medicare as I was lacking pension health, etc. and ACA took a yearly fortune). . . Yes. Wise to get in the travel because there are lifestyle compromises as health issues crop up. Hopefully later vs sooner.

That may be the case in "Bogleheadville". It's possible that the higher equity allocations (100%, accumulation phase, etc) are more vocal and the retired "slow and steady" folks have less drama and therefore less to post.

Thanks again.
jim :D
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Mon May 27, 2019 8:11 am

Dandy wrote:
Mon May 27, 2019 7:56 am
Would it make sense to use instead of X times expenses, X times the drawdown required to meet expenses. There is a big difference if most/all of your expenses are covered by pension/SS vs little or none. The equity allocation/risk need can be vastly different.
+1
Absolutely. And, many here, including myself, comment that there are other variables beyond 10x, 25x, etc, annual retirement expenses , such as total portfolio size, nature of the income stream and size, etc.

An interesting topic, off course, is the volatility difference between 2 portfolios of the same allocation but different makeup.

Thanks for the input.
Aloha
j :happy
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Mon May 27, 2019 8:13 am

dknightd wrote:
Mon May 27, 2019 7:27 am
We're currently about 25/75. Will be retiring soon.
About 33% of our "safe" money will be used to buy SPIA when I retire.
About 33% of our "safe" money will be used to get us through me claiming SS at 70.

That will leave about 50% of our money which will be 50/50 (or 25/25 of what we have now) which will be used for discretionary spending.
Wow.
Great plan!
25/75
Do you have your baseline expenses covered by income streams outside of your portfolio (which is where the allocation is figured)?

thanks,
j :happy
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Phineas J. Whoopee
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Phineas J. Whoopee » Mon May 27, 2019 8:34 am

Dandy wrote:
Mon May 27, 2019 7:56 am
Would it make sense to use instead of X times expenses, X times the drawdown required to meet expenses. There is a big difference if most/all of your expenses are covered by pension/SS vs little or none. The equity allocation/risk need can be vastly different.
Of course so, yes. In my personal case the future uncertainties are so great over such a long period of time I use a multiple of current expenses. Most likely, as I think I wrote in some thread before, my returns will be greater than zero real, and my Social Security retirement benefits will be discounted by less than 25%, so I'll be able to spend more if I want to.

I am not willing to make such an assumption at this early date.

As I definitely wrote in posts linked in this thread my plan is based on my personal situation and nobody else's. I didn't design it with the purpose of writing a book telling everyone else to follow it.

I post it as an alternate way of looking at the asset allocation question, putting the conventional thought into sharper relief.

PJW

Dandy
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Dandy » Mon May 27, 2019 9:20 am

I post it as an alternate way of looking at the asset allocation question, putting the conventional thought into sharper relief
.

Your original post was --original and interesting. I was just trying to build on that.

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shum
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by shum » Mon May 27, 2019 9:24 am

How about 16/84 with the argument that the standard deviations of bond funds is about 3% and the standard deviation of stock funds is about 15%. In order for you to have equal weighting of each, the weighting must be proportional to their standard deviations. A simple 50/50 doesn’t even come close to equal weighting. Of course you normally buy more bonds to keep the weighting so they have about an equal affect on the total value of your portfolio. If you are old (77), you have enough, and are not withdrawing for expenses, but adding more, why not?
-shum

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Doc
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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by Doc » Mon May 27, 2019 9:51 am

stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
All reasons to take on more risk because you can not because you have need. :D
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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tc101
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by tc101 » Mon May 27, 2019 9:57 am

I'm 69, widower, no heirs. I live on about $40K/yr. House is paid for. Next year I will start taking SS and get about $22K/yr. Portfolio of $1.5M is about 45% stock. Withdrawal rate when I start SS will be less than 1.5%. I see no reason to take greater risk. In fact it couldn't hurt to lower my stock allocation to 40% or less.

I am totally happy with how and where I live. A more expensive life style would do nothing to make me happier.

Maybe I will start traveling more and spend more money but travel doesn't hold the appeal it once did. Maybe I will spend more money on an expensive girl friend, but since my wife died the women I have been involved with have been pretty financially responsible. Probably I will donate more money to charity and give money to my friends who have had a hard time financially, but I am undecided on that.

I might start looking at SP annuities in a few years, but more likely will not. Annuity is insurance against running out of money in old old age, but that seems so unlikely that I don't think I need that insurance. What do you think?
. | The most important thing you should know about me is that I am not an expert.

stan1
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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by stan1 » Mon May 27, 2019 10:02 am

Doc wrote:
Mon May 27, 2019 9:51 am
stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
All reasons to take on more risk because you can not because you have need. :D
Yes, that brings up the willingness part of "willingness, ability, and need" to take risk. Turning $5M to $10M may become a game. It may become a measure of personal achievement. Does the winner leave the most to his heirs? Are you a loser if you "only" leave $2M to your heirs when you could have left them $5M?

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midareff
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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by midareff » Mon May 27, 2019 10:20 am

Reasons why we are roughly 48% equities, 50% FI, 2% cash.

1. Won the game and don't need to take more risk.
2. Can live OK off my pension and SS if the market disintegrates for an extended period.
3. Younger wife will be fine with her inheritance and never need to work (but probably will open another restaurant in Bangkok).
4. Took the 1998/1999 and 2007/2008 roller coaster and prefer to sleep well at night and say "Who cares what the market did today/this week/this month/this year." None of it matters anymore.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by dknightd » Mon May 27, 2019 10:55 am

Sandtrap wrote:
Mon May 27, 2019 8:13 am
Wow.
Great plan!
25/75
Do you have your baseline expenses covered by income streams outside of your portfolio (which is where the allocation is figured)?

thanks,
j :happy
The plan is that SPIA (dual life, with small annual increases that will likely not keep up with inflation), SS, and my wife's small pension ($350/month COLA and also dual life) will cover our baseline. When one of us dies, the other will lose only the smaller SS check, so will still be fine.

Edit: Our baseline includes some money for travel and hobbies. Enough to keep us sane and happy ;)
Last edited by dknightd on Mon May 27, 2019 11:03 am, edited 1 time in total.

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arcticpineapplecorp.
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by arcticpineapplecorp. » Mon May 27, 2019 11:00 am

vanguard's target date funds never fall below 30%. Never. (source: https://www.google.com/search?client=fi ... ent+income)

That is, until/unless they change it like they've changed other aspects of their TD funds in the past. I believe this is based on the trinity study/Bengen findings. Success rate drops if you go lower than 30% in stocks. Also, if you have 30 years of funds for retirement and 1/3rd is in stocks, then you've got 20 years of funding retirement in fixed income. Presumably if stocks tanked, bonds might go up. Even still, 20 years for stocks to recover while drawing down fixed income seems reasonable (would have gotten you through the Great Depression and recovery of two back to back recessions from 1929-1936, then 1937-1945, less than 20 years). If so, after you exhausted (or nearly so) your fixed income, you'd have another 10 years to fund your retiremement remaining with the stocks that recovered.

So I think 30%-50% makes sense. Unless you're Bill Gates, Warren Buffett, or the recent poster who has 70k in expenses and 4 mil saved up:
viewtopic.php?p=4561580#p4561580

Then you can put all your eggs in a basket paying 2% or so (high yield savings/cds, money market) and still be fine forever.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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MN-Investor
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by MN-Investor » Mon May 27, 2019 11:24 am

I think we're like a number of other investors who, as my husband neared retirement, we switched from being heavily invested in stocks (80%+) to a more conservative 40/60 portfolio. In a few years that ratio will probably be moved to a 50/50 split. We'll see.
The key to success - Save early, save often, invest well.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Slapshot » Mon May 27, 2019 11:54 am

Retired with no debt and a pension which is plenty to pay all our bills. So we're 30-70. No need to take risk anymore. I'd consider putting even more in fixed income if the interest rates were much higher.
This time, like all times, is the best of times if we but know what to do with it.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by pinot3 » Mon May 27, 2019 11:56 am

Retired 4 1/2 years. 68 in Aug2019. 30/70. VTSAX (total stock)/VBILX (intermediate bond index). No need for international. 2 fund a la Jack Bogle. 30/70 a la Rick Ferri, new center of gravity for retirees. Won the game. We withdraw less than 4 percent per year and have increased investable assets by more than $500k since we retired (it has been an increasing market since retirement, tho.../this will not always be the case; we lost hundreds of thousands in 2008 and need to sleep well now). 2 homes in SoCal paid for. We've traveled internationally several times since my retirement. Drive late model Acuras; days of the BMWs are past. Il dolce far niente. No pensions. I collected SS at FRA, 66. Wife works and makes less than $70k (she likes it and it helps to max out her 401k, catch up contributions, and both our traditional IRA contributions). She may work a couple more months (when she hits FRA) or a couple more years. tl;dr Older posts of mine talk about anguishing over when to claim SS, FRA or 70. I claimed at FRA. Glad I did; 1 year ago this month I was diagnosed with slow growing prostate cancer; currently under active surveillance. Sorry about the downer quality of last couple sentences, but life does happen. Hope this helps. Overall, life is good. I plan to live a long time. Ciao.
Last edited by pinot3 on Mon May 27, 2019 2:10 pm, edited 1 time in total.
pinot3 / total expense ratio: .06%

Hockey10
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Hockey10 » Mon May 27, 2019 12:01 pm

UpperNwGuy wrote:
Mon May 27, 2019 6:33 am
alexfoo39 wrote:
Sun May 26, 2019 10:52 pm
Hehe... Most bogleheads are more Conservative than we think. Where's the 90/10 folks?
They're not posting because the question was phrased in such a way that only those below 50/50 were asked to respond.
I am close to being one of the 90/10 folks. I have 10% bonds, 10% cash and 80% stocks. I never owned any bonds until age 50. I don't anticipate ever owning more than 10% bonds. I know this is much more aggressive than the typical Boglehead, but I have always been comfortable with the majority of my financial assets in stocks.

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by friar1610 » Mon May 27, 2019 12:49 pm

I have a lot in common with many of the people who have posted in this thread.

- Ages 74 (me)/72
- Excellent inflation-adjusted pension that we live on just fine. Dip into SS only rarely (extraordinary expenses, big vacations, etc.) Lifestyle is thriftily comfortable but not extravagant.
- Modest RMDs normally reinvested in taxable and/or QCD'd to charity.
- Significant drop in income + tax increase for spouse if I go first.
- Two adult children and several charities to whom we'd like to leave something.

Have been drifting along at 40%-45% equity for a number of years, currently 43%. Felt that was adequate for our needs and didn't want to be overly aggressive to sustain my wife's quality of life if I were to predecease. Recently had a consult/review with an hourly investment advisor of some repute. He advised increase in equity to 50% (but no need to do so until next bear appears) because he thinks our fixed income is more than adequate to cover income gap I will leave my wife with. Although he didn't use the terminology, in my mind this is also completely consistent with Bernstein's LMP strategy to which I subscribe. It is also consistent with allocation recommended by Vanguard PAS (which I didn't enroll in) during two separate reviews over the past 7 or 8 years.

So, plan to move from current 43% to about 50% (25%-30% international) when prudent to do so and remain there indefinitely.
Friar1610

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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by nesdog » Mon May 27, 2019 1:14 pm

25/55/20, thrown off by inheritance. Retirement in 4 weeks (yay! Already planned years earlier). Plan is to slowly move closer to 30% and reduce the cash heavy portion, now sitting in T-Bills. Anticipated spend should be 2-2.5%. Frankly, it's unfortunate and sad that we picked up the extra funds but putting aside the emotion of it becomes game over.
Insert clever comment here...

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Re: Do you have an allocation more conservative than 50/50 ?? Why?

Post by msk » Mon May 27, 2019 1:24 pm

stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
All above apply to me, but I am 100% equities. Why? I would like to donate more to charity, but if the market tanks I'll just donate less :annoyed
I am already gifting my heirs quite generously, so if the market tanks my gifting may shrivel :annoyed
Depending on how long I still have to live, now 75, I would welcome to become able to leave substantial sums also to my grandkids :moneybag
Low expense ETFs afford us an efficient way of generating more wealth; why encumber that by nervousness? I should have been more nervous in my younger, less secure days when the future was actually long. At my age the future may be trivially short, so worry level ought to match the probable time length of the bad impact. Cup half full/half empty business. Diametrically opposed conclusions starting from the same premises :beer

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Sandtrap
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Re: Do you have an allocation more conservative than 50/50 ?? What is it? Why?

Post by Sandtrap » Mon May 27, 2019 1:59 pm

friar1610 wrote:
Mon May 27, 2019 12:49 pm
I have a lot in common with many of the people who have posted in this thread.

- Ages 74 (me)/72
- Excellent inflation-adjusted pension that we live on just fine. Dip into SS only rarely (extraordinary expenses, big vacations, etc.) Lifestyle is thriftily comfortable but not extravagant.
- Modest RMDs normally reinvested in taxable and/or QCD'd to charity.
- Significant drop in income + tax increase for spouse if I go first.
- Two adult children and several charities to whom we'd like to leave something.

Have been drifting along at 40%-45% equity for a number of years, currently 43%. Felt that was adequate for our needs and didn't want to be overly aggressive to sustain my wife's quality of life if I were to predecease. Recently had a consult/review with an hourly investment advisor of some repute. He advised increase in equity to 50% (but no need to do so until next bear appears) because he thinks our fixed income is more than adequate to cover income gap I will leave my wife with. Although he didn't use the terminology, in my mind this is also completely consistent with Bernstein's LMP strategy to which I subscribe. It is also consistent with allocation recommended by Vanguard PAS (which I didn't enroll in) during two separate reviews over the past 7 or 8 years.

So, plan to move from current 43% to about 50% (25%-30% international) when prudent to do so and remain there indefinitely.
Outstanding!
Also a fan of Bernstein's LMP.
Thanks for posting.
j :happy
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