Adjust Asset Allocation when 90 or older?

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Looking4Answers
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Adjust Asset Allocation when 90 or older?

Post by Looking4Answers » Mon May 11, 2020 2:20 pm

I often read that money needed in X number of years (varies anywhere from 3-10 Years) should not be in the stock market. Much is discussed about when a person is nearing retirement. What about nearing death? If someone is 90+, should their money be in stock market? Under present tax system the cost basis of stock will start over with heirs. But heirs will not necessarily wait 3-10 years to decide what to do with money and not all will choose to invest in stock market.

Is anyone adjusting, or planning to adjust, their asset allocation later in life?
Last edited by Looking4Answers on Mon May 11, 2020 4:28 pm, edited 1 time in total.

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Toons
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Re: Adjust Asset Allocation in last decade of life?

Post by Toons » Mon May 11, 2020 2:23 pm

I will be 70 in October,
Have been thinking about it the last 5 years,but
Still 70/30 Stock Bond.
Comfortable with it
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Looking4Answers
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Re: Adjust Asset Allocation in last decade of life?

Post by Looking4Answers » Mon May 11, 2020 2:26 pm

Toons wrote:
Mon May 11, 2020 2:23 pm
I will be 70 in October,
Have been thinking about it the last 5 years,but
Still 70/30 Stock Bond.
Comfortable with it
:happy
Hey, I'm in my 60's. Please don't suggest that 70 is old.

RadAudit
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Re: Adjust Asset Allocation in last decade of life?

Post by RadAudit » Mon May 11, 2020 2:48 pm

Well, I'm not too sure exactly how I'm going to determine when my last decade of life is going to begin. Instead I chose an AA that met my need ... to accept the risk of investing in stocks and allowed me to meet my goals - leaving DW enough for the duration. On a personal note, I figured that was a 50 / 50 AA and a 3% SWR plus SS and a small pension. Might be wrong. YMMV.

And, you're correct. The heirs get to adjust their AA whenever their inheritance shows up.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

bloom2708
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Re: Adjust Asset Allocation in last decade of life?

Post by bloom2708 » Mon May 11, 2020 2:51 pm

My grandma was 90 when our first child was born. We were happy she could spend time with her.

She lived to 107.5 and had a great ride.

I think 20-30% stocks still works for a 90 year old and the eventual heirs.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

jhsu802701
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Re: Adjust Asset Allocation in last decade of life?

Post by jhsu802701 » Mon May 11, 2020 3:22 pm

How do you know if it's your last decade? What if you live longer than expected?

afan
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Re: Adjust Asset Allocation when 90 or older?

Post by afan » Mon May 11, 2020 5:38 pm

Confused.
The advice on money needed in the short term assumes you need to spend it in a few years. If you are talking about leaving it for the next generation, then the risk of short term loss only matters if the heirs would need to spend the money in the short term. But the heirs don't know how long the 90+ person will live.

Someone in their 90's probably does not need the money long term. They need enough to cover their expenses for 10-15 years, maximum. Depending on their health, maybe much less time. They can keep a substantial amount in stocks if they have enough in bonds to tide them through a down market.

For inheritance purposes it would make no sense to sell and pay capital gains that would not apply if held till death.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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Re: Adjust Asset Allocation when 90 or older?

Post by Fallible » Mon May 11, 2020 6:01 pm

Looking4Answers wrote:
Mon May 11, 2020 2:20 pm
I often read that money needed in X number of years (varies anywhere from 3-10 Years) should not be in the stock market. Much is discussed about when a person is nearing retirement. What about nearing death? If someone is 90+, should their money be in stock market? Under present tax system the cost basis of stock will start over with heirs. But heirs will not necessarily wait 3-10 years to decide what to do with money and not all will choose to invest in stock market.

Is anyone adjusting, or planning to adjust, their asset allocation later in life?
Are you talking about AA adjustment at 90, or near retirement, or near death, or all three? What was it you read?
The first principle is that you must not fool yourself – and you are the easiest person to fool. ~Richard Feynman

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Re: Adjust Asset Allocation when 90 or older?

Post by bayview » Mon May 11, 2020 6:23 pm

My mother (age 92) has a couple of dozen individual stocks. The cost basis info is long gone, but I doubt there are any significant TLH opportunities there. I don’t want to incur a lot of capital gains for her by selling while she is alive, so I’ll just deal with them after she dies and the basis resets.

Unless there is some pressing issue of financial urgency, I don’t see any point in trying to rearrange things.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Looking4Answers
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Re: Adjust Asset Allocation when 90 or older?

Post by Looking4Answers » Mon May 11, 2020 7:17 pm

[/quote]

Are you talking about AA adjustment at 90, or near retirement, or near death, or all three? What was it you read?
[/quote]

Adjusting asset allocation to fewer stocks because there would not be enough time to recover for whoever is drawing the money out. Non-boglehead heirs may not know right away whether to invest in stock market, may not know whom to turn to for advice, etc.

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Re: Adjust Asset Allocation when 90 or older?

Post by RadAudit » Tue May 12, 2020 6:30 am

Looking4Answers wrote:
Mon May 11, 2020 7:17 pm
Non-boglehead heirs may not know right away whether to invest in stock market, may not know whom to turn to for advice, etc.
I came to a conclusion that this is something you don't need to be concerned about. Most inheritances are gone in two to three generations no matter what you do. If it is true about large inheritances (Vanderbilt [?]), it's true about small inheritances.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Adjust Asset Allocation when 90 or older?

Post by tennisplyr » Tue May 12, 2020 8:31 am

I think it's fine for some to go with "what feels comfortable" for them especially at that stage of life.
Those who move forward with a happy spirit will find that things always work out.

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House Blend
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Re: Adjust Asset Allocation when 90 or older?

Post by House Blend » Tue May 12, 2020 8:45 am

Mom will be 87 this month. Ten years ago, I set up her 30/70 investment portfolio. About 3 years ago, stock gains blew past the 5% rebalancing bands I had imposed, but her drawdown rate and life expectancy were low enough that it no longer made sense to pay the capital gains tax (and high state tax) it would cost to rebalance.

So from that point forward, we've let the portfolio drift. I think at the highest point it reached 38% equity. Currently at about 35%.

David Althaus
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Re: Adjust Asset Allocation when 90 or older?

Post by David Althaus » Tue May 12, 2020 9:05 am

We're 73 and strive for seven years living expenses in fixed assets. The rest is in TSM. Such a strategy protects the 90 year old and can maximize end net worth which may come in handy for future generations. That said you probably can't make a mistake here. 100% cash would be ok too.


All the best

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Stinky
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Re: Adjust Asset Allocation when 90 or older?

Post by Stinky » Tue May 12, 2020 10:06 am

David Althaus wrote:
Tue May 12, 2020 9:05 am
We're 73 and strive for seven years living expenses in fixed assets. The rest is in TSM. Such a strategy protects the 90 year old and can maximize end net worth which may come in handy for future generations.
This sounds like an excellent plan.

If you choose, you could always back off on the equity component.
It's a GREAT day to be alive - Travis Tritt

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Toons
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Re: Adjust Asset Allocation in last decade of life?

Post by Toons » Fri May 15, 2020 9:37 am

Looking4Answers wrote:
Mon May 11, 2020 2:26 pm
Toons wrote:
Mon May 11, 2020 2:23 pm
I will be 70 in October,
Have been thinking about it the last 5 years,but
Still 70/30 Stock Bond.
Comfortable with it
:happy
Hey, I'm in my 60's. Please don't suggest that 70 is old.

Hey It is only 840 months
:happy :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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LilyFleur
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Re: Adjust Asset Allocation when 90 or older?

Post by LilyFleur » Fri May 15, 2020 8:09 pm

It's a good idea to leave enough in fixed income in a tax deferred account in case of nursing home bills, unless the person has a very generous pension. Paying for nursing home costs out of a pension or tax-deferred account rather than from a taxable account is a good strategy for capital preservation for the heirs, as the nursing home costs will be a huge tax deduction and the person would likely pay minimal taxes. It makes sense to also withdraw enough money from tax-deferred to cover funeral costs. In many cases, it is much better for heirs to inherit a taxable account than a tax-deferred account.

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Taylor Larimore
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Re: Adjust Asset Allocation when 90 or older?

Post by Taylor Larimore » Fri May 15, 2020 9:02 pm

Looking4Answers wrote:
Mon May 11, 2020 2:20 pm
I often read that money needed in X number of years (varies anywhere from 3-10 Years) should not be in the stock market. Much is discussed about when a person is nearing retirement. What about nearing death? If someone is 90+, should their money be in stock market? Under present tax system the cost basis of stock will start over with heirs. But heirs will not necessarily wait 3-10 years to decide what to do with money and not all will choose to invest in stock market.

Is anyone adjusting, or planning to adjust, their asset allocation later in life?
Looking4Answers:

Inasmuch as I am 96 years old, I'm probably qualified to answer your question.

When my wife and I were about 80 years of age, we bought a joint life-income annuity (SPIA). It was easy to buy and to understand (it is like a pension). We liked the annuity so well that we bought another a year later.

With our income secured, we began giving our children their inheritance in the form of a monthly allowance. My wife of 62 years died in May 2013. My two annuities, government pension and social security give me more than enough income to live comfortably. Inasmuch as my income is more than I need, my asset allocation is almost immaterial for my thrifty lifestyle.

Lesson learned: There can be no hard-and-fast rule about adjusting our allocation "when 90 or older."

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Using age and asset level as a rule of thumb in establishing an asset allocation baseline seems to me a wise starting point for most--granted, not all--investors, whose infinite variety of circumstance belies pat solutions."
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Adjust Asset Allocation when 90 or older?

Post by geerhardusvos » Fri May 15, 2020 9:34 pm

Looking4Answers wrote:
Mon May 11, 2020 2:20 pm
I often read that money needed in X number of years (varies anywhere from 3-10 Years) should not be in the stock market. Much is discussed about when a person is nearing retirement. What about nearing death? If someone is 90+, should their money be in stock market? Under present tax system the cost basis of stock will start over with heirs. But heirs will not necessarily wait 3-10 years to decide what to do with money and not all will choose to invest in stock market.

Is anyone adjusting, or planning to adjust, their asset allocation later in life?
In my opinion, there is no reason to ever be more than 50% fixed income
VTSAX and chill

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celia
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Re: Adjust Asset Allocation when 90 or older?

Post by celia » Fri May 15, 2020 9:35 pm

Looking4Answers wrote:
Mon May 11, 2020 7:17 pm
Fallible wrote: Are you talking about AA adjustment at 90, or near retirement, or near death, or all three? What was it you read?
Adjusting asset allocation to fewer stocks because there would not be enough time to recover for whoever is drawing the money out. Non-boglehead heirs may not know right away whether to invest in stock market, may not know whom to turn to for advice, etc.
I wouldn’t adjust my Asset Allocation just because I was older or close to death. (What would you or your heirs be recovering from?). And I certainly wouldn’t ignore diversification by owning a fewer number of stocks.

Sure, my heirs will probably do something different than I would but if I inherited from them, I would likely do something different than what they would do, too!
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Adjust Asset Allocation when 90 or older?

Post by RetiredAL » Fri May 15, 2020 10:58 pm

My Dad is 95. About 1/2 his investments were under WF Advisor direction until age 94. The advisor had him 75-80% in equities. When I took over those accounts, I lowered them to 60%. The other 1/2 was at USAA and Schwab, and they were about 60% equities combined.

Why so high at his age? Even with him now in Assisted Living, his portfolio have is not being depleted, except for gifting. His LTCi will cover the bulk of his care to age 99+. If I sell his house and shed those costs, his Military Retirement and SS is more than his current LTC costs. Thus a long term investment horizon is seems OK.

And as someone referenced in their post, some of his funds have huge gains. I would hate to sell them at this stage of the game and book a large Cap-Gain at a 25% tax rate.

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Re: Adjust Asset Allocation when 90 or older?

Post by BalancedJCB19 » Sat May 16, 2020 10:07 am

You have to do what feels right for you. I discovered a long time ago, I would hold the balanced index fund for life and no matter what happens and what age, there is nothing I have to worry about or decide to do. I know that may seem overly simplistic to some, but for me it saved me from myself many times. Whatever I leave behind my heirs can do any AA they like.

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