If retired, what's your allocation to fixed income?

[bertilak]

It is 40%

[Toons]

30%

[Stoic9]

Retired 3 years, no SS yet. When I retired I set a solid 70/30. Been working on pre-end of year and as of today we are at 87/13. This is part market (equities up bonds lagging) and part we haven't spent any money this year except maybe a couple extra used books when it was hard to get to the library.

I'll probably take it back to 70/30 soon depending on todays events.

[sergeant]

When my husband joined me in retirement in 2016, at age 62, we re-allocated to a fairly conservative 60% bonds + cash, 40% stocks. Since then my sweetie has passed away. I've sold a few things since then and I'm sitting at 61% bonds, 4% cash, and 35% stocks. Yeah, definitely too conservative for me (age 67) but the economy just has me nervous right now. By the end of next year I'll get back to 40% stocks.

Sorry for your loss. I think your allocation is fine.

[placeholder]

I don't meet your criteria because I have a pension but I'm 40% FI split between bond index and stable value.

[JDave]

When my husband joined me in retirement in 2016, at age 62, we re-allocated to a fairly conservative 60% bonds + cash, 40% stocks. Since then my sweetie has passed away. I've sold a few things since then and I'm sitting at 61% bonds, 4% cash, and 35% stocks. Yeah, definitely too conservative for me (age 67) but the economy just has me nervous right now. By the end of next year I'll get back to 40% stocks.

When the economy doesn't have you nervous will be when stocks are at their top. There are always two dozen reasons to think the market is going to crash tomorrow.

[colodane]

I'm retired and 77 years old. Do receive a smallish pension and SS. Have assets at Vanguard that will comfortably support any extra needs during my projected life span.

I'm apparently financially conservative, as I presently have about 77% of assets in fixed income and the remainder in the usual broad equity index funds, as well as more targeted Vanguard growth funds.

My Fixed Income investments are primarily in tax-exempt and regular bond funds. Also some in Money Markets.

Interesting to note that my two biggest YTD total returns have been Vanguard Core Bond and Intermediate Term Treasury funds.

So obviously I'm not swinging for the fences, but am somewhat confident that my own cautious strategy will allow me to remain in the game and sleep well at night.

[Gort]

33% (That's a 2:1 ratio betweek stocks and bonds).

[Marseille07]

I'm doing 80/20 in taxable but 100/0 in 401K (basically all-in some S&P500 based fund), which puts my average around 90/10. I'm of the opinion that portfolio growth is extremely critical, and portfolio volatility can easily be covered by rainy-day fund (from your withdrawn cash) and simply cutting travel budget if needed.

Even if we hit a year like 2008, my budget is already set on Jan 1 and does not change throughout 2008. And we can access portfolio balance at any time, so it's trivial to start saving up as you already know the budget would be very tight in 2009. Retirement does not remove the need for proper budgeting.

[flyingaway]

Both of us are 69 and retired. We consulted with Allen Roth (a Boglehead member), and decided with his guidance to go 35/65. As has been stated on this site numerous times, "we won the game, and we quit playing the game (capital appreciation)". Our goal now is to maintain the lifestyle we have become accustomed. We have about $4.5 in retirement accounts. Feeling good!!!

Are you worried about running out of money with just $4.5 in retirement accounts.

[DetroitRick]

Around 30% for most of retirement so far.

So many considerations went into this choice for me (pensions, social security timing, spending needs, emergency fund size, healthcare costs, and more), but I basically try to keep about 6 years of normal withdrawal needs in fixed income. Composition of that 30% varies, but general aggregate level is fairly constant for me. And I include cash/cd's/short-term treasuries in that 30% too, but right now that portion is down to 1 year of withdrawal needs in individual Treasuries and virtually no cash.

I never considered much more than about 35%, but current yields don't motivate me to go any higher. No issues for me with resulting portfolio volatility. Has yet to present any issues during any of the severe downturns I've weathered.

[Munir]

30/70.

[crnatg]

Both of us are 69 and retired. We consulted with Allen Roth (a Boglehead member), and decided with his guidance to go 35/65. As has been stated on this site numerous times, "we won the game, and we quit playing the game (capital appreciation)". Our goal now is to maintain the lifestyle we have become accustomed. We have about $4.5 in retirement accounts. Feeling good!!!

Are you worried about running out of money with just $4.5 in retirement accounts.

No, not at all! If we divided the $4,500,000 by 25 years we would have 180,000 per year. And we have SS as well. So, we are out of the game of investing for capital and enjoying our 2nd childhood without parental supervision this time! (I do have spousal supervision however!)

[howard71]

20% - as called for by the Golden Butterfly portfolio

[framus]

75 yr old. 40% Equities. 60% Fixed. Happy.

[radiowave]

Currently 55/45 transitioning to retirement mid 2021 and land around 50/50. Will maintain that through early retirement phase.

[Garco]

I've been retired for 6 years. In my main retirement account (403b), I have 42% in fixed income. Equities have run up quite a bit and I may trim them by year's end. In addition to my main account I have investments in brokerage and IRA accounts. The allocations in these accounts have a greater percentage in fixed income than in my main retirement account.

[Tib]

Post deleted.

[hudson]

From the "Bogleheads investment philosophy": "We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequence inverse range of 75% to 25% in bonds. There is an implication here that the standard division should be an equal one, or 50-50, between the two major investment mediums."

Did the authors of the above mean that the "implication" is that 50-50 should be the "standard division" for investors of any age, including retirees?

Tib,
I would speculate that 25/75, 75/25, or 50-50 would be starting points when setting up your asset allocation.
Next you figure out what works for you. You might like 0/100, 100/0, or 100% real estate.
Maybe more reading?
If you haven't already, consider reading Bernstein's The Four Pillars of Investing: Lessons for Building a Winning Portfolio and maybe also The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults Book 1).

[protagonist]

My fixed income allocation is as much as I feel I need to sustain my lifestyle through retirement, plus a buffer. I wish it could all be in I-bonds.
The rest I gamble in the stock market and hope I get richer.
Simple.
Percentages don't matter to me.

[Wanderingwheelz]

From the "Bogleheads investment philosophy": "We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequence inverse range of 75% to 25% in bonds. There is an implication here that the standard division should be an equal one, or 50-50, between the two major investment mediums."

Did the authors of the above mean that the "implication" is that 50-50 should be the "standard division" for investors of any age, including retirees?

It’s called personal finance for a reason. It’s up to you to determine what your goals are and how best to reach them. Most retirees who paid a little bit of attention have met their goals, and retirees here on Bogleheads essentially all have.

It would stand to reason that most Bogleheads are not aggressively invested in the years they are no longer working. Because they don’t need to be.

If you’re not retired I’d suggest considering being more aggressively invested than 50/50. But again, it’s up to you to decide what’s best for yourself.

[Escapevelocity]

OP,


I am 60/40. That translates into 10 years of expense in FI. I have another 2 years of expense in CASH as the emergency fund. It is not part of the AA. The retiree's AA should include 10 to 20 years of expense in FI.


KlangFool

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

[KlangFool]

OP,


I am 60/40. That translates into 10 years of expense in FI. I have another 2 years of expense in CASH as the emergency fund. It is not part of the AA. The retiree's AA should include 10 to 20 years of expense in FI.


KlangFool

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.


KlangFool

[Nowizard]

We are staying with Total Bond and ST Bond indexes, and feel that the concern about inflation is questionable. Our basic approach is that much of the discussion involves a questionable distinction between logical changes in portfolio allocation and market timing. For us, significant changes to obtain greater yield would be considered market timing. We follow the belief that when there is substantial confusion the best approach is to do nothing. Just our opinion. We may be mistaken, as each of us will be at some juncture or with some decisions, but we can answer "Yes" to the question of whether we have analyzed from our perspective and can we accept the consequences of our decisions.

Tim

[Escapevelocity]

OP,


I am 60/40. That translates into 10 years of expense in FI. I have another 2 years of expense in CASH as the emergency fund. It is not part of the AA. The retiree's AA should include 10 to 20 years of expense in FI.


KlangFool

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.

My AA is 60/40.


KlangFool

Good question. I do not intend to re-balance out of stock at all during the period between retirement and SS claim as I believe that my FI is already adequate. So, I will only re-balance in the event that stocks fall to the point that I need to buy more stocks to maintain 45%. Therefore, I intend that the equity allocation will rise over this timeframe (rising equity glidepath) as FI is spent down and equity appreciates. The closer I get to SS claim date, then I start to think of the PV of those benefits as part of my fixed income allocation, not in the actual calculation but in creating the sense of confidence to let the equity percentage increase over time relative to the FI.

[Imagolfer2]

61 y/o DW 63 y/o. retired almost 2 years ago. No SS yet as we’re aiming for 70. DW has a small pension to start when she hits 65. Try to keep it around 60/40. Usually rebalance when equities reach 5% upper/lower band but haven’t had to do that in several years. If it’s good for Wellington, it’s good for me.

[KlangFool]

OP,


I am 60/40. That translates into 10 years of expense in FI. I have another 2 years of expense in CASH as the emergency fund. It is not part of the AA. The retiree's AA should include 10 to 20 years of expense in FI.


KlangFool

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.

My AA is 60/40.


KlangFool

Good question. I do not intend to re-balance out of stock at all during the period between retirement and SS claim as I believe that my FI is already adequate. So, I will only re-balance in the event that stocks fall to the point that I need to buy more stocks to maintain 55%. Therefore, I intend that the equity allocation will rise over this timeframe (rising equity glidepath) as FI is spent down and equity appreciates. The closer I get to SS claim date, then I start to think of the PV of those benefits as part of my fixed income allocation.

Escapevelocity,

That is not my question. My question is do you rebalance out of FI.


A) What do you do if the stock drop by 50%, do you sell FI to buy the stock?


B) Do you set a minimum amount of FI as a limit to your rebalancing out of FI?


C) What do you do if you are 5 years to SS and your rebalancing will drop the FI to 2 years?

D) Why won't you rebalance out of stock?

KlangFool

[Escapevelocity]

OP,


I am 60/40. That translates into 10 years of expense in FI. I have another 2 years of expense in CASH as the emergency fund. It is not part of the AA. The retiree's AA should include 10 to 20 years of expense in FI.


KlangFool

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.

My AA is 60/40.


KlangFool

Good question. I do not intend to re-balance out of stock at all during the period between retirement and SS claim as I believe that my FI is already adequate. So, I will only re-balance in the event that stocks fall to the point that I need to buy more stocks to maintain 55%. Therefore, I intend that the equity allocation will rise over this timeframe (rising equity glidepath) as FI is spent down and equity appreciates. The closer I get to SS claim date, then I start to think of the PV of those benefits as part of my fixed income allocation.

Escapevelocity,

That is not my question. My question is do you rebalance out of FI.


A) What do you do if the stock drop by 50%, do you sell FI to buy the stock?


B) Do you set a minimum amount of FI as a limit to your rebalancing out of FI?


C) What do you do if you are 5 years to SS and your rebalancing will drop the FI to 2 years?


KlangFool

A) Yes, as I stated I will buy more stocks if needed to keep at least 45% stock. So, I am willing to sell the FI to do that.
B) No, barring a huge drop of like 80% in stocks. If stocks fall by half, I would keep buying stock to take advantage.
C) As said, I will have another 3.5 years FI on top of the 8 from selling house. I am willing to drop spend level by 20% if needed. I also can claim SS early if things really go south.

[KlangFool]

10 to 20 years is a pretty big range. I am retiring in a little over a year at age 55 with AA of 45/55. The 55 includes all of my bonds and cash. In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation. In year 2 or 3 I intend to sell my house and rent apartments or house in retirement in more exciting location(s). This will free up another 3.5 years of spend. I hope to delay SS until 70. This will require some level of appreciation in the stock portfolio.

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.

My AA is 60/40.


KlangFool

Good question. I do not intend to re-balance out of stock at all during the period between retirement and SS claim as I believe that my FI is already adequate. So, I will only re-balance in the event that stocks fall to the point that I need to buy more stocks to maintain 55%. Therefore, I intend that the equity allocation will rise over this timeframe (rising equity glidepath) as FI is spent down and equity appreciates. The closer I get to SS claim date, then I start to think of the PV of those benefits as part of my fixed income allocation.

Escapevelocity,

That is not my question. My question is do you rebalance out of FI.


A) What do you do if the stock drop by 50%, do you sell FI to buy the stock?


B) Do you set a minimum amount of FI as a limit to your rebalancing out of FI?


C) What do you do if you are 5 years to SS and your rebalancing will drop the FI to 2 years?


KlangFool

A) Yes, as I stated I will buy more stocks if needed to keep at least 45% stock. So, I am willing to sell the FI to do that.
B) No, barring a huge drop of like 80% in stocks. If stocks fall by half, I would keep buying stock to take advantage.
C) As said, I will have another 3.5 years FI on top of the 8 from selling house. I am willing to drop spend level by 20% if needed. I also can claim SS early if things really go south.

What if the stock market drop and you cannot sell the house?


KlangFool

[Escapevelocity]

Escapevelocity,

<<In aggregate, the FI will cover around 8 years of spend assuming it keeps up with inflation.>>

Do you rebalance from the FI to stock during retirement? In my system, I do rebalance from the FI to stock. I set a minimum limit of 5 years of expense in FI for rebalancing.

My AA is 60/40.


KlangFool

Good question. I do not intend to re-balance out of stock at all during the period between retirement and SS claim as I believe that my FI is already adequate. So, I will only re-balance in the event that stocks fall to the point that I need to buy more stocks to maintain 55%. Therefore, I intend that the equity allocation will rise over this timeframe (rising equity glidepath) as FI is spent down and equity appreciates. The closer I get to SS claim date, then I start to think of the PV of those benefits as part of my fixed income allocation.

Escapevelocity,

That is not my question. My question is do you rebalance out of FI.


A) What do you do if the stock drop by 50%, do you sell FI to buy the stock?


B) Do you set a minimum amount of FI as a limit to your rebalancing out of FI?


C) What do you do if you are 5 years to SS and your rebalancing will drop the FI to 2 years?


KlangFool

A) Yes, as I stated I will buy more stocks if needed to keep at least 45% stock. So, I am willing to sell the FI to do that.
B) No, barring a huge drop of like 80% in stocks. If stocks fall by half, I would keep buying stock to take advantage.
C) As said, I will have another 3.5 years FI on top of the 8 from selling house. I am willing to drop spend level by 20% if needed. I also can claim SS early if things really go south.

What if the stock market drop and you cannot sell the house?


KlangFool

Then I will stay in the house and eat Ramen.

[michaeljc70]

30%, but I am not collecting SS yet.

[retire57]

50/50.

[Escapevelocity]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

[KlangFool]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

[Escapevelocity]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

Looks good! How do you handle your annual withdrawals for spending? Do those withdrawals come out proportionally to your 60/40?

[KlangFool]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

Looks good! How do you handle your annual withdrawals for spending? Do those withdrawals come out proportionally to your 60/40?

Escapevelocity,


A) I have 2 years of expense in the emergency fund. I do not have to do my withdrawal annually. The plan is to withdraw when it makes the most sense from a tax management point of view.

<<Do those withdrawals come out proportionally to your 60/40?>>


B) Not quite sure what do you mean by that. The withdrawal will be done to maintain the AA of 60/40. It will not come out proportionally. It will come out whatever asset class that exceeds the allocation.


KlangFool

[Escapevelocity]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

Looks good! How do you handle your annual withdrawals for spending? Do those withdrawals come out proportionally to your 60/40?

Escapevelocity,


A) I have 2 years of expense in the emergency fund. I do not have to do my withdrawal annually. The plan is to withdraw when it makes the most sense from a tax management point of view.

<<Do those withdrawals come out proportionally to your 60/40?>>


B) Not quite sure what do you mean by that. The withdrawal will be done to maintain the AA of 60/40. It will not come out proportionally. It will come out whatever asset class that exceeds the allocation.


KlangFool

B) you answered the question. You will customize the details of any withdrawals to keep the portfolio at 60/40 post-withdrawal.

[EnjoyIt]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

[Oilcans]

Guess I'm very conservative at age 73. Pension & SS $73k per year. Other income $277k per year. No bills.

Have 60% in cash of which half are in CD's.

34% in bonds of which 72% are in muni's, both funds and individual bonds. (may be overweight in muni's)

6% in mutual funds.

Looking at buying some Multi-year guaranteed annuities tomorrow.

Guess you could say I'm in preservation mode.

[bigskyguy]

We are approximately 30/70 for our total portfolio. That includes our Liability Matching Portfolio, a Risk Portfolio, and an emergency buffer fund.

Just under 2/3's of the portfolio is LMP (Ladder of individual Treasury STRIPs and TIPS exclusively). Rungs are financed into 2044.

Just under 1/3 is Risk [equally apportioned to Dodge and Cox Global Stock Fund (DODWX), Schwab Fundamental US Broad Market ETF (FNDB), Schwab Fundamental International Equity ETF (FNDF).

We reserve a 100k emergency buffer in Vanguard Short Term Inflation Indexed Treasury ETF (VTIP).

Our LMP, when coupled with our SS, is more than adequate for a very comfortable life. I'm 71, wife 62.

[hudson]

We are approximately 30/70 for our total portfolio. That includes our

Liability Matching Portfolio, a Risk Portfolio, and an emergency buffer fund.

Just under 2/3's of the portfolio is LMP (Ladder of individual Treasury STRIPs and TIPS exclusively). Rungs are financed into 2044.

Just under 1/3 is Risk [equally apportioned to Dodge and Cox Global Stock Fund (DODWX), Schwab Fundamental US Broad Market ETF (FNDB), Schwab Fundamental International Equity ETF (FNDF).

We reserve a 100k emergency buffer in Vanguard Short Term Inflation Indexed Treasury ETF (VTIP).

Our LMP, when coupled with our SS, is more than adequate for a very comfortable life. I'm 71, wife 62.

Does your plan have Bill Bernstein's fingerprints on it?

[KlangFool]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

[bigskyguy]

We are approximately 30/70 for our total portfolio. That includes our

Liability Matching Portfolio, a Risk Portfolio, and an emergency buffer fund.

Just under 2/3's of the portfolio is LMP (Ladder of individual Treasury STRIPs and TIPS exclusively). Rungs are financed into 2044.

Just under 1/3 is Risk [equally apportioned to Dodge and Cox Global Stock Fund (DODWX), Schwab Fundamental US Broad Market ETF (FNDB), Schwab Fundamental International Equity ETF (FNDF).

We reserve a 100k emergency buffer in Vanguard Short Term Inflation Indexed Treasury ETF (VTIP).

Our LMP, when coupled with our SS, is more than adequate for a very comfortable life. I'm 71, wife 62.

Does your plan have Bill Bernstein's fingerprints on it?

Among others (Zvi Bodie for certain).

[hudson]

We are approximately 30/70 for our total portfolio. That includes our

Liability Matching Portfolio, a Risk Portfolio, and an emergency buffer fund.

Just under 2/3's of the portfolio is LMP (Ladder of individual Treasury STRIPs and TIPS exclusively). Rungs are financed into 2044.

Just under 1/3 is Risk [equally apportioned to Dodge and Cox Global Stock Fund (DODWX), Schwab Fundamental US Broad Market ETF (FNDB), Schwab Fundamental International Equity ETF (FNDF).

We reserve a 100k emergency buffer in Vanguard Short Term Inflation Indexed Treasury ETF (VTIP).

Our LMP, when coupled with our SS, is more than adequate for a very comfortable life. I'm 71, wife 62.

Does your plan have Bill Bernstein's fingerprints on it?

Among others (Zvi Bodie for certain).

Thanks bigskyguy!
I've never read anything by Bodie, but I've heard his name many times.
Bernstein mentions Bodie several times in his short book: The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults Book 1)
Bernstein talks about a TIPS ladder on page 28/location 404:

"Such a comprehensive real coverage of retirement living expenses would constitute a liability-matching Full Monty (or, perhaps a, ahem, "Full Bodie")."

[dwickenh]

50% in fixed income including mortgage loans.

[smitcat]

What if the stock market drop and you cannot sell the house?

KlangFool

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

All past posts have indicated that you only need a steady $60K for all lifestyle expenses - what will you do with the extra funds?

[KlangFool]

Klang,

Do you have your own point of view on rebalancing during retirement? It seems you are driving at a philosophy that says do not rebalance. If so, do you just calibrate your withdrawal mix of assets to maintain your 60/40?

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

All past posts have indicated that you only need a steady $60K for all lifestyle expenses - what will you do with the extra funds?

No idea at this moment. Maybe buying a $3,000 computer-controlled coffee roaster.


KlangFool

[smitcat]

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

All past posts have indicated that you only need a steady $60K for all lifestyle expenses - what will you do with the extra funds?

No idea at this moment. Maybe buying a $3,000 computer-controlled coffee roaster.


KlangFool

You currently have a real conundrum to solve for:
1. past statement indicates you never need more than $60K / year of expenses
2. you likely have more that $60K in funds available

[EnjoyIt]

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

All past posts have indicated that you only need a steady $60K for all lifestyle expenses - what will you do with the extra funds?

No idea at this moment. Maybe buying a $3,000 computer-controlled coffee roaster.


KlangFool

You currently have a real conundrum to solve for:
1. past statement indicates you never need more than $60K / year of expenses
2. you likely have more that $60K in funds available

1) Past statements indicate a very conservative approach to personal finance. I will lay out a guess that KlangFool will be just as conservative in retirement as he was during his working career. Odds are there will be a large inheritance in the future.

[Wanderingwheelz]

Escapevelocity,


A) My 60/40 portfolio is at 25 times my annual expense. So, my FI is at 10 years.


B) In addition to that, I have 2 years of EF in CASH. They are not part of my portfolio.


C) All those numbers are before social security. Social security covers 50% of my annual expense.


D) My rebalancing rule allows me to sell stock to buy the FI. For the FI to the stock, I set a limit of 5 years of expense in FI. I will sell the FI to buy the stock until the FI is at 5 years. Then, I will stop.


E) I am prepared for at least 7 years of downturn/recession.


KlangFool

D) This is our plan and what we do now, even though only semi-retired right now. Except we don't keep an emergency fund. Generally our checking account has about 1-2 months of expenses at a time that gets replenished as it gets low. All our bills and credit cards are due on the same day, so it makes it very easy to see what we need. Our backup plan is that our discretionary expenses comprise of over 50% of current spending so would be pretty easy to have 5 years in bonds last 7 or more years.

What is your plan or thought if the market performs on par with history and not the very low returns so many believe, do you have plans on spending more, or will you keep at your current spending plan?

What are your plans when you start collecting SS? Will you stick with the same spending or will you adjust higher? Will you change your AA? If SS is 50% of your expenses then at 70 the same portfolio of 60/40 will have 20 years of expenses in fixed income.

EnjoyIt,


I am working on that system. Tentatively, I harvest 30K into my emergency fund/pool when my portfolio grows by 60K above 1.5 million. When the pool exceed 180K (3 x 60K) within a 3 years period, I may spend 1/3 of the pool for that year.


For example,


A) 1.5 million to 1.56 million -> move 30K into the pool ( I just did that yesterday).


B) 1.53 to 1.59 million (60K grow) -> move 30K into the pool


C) 1.56 to 1.62 -> Move 30K into the pool


KlangFool

All past posts have indicated that you only need a steady $60K for all lifestyle expenses - what will you do with the extra funds?

No idea at this moment. Maybe buying a $3,000 computer-controlled coffee roaster.


KlangFool

Before you make a hasty decision, I know where you can get one for $2,950.