Asset Allocation @ age 60

[Shilo777]

Prep work has been completed and we are almost ready to move funds over to Vanguard. Due to a lock in time of some of our investments at Ameriprise we are only able to move about $826,000 at this time. $140,000 is cash, $686,000 in IRAs. Later we will discuss the pros and cons of taking penalty hits on our REITS. Our annuity will move in 2015 and our CD in 6 months.

After reading posts from this forum and reading The Bogleheads’ Guide to Investing, I realize our portfolio is going to be changed in a very big way. Of the $826,000 we will be transferring there are 32 different funds. Coming to Vanguard, we know things will be simplified. That is what we desire. It’s just hard wrapping our minds around having so few investments.

I’m wondering if there are any of you 60ish year old retirees out there who would be so kind as to share how many funds you hold in your portfolio. Also what funds you do hold. We’ve been studying asset allocation. My understanding for our age is 60% bonds, 40% stocks. When I used the Vanguard on-line tool it came up with 35% Total Stock Market and 15% International Stock and 50% Bonds. We are also wondering about where to put our cash.

Any feedback would be greatly appreciated. My husband was bit shocked when I mentioned we would have so few investments. Hearing back from those of you in our situation would be most helpful and reassuring while we make this transition.

Thanks,
Shilo777

[wwross]

Hey -- I resemble that remark! I just turned 60. That event, combined with my wife and I hitting a certain number, caused me to do a strategic rebalance. I went from 60/40 stock/bond to about 55/45 (the latter including about 2% cash). The stock allocation includes about 20% international.

[OverTheHill]

I'm 62, so I hope I'm not too old. I'm fully retired now due to some health issues. My wife and I have 99% of our investments with Vanguard, with about 1% at Bank of America. We've been using Vanguard for at least 25 years now. We rolled our respective retirement accounts over to Vanguard about 15 years ago when we became self-employed. We currently have 45% in Vanguard equity funds (SP500 and Total Market), with the other 55% in Vanguard investment grade bond funds (short and intermediate). We could just as easily have all of the equity in Total Market and all of the bonds in Total Bond Market, but we decided to spit things up a bit to manage risk a little better and to better diversify in keeping with our investment philosophy. For example, the Total Bond Market is overweighted in Treasuries and government paper, and we prefer investment grade bonds, which we think are just as safe and have better yields. Of course, many folks might disagree with this, so they would opt for Total Bond fund. Anyway, when deciding whether a few funds are better/safer than having a lot of funds, think about it this way: With a whole lot of funds, you're really just creating one large index fund, particularly since most equity funds have the core of their holdings in the corresponding index. More funds just equates with more mess and higher fees, so keep it simple is our belief. Good luck.

[YDNAL]

I’m wondering if there are any of you 60ish year old retirees out there who would be so kind as to share how many funds you hold in your portfolio. Also what funds you do hold. We’ve been studying asset allocation. My understanding for our age is 60% bonds, 40% stocks. When I used the Vanguard on-line tool it came up with 35% Total Stock Market and 15% International Stock and 50% Bonds....

Any feedback would be greatly appreciated. My husband was bit shocked when I mentioned we would have so few investments. Hearing back from those of you in our situation would be most helpful and reassuring while we make this transition.

Shilo,

I just turned 61 (DW is almost 58) and 33/67 Equity/Fixed largely Taxable account. We own 5 Funds and individual Municipals (AAA/AA largely). I would not discuss Funds specifically since our personal circumstances may differ significantly.

I hope that helps some.

[Taylor Larimore]

My husband was bit shocked when I mentioned we would have so few investments.

A common strategy used by brokers is to structure complex portfolios to give the appearance that investing is too complicated for ordinary investors. Complicated portfolios also make it more difficult and expensive to leave the brokerage which will end the broker's commissions and fees.

The fact is that your new simplified portfolio almost certainly holds more individual securities than your old one. The Three Fund Portfolio contains over 15,000 individual securities representing nearly all types, styles and categories of stocks and bonds.

Michael LeBoeuf, author of The Millionaire in You, wrote:

"The master key to wealth can be summed up in just one word: Simplicity."

Best wishes
Taylor

[peppers]

We are 61 and 59, looking to retire in 1-2 years. We have an S&P 500, Extended Market, Total Bond and GNMA. Yeah, I know but I have a soft spot for things name Ginnie.

[2comma]

Him 58 and her 48, he ER's in June. We are 50/50 with 30% of stock in intl and bonds split equally between total bond, TIPS and stable value. We don't have total stk mkt in 401k so use 80/20 s&p/extended mkt to mimic. That's 6 funds total for now. As each retires we loose stable value and gain total stk mkt so will only need four funds - total stk, total bond, total intl and a TIPs fund.

[Sconie]

I am 64 and my wife is 58 and we are both ER. We have a portfolio of abt $2.5MM allocated approximately 67% equity, 23% fixed and 10% cash. The equity portion is split 50/50 between domestic and international.

Our funds are either held at Vanguard or in an 401(k) plan sponsored by a former employer.
Here are the funds we use for equity and fixed:

Vanguard TSM
Vanguard International TSM
Harbor International (401k)
Nationwide S&P 500 Fund (401k)
Guaranteed Investment Contract-Annual Yield 3.46% (401k)
Vanguard Brokerage-Small Holding of Individual Municipal Bonds

[Shilo777]

Thank you so much for your responses. I just reread chapter 8 in The Bogleheads' Guide to Investing about asset allocation. Finally, it's all starting to sink in! I've come a long way in the last few months.....but can't wait to learn more. I actually understood what you all posted! I can't believe it took us this long to wake up!

Thanks again for your help!