Close to 50? What’s Your Risk Tolerance?

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angelescrest
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Re: Close to 50? What’s Your Risk Tolerance?

Post by angelescrest »

Ron Ronnerson wrote: Sat Jan 08, 2022 1:06 pm My wife and I are both 47 years old. We're 77/23 stocks to bonds. Wife stopped working at age 43 to be a stay-at-home parent and is possibly already retired. My plan is to semi-retire at age 55 and fully retire at 61. I'm a public school teacher expecting a pension that should fully cover our retirement expenses ($100k/year with COLA and 100% survivor benefits). We currently max an HSA, 2 IRA accounts, a 457b, a 403b, and contribute 10% of salary toward the pension. The full 403b contribution goes into bonds. I could take more risk due to the pension but don't want to at this stage as retirement isn't quite as far away as it once was.
RR, thanks for sharing. What does semi retirement look like for you as a teacher? What type of income would you be looking at from age 55-61, and what kind of hours would you be putting in for that?
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Re: Close to 50? What’s Your Risk Tolerance?

Post by AnnetteLouisan »

Just turned 55. My target AA is 30/70 and planning to retire by 60. That’s the best I can do and still SWAN, rightly or (probably) wrongly. Gotta be me.

Not suggesting this for anyone else.
Last edited by AnnetteLouisan on Tue Jan 11, 2022 10:18 pm, edited 1 time in total.
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calmaniac
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Re: Close to 50? What’s Your Risk Tolerance?

Post by calmaniac »

jvini wrote: Sat Jan 08, 2022 3:20 pm
staustin wrote: Sat Jan 08, 2022 11:33 am 53 but still working with a very high savings rate allowing us to take less risk.

44/40/16 (cash)... we'll see where that goes in a year or so after retirment.
I often wonder if a high savings rate means you can take less risk or more. Guess it depends on the person.
I had the same thought when I read the text above in red.

We have oversaved to the "Zombie Apocalypse FI*" level (arbitrarily set at ≥75x expenses). My intuitive take is that this allows us to take more risk. My brain is clearly wired differently than staustin's. Not that one is right or wrong, but very different.

It just goes to show, you can analyze your SWR to 3 significant figures, but that level of precision is irrelevant relative to the variability attributable to individual investor psychology.

We were 100/0 until age ≈58. Current AA below in signature bar.

* You heard it here first!
≈63yo. AA 70/30: 30% TSM, 16% value (VIOV/VFVA/AVUV), 16% foreign LC, 8%emerging, 30% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Wannaretireearly »

I was 80/20 6 months ago not including some ER cash or 529’s.
Combo of buying some CA long term munis recently and TRD 2030 glide path changes probably means we’re closer to 75/25 now.

I’m thinking of getting out of the TRD’s, perhaps into a life strategy fund, so that I can control the AA better. Not sure if that’s a good idea or not. I’d like to not go below 70% equities, likely ever?

Age 45 & 43.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Starfish »

47, 95/5. I don't use target date funds, I like flexibility.
I do have a lot of cash these days though, preparing for a renovation. Not the brightest move.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by eye.surgeon »

I'm 52 and 80/20 with about 15 yrs left to retirement.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by JBTX »

Upper 50's, approximately 60/40, although the 40% is spread among conventional bonds, TIPS, Ibonds, gold, silver.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Ron Ronnerson »

angelescrest wrote: Mon Jan 10, 2022 9:21 pm
Ron Ronnerson wrote: Sat Jan 08, 2022 1:06 pm My wife and I are both 47 years old. We're 77/23 stocks to bonds. Wife stopped working at age 43 to be a stay-at-home parent and is possibly already retired. My plan is to semi-retire at age 55 and fully retire at 61. I'm a public school teacher expecting a pension that should fully cover our retirement expenses ($100k/year with COLA and 100% survivor benefits). We currently max an HSA, 2 IRA accounts, a 457b, a 403b, and contribute 10% of salary toward the pension. The full 403b contribution goes into bonds. I could take more risk due to the pension but don't want to at this stage as retirement isn't quite as far away as it once was.
RR, thanks for sharing. What does semi retirement look like for you as a teacher? What type of income would you be looking at from age 55-61, and what kind of hours would you be putting in for that?
I currently work 5 days per week and about 180 days per year. As of now, at age 47, I have 18 years in my district. In 8 years, at age 55, I'll be at 26 years. In current dollars, my income with 26 years of experience on the salary schedule should be around $25k for each day that I work. I'm trying to set things up so that I can go to 3 days a week or 60% of full time. This would mean a salary of around $75k in current dollars. I plan to pretty much stop contributing to retirement accounts at age 55 if I do go part time. If the budget is looking tight, the option to work 4 days, or 80% of full time, is there too.

A big portion of my expenses consists of housing (I live in the Bay Area). My mortgage payment is fixed and, due to Prop 13 in California, property taxes don't change much year-to-year either. I'm hoping that, over time, inflation will help us as our two biggest expenses (mortgage and property taxes) stay the same but I continue to receive raises.

If there is a gap between income and expenses during ages 55-61, I am thinking that I could use up some of my savings to help close that during this time. I'm also open to the possibility of borrowing money for a few years if terms are favorable since I expect to be in a position to pay off any loans once I retire.

I'm a CalSTRS members and once I turn 55, I can continue to earn full time retirement credit toward my pension so long as I work at least 50% of full time. I expect to fully retire at age 61 with about 33 years of service (this includes the time that I was a substitute teacher and any unused sick time).
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Re: Close to 50? What’s Your Risk Tolerance?

Post by abuss368 »

sf_tech_saver wrote: Fri Jan 07, 2022 10:11 pm The older I get (almost 45) the more I focus on the Jack Bogle comments about "dividends" being my income foundation.

This means:

--I'm GLAD I'm 10% VCLAX (long term muni) vs. intermediate-term. I follow the longer term is suitable if you plan on holding them that long mantra. Distributions fell from 3.2% to 2.4% over the last two years but generally kept a meaningful tax-free income stream coming that I diversified into monthly stock purchases.

--I'm 85/15 (similar to Vanguard 2045 fund) and generally moving away from 100% VTI for equities into doing 50/50 VT/VTI for 'new' purchases. International and VT has a generally higher dividend yield.

--For me being 'more conservative' at this age means planning to build a larger overall portfolio suitable to live off the income it produces and managing expenses in retirement accordingly. This likely means planning to work a bit longer and continue to set goals that take me into a larger portfolio to accomplish this. Essentially this is shifting from the 4% rule to the 2-3% rule.

--The longer I think about the BH philosophy the more AA and personal risk tolerance feels like the Astrology section of the Wiki! It's so soft and squishy and 'personal' -- but it hides the real risk of long-term portfolio exhaustion to focus on 'panic selling' phenomena which are easier to avoid by just having a rule that I 'never sell'. My investing rule? I never sell, and I only rebalance through future purchases...there done..no panic possible :)

--This approach might not be for everyone but it's how I'm looking at things as I approach 45!
Excellent advice. Did you finally cash out of (and simplify) Fundrise and just focus of Total Stock and Total World with Vanguard?

Despite learning much from Jack Bogle, I could never see Mr. Bogle approving of Fundrise with 1.00% fees and illiquidity.

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Close to 50? What’s Your Risk Tolerance?

Post by abuss368 »

jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Only you can answer that! This is different for all investors based on individual circumstances of goals, timeframe, and tolerance for risk.

If you are up at night then shift a higher allocation of the portfolio to safe assets.
Tony
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Darth Xanadu »

aristotelian wrote: Sat Jan 08, 2022 4:18 pm 75/25 at age 47. I expect to hit about 70/30 at age 50 and keep it there forever.
I turned 45 last year, and moved from 80/20 to 75/25 (thanks to BH forum for helping me not agonize over such a minor change for too long!)

My IPS, as currently written, has me shifting to 70/30 at age 50, and then to 60/40 at age 55.

My plan is to move to 50/50 at (Retirement Minus 1 Year), then go to 55/45 at age 70, 60/40 at age 75, and 65/35 at age 80 until the dirt nap.

However, I've been thinking to simplify this a bit. I mean, it's not always easy to predict a year in advance if retirement is thrust upon you.

Since I hope to retire between 55-60, once I move to 60/40 at age 55, I may just set an absolute floor of fixed income dollars (likely as a multiple of annual expense) and allow my equities exposure to drift up as the market dictates. I'm still trying to figure out the approach, but I have a few years to contemplate. I may also add qualifiers to my "downshift" points, i.e. "move to 60/40 at age 55 assuming market is at least 15% above age 50 levels.

No pension but I expect to achieve 2nd bend point on SS (may get there this year, but SS has always confused me so who knows).

I think the existence or absence of a pension critically informs many of these posts.

Thanks,
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Re: Close to 50? What’s Your Risk Tolerance?

Post by aristotelian »

Darth Xanadu wrote: Tue Jan 11, 2022 11:52 pm Since I hope to retire between 55-60, once I move to 60/40 at age 55, I may just set an absolute floor of fixed income dollars (likely as a multiple of annual expense) and allow my equities exposure to drift up as the market dictates. I'm still trying to figure out the approach, but I have a few years to contemplate. I may also add qualifiers to my "downshift" points, i.e. "move to 60/40 at age 55 assuming market is at least 15% above age 50 levels.
Yes, I think it is reasonable to think of the bond allocation in terms of years expenses instead of (or in addition to) a relative percentage. A reasonable decision rule might be something like "at least 10 years expenses or 40% in bonds". If you get a bad sequence of returns you maintain 40%. If the market goes up you keep your 10 years expenses in bonds and invest the rest.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by jason1122 »

theorist wrote: Fri Jan 07, 2022 8:20 pm We are at just under 75/25 and heading for 70/30 at age 51. I’m thinking of cutting equities a bit more, to maybe something like 67/33 in the next few years.

I also find some of the target funds a bit too aggressive. My retirement plan recently moved me into Fidelity 2035 freedom index, and it was at just below 80/20. I really don’t want to lose 40% in a crash now! But with bonds giving no real return, I have to remember that inflation is also a stealth enemy. 70/30 seems like a reasonable compromise.
I just put a large portion of our retirement into the 2035 Fidelity Index. I think with the rest I’ll try to get us to 75/25.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by sf_tech_saver »

abuss368 wrote: Tue Jan 11, 2022 10:16 pm
sf_tech_saver wrote: Fri Jan 07, 2022 10:11 pm The older I get (almost 45) the more I focus on the Jack Bogle comments about "dividends" being my income foundation.

This means:

--I'm GLAD I'm 10% VCLAX (long term muni) vs. intermediate-term. I follow the longer term is suitable if you plan on holding them that long mantra. Distributions fell from 3.2% to 2.4% over the last two years but generally kept a meaningful tax-free income stream coming that I diversified into monthly stock purchases.

--I'm 85/15 (similar to Vanguard 2045 fund) and generally moving away from 100% VTI for equities into doing 50/50 VT/VTI for 'new' purchases. International and VT has a generally higher dividend yield.

--For me being 'more conservative' at this age means planning to build a larger overall portfolio suitable to live off the income it produces and managing expenses in retirement accordingly. This likely means planning to work a bit longer and continue to set goals that take me into a larger portfolio to accomplish this. Essentially this is shifting from the 4% rule to the 2-3% rule.

--The longer I think about the BH philosophy the more AA and personal risk tolerance feels like the Astrology section of the Wiki! It's so soft and squishy and 'personal' -- but it hides the real risk of long-term portfolio exhaustion to focus on 'panic selling' phenomena which are easier to avoid by just having a rule that I 'never sell'. My investing rule? I never sell, and I only rebalance through future purchases...there done..no panic possible :)

--This approach might not be for everyone but it's how I'm looking at things as I approach 45!
Excellent advice. Did you finally cash out of (and simplify) Fundrise and just focus of Total Stock and Total World with Vanguard?

Despite learning much from Jack Bogle, I could never see Mr. Bogle approving of Fundrise with 1.00% fees and illiquidity.

Best.
Tony
Hey Tony!

You caught me... I do have $3,450 of $5,700,000 in Fundrise... I put in an extra $1k just after New Years! :) I consider that just a learning investment in tracking commercial Real Estate... not really portfolio... my HSA accounts are far bigger....

...but in simplifications news now that I have a 'status' level of equity savings in all of my favorite banks I'm using Vanguard.com going forward for essentially all future investments. Parking VTI at a bank is a super cheap way of getting perks... but I'm all set now and it's time for just one destination going forward!
VTI is a modern marvel
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Re: Close to 50? What’s Your Risk Tolerance?

Post by abuss368 »

sf_tech_saver wrote: Wed Jan 12, 2022 9:24 pm
abuss368 wrote: Tue Jan 11, 2022 10:16 pm
sf_tech_saver wrote: Fri Jan 07, 2022 10:11 pm The older I get (almost 45) the more I focus on the Jack Bogle comments about "dividends" being my income foundation.

This means:

--I'm GLAD I'm 10% VCLAX (long term muni) vs. intermediate-term. I follow the longer term is suitable if you plan on holding them that long mantra. Distributions fell from 3.2% to 2.4% over the last two years but generally kept a meaningful tax-free income stream coming that I diversified into monthly stock purchases.

--I'm 85/15 (similar to Vanguard 2045 fund) and generally moving away from 100% VTI for equities into doing 50/50 VT/VTI for 'new' purchases. International and VT has a generally higher dividend yield.

--For me being 'more conservative' at this age means planning to build a larger overall portfolio suitable to live off the income it produces and managing expenses in retirement accordingly. This likely means planning to work a bit longer and continue to set goals that take me into a larger portfolio to accomplish this. Essentially this is shifting from the 4% rule to the 2-3% rule.

--The longer I think about the BH philosophy the more AA and personal risk tolerance feels like the Astrology section of the Wiki! It's so soft and squishy and 'personal' -- but it hides the real risk of long-term portfolio exhaustion to focus on 'panic selling' phenomena which are easier to avoid by just having a rule that I 'never sell'. My investing rule? I never sell, and I only rebalance through future purchases...there done..no panic possible :)

--This approach might not be for everyone but it's how I'm looking at things as I approach 45!
Excellent advice. Did you finally cash out of (and simplify) Fundrise and just focus of Total Stock and Total World with Vanguard?

Despite learning much from Jack Bogle, I could never see Mr. Bogle approving of Fundrise with 1.00% fees and illiquidity.

Best.
Tony
Hey Tony!

You caught me... I do have $3,450 of $5,700,000 in Fundrise... I put in an extra $1k just after New Years! :) I consider that just a learning investment in tracking commercial Real Estate... not really portfolio... my HSA accounts are far bigger....

...but in simplifications news now that I have a 'status' level of equity savings in all of my favorite banks I'm using Vanguard.com going forward for essentially all future investments. Parking VTI at a bank is a super cheap way of getting perks... but I'm all set now and it's time for just one destination going forward!
Glad to hear it James! Simplicity in finance and life provides so many benefits! Jack Bogle was on to something for sure and we Bogleheads have all benefited.

Good luck with Fundrise. I looked at it and read a lot of research and articles. I even listened to their inaugural podcast but ultimately decided to not invest. I simply did not like the 1.00% minimum fee and illiquidity. Public Non-Traded REITs are an entirely different strategy not to be confused by investors with liquid and low cost public markets.

Low cost total market index funds with Vanguard is the strategy.

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Close to 50? What’s Your Risk Tolerance?

Post by invest2bfree »

jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
47, 60/40 with a twist. I have active in my 401k and index in my taxable.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by pbski15 »

50, 85/15, plan to retire in 7-10 years with military & fed pensions.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by theorist »

jason1122 wrote: Wed Jan 12, 2022 8:50 pm
theorist wrote: Fri Jan 07, 2022 8:20 pm We are at just under 75/25 and heading for 70/30 at age 51. I’m thinking of cutting equities a bit more, to maybe something like 67/33 in the next few years.

I also find some of the target funds a bit too aggressive. My retirement plan recently moved me into Fidelity 2035 freedom index, and it was at just below 80/20. I really don’t want to lose 40% in a crash now! But with bonds giving no real return, I have to remember that inflation is also a stealth enemy. 70/30 seems like a reasonable compromise.
I just put a large portion of our retirement into the 2035 Fidelity Index. I think with the rest I’ll try to get us to 75/25.
This is a simple strategy and a reasonable allocation, so fingers crossed! The Fidelity target date funds glide down reasonably rapidly within 15 years of the target date, so 2035 should be more conservative within 4-5 years anyway.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by LuckyGuy »

Married ages 55 and 53. Retired. 80/20 split. The 20 is half cash like and half total bond.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by buystoys »

Current ages 58/65. At 50, I was 100% equities. Then events happened and DH and I ended up retiring early on disability. Our AA was adjusted to 65/30/5 when that happened. We're in a fortunate position. All our needs and many of our wants can be covered with our SSDI and DH's small pension. We currently withdraw less than 3% from his IRA and use those funds for home projects. We only have a couple more projects to do, so we'll likely just do Roth conversions after that.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Regal 56 »

I’m 65. Still working and accumulating. If all goes well, I’ll retire at 70. My portfolio is 83/17. By Boglehead standards, I’m a wild and crazy guy. After surviving 2008, my risk tolerance is stratospheric. Maybe that’s not prudent. So I have a backup plan. I don’t want to fully reveal it here, but it involves rummaging through trash cans.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by sureshoe »

It really depends on your financial picture. If you have significant assets and closing in on being FI - the risk tolerance is probably lower (stop playing when you've won). If behind on retirement, don't go do option speculation, but the person needs a more aggressive posture since they're probably working for the next 15 years (or more).
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Money_Badger »

51 years old. Probably looking at a minimum of 12 years before I can retire.

I'm at 80/20. I have a large chunk in Vanguard 2035, which is about 72/28, but the rest of my investments are more aggressive.

That said, my wife has a pension that we will be able to tap into that I would view as "bond-like". I really just ignore the pension and treat it like gravy, but if the present value were factored in, there's probably a solid argument that I'm too conservative given my time frame. Because of that, I've moved my current and future 401K contributions to 90/10.

Counterbalancing that though, Vanguard 2035 (where I have about 40% of my portfolio) will get more conservative as time goes by.

Hmmm. Maybe I should go 95/5 on future contributions ...
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Re: Close to 50? What’s Your Risk Tolerance?

Post by 59Gibson »

Late 40s-as of a couple weeks ago the portfolio was 54% Stocks, 42X, work p/t. Most likely will keep in this area for the foreseeable future
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Re: Close to 50? What’s Your Risk Tolerance?

Post by ITC56 »

Brand new here....I'm 49 and my wife is 50. Still at 100% equities but will probably transition down to 80/20 over the next five years.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by RJC »

Anyone use a bucket approach where you put a set number in bonds (500k-1M) and then put the rest in equities? I am thinking about this when I get close to 50.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by JS-Elcano »

close to 50 and my AA is 65/35. It used to be 95/5 until a couple of years ago. I might go down further to 55/45 when I retire.

For me there. came a point when I asked myself: If I lose 50% of my equity position, how would I feel. Well, once my portfolio had grown to a certain amount, the. answer was that I would feel terrible. In fact, I felt I would have bailed even at a 25% downturn. So, I went to 65/35 where this number looked more tolerable. My savings rate is quite high (50%) so I don't have to rely too much on getting the potential 8-10% growth from a more equity-heavy portfolio.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by ZWorkLess »

51, spouse 5 years older, retirement goal 5 - 8 years from now (but very flexible if we want/need to work longer), current AA 75:25 moving 1 point a year towards bonds. I have wide reallocation bands. Was using a Target Date fund in our retirement accounts but converted to a 4 fund + I bond portfolio a couple months ago. Moving slowly a bit towards bonds as we approach early retirement. (Will hold steady once we get to 60:40.)
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Re: Close to 50? What’s Your Risk Tolerance?

Post by ZWorkLess »

RJC wrote: Fri Jan 14, 2022 10:32 am Anyone use a bucket approach where you put a set number in bonds (500k-1M) and then put the rest in equities? I am thinking about this when I get close to 50.
Not yet, but I'm contemplating this idea for a few years of early retirement money, and I might end up using that approach overall if we end up working longer than we plan and having a lot more money than we need. If that's the case, I'd probably go to something like 10-15 years in bonds and the rest stocks.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by aj76er »

Elsebet wrote: Sat Jan 08, 2022 4:18 pm I'm 45 and 70/30. Plan to start migrating to 60/40 when I hit 50.
+1

This is exactly what we are doing (also currently 45).
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Re: Close to 50? What’s Your Risk Tolerance?

Post by dbr »

ZWorkLess wrote: Fri Jan 14, 2022 11:17 am
RJC wrote: Fri Jan 14, 2022 10:32 am Anyone use a bucket approach where you put a set number in bonds (500k-1M) and then put the rest in equities? I am thinking about this when I get close to 50.
Not yet, but I'm contemplating this idea for a few years of early retirement money, and I might end up using that approach overall if we end up working longer than we plan and having a lot more money than we need. If that's the case, I'd probably go to something like 10-15 years in bonds and the rest stocks.
The observation and question I have always had about this is the following.

First, for many people 10-15 years in bonds and around 50/50 asset allocation come out to about the same number of dollars in each asset.

The question is what happens next. Does a person as retirement goes on plan on fewer years in bonds? If the portfolio is spent down over time does this imply more and more allocation proportionately to bonds? If the portfolio grows over time is the allocation proportionately more to stocks?

No one ever seems to be clear about all that.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Wannaretireearly »

ZWorkLess wrote: Fri Jan 14, 2022 11:17 am
RJC wrote: Fri Jan 14, 2022 10:32 am Anyone use a bucket approach where you put a set number in bonds (500k-1M) and then put the rest in equities? I am thinking about this when I get close to 50.
Not yet, but I'm contemplating this idea for a few years of early retirement money, and I might end up using that approach overall if we end up working longer than we plan and having a lot more money than we need. If that's the case, I'd probably go to something like 10-15 years in bonds and the rest stocks.
Same here. The mental math challenge I have is how do I split my taxable portfolio across Muni bonds/cash/stock, assuming I am not going to tap any ‘retirement’ accounts (Roth, 401k, IRA etc) until age 60. Currently I’m something like, 85% stock, 15% bonds/cash.
I feel like I want 30/40% bonds/cash for ER.
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