Asset allocation question

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
pesakerns
Posts: 1
Joined: Tue Jun 21, 2022 9:42 am

Asset allocation question

Post by pesakerns »

I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
Marseille07
Posts: 10099
Joined: Fri Nov 06, 2020 1:41 pm

Re: Asset allocation question

Post by Marseille07 »

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
I think you can do whatever you please, since it appears your living expenses are met by SS and a pension.

50/50(cash) might do just fine here if you want a suggestion.
US & FM (5% seed) | 300K Cash
delamer
Posts: 14264
Joined: Tue Feb 08, 2011 6:13 pm

Re: Asset allocation question

Post by delamer »

What is your current withdrawal rate from your portfolio, expressed as a percent?

How would that rate change for the survivor after the first spouse dies?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
rkhusky
Posts: 12806
Joined: Thu Aug 18, 2011 8:09 pm

Re: Asset allocation question

Post by rkhusky »

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
Welcome to Bogleheads!

Which is a larger concern: leaving money to beneficiaries or preserving your current balance?
dbr
Posts: 41361
Joined: Sun Mar 04, 2007 9:50 am

Re: Asset allocation question

Post by dbr »

The answer is that the appropriate allocation is the one best matched to what you want to do with your money. Other posters are putting that as such questions as leaving a lot of money to your heirs, giving it away, making sure it doesn't get less, etc.

Asset allocation is the servant of what your objectives are. If you already know you don't need your assets to support living expenses then it may be you haven't taken the second step of thinking through what you want or might need and putting numbers on it to a sufficient extent to make some decisions about allocation.

A good visual of the range of what can happen is here:

https://engaging-data.com/visualizing-4-rule/

You can put in zero for spending if all your income comes from SS and pensions. This model puts in SS and pensions explicitly and total spending explicitly. It also allows you to add or remove assets at some point in time and add or remove spending at some point in time:

www.firecalc.com

In both models you select a stock/bond allocation and a length of time and see what happens.
dbr
Posts: 41361
Joined: Sun Mar 04, 2007 9:50 am

Re: Asset allocation question

Post by dbr »

A further comment on this is that future outcomes are so variable that asset allocation only has a large effect over large changes in allocation. It makes a great deal of difference between 25/75 and 75/25 but between 40/60 and 60/40 not so much.
livesoft
Posts: 80588
Joined: Thu Mar 01, 2007 8:00 pm

Re: Asset allocation question

Post by livesoft »

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
What is the current asset allocation of your portfolio? Why do you think it might not be appropriate? What works for one retired married couple may not be what a different retired married couple finds appropriate for them?
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
retiredjg
Posts: 48400
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asset allocation question

Post by retiredjg »

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
Welcome to the forum. :happy

Every couple is different. One couple might be invested aggressively because they do not need all their money and are investing for the kids. Or they could be uncomfortable with market swings and prefer to be in a conservative allocation.

When retired, with most of your needs covered by income streams, I'd say it depends entirely on where you are comfortable. That could be a very wide range.

What is causing you to ask this question? Are you comfortable with your stock to bond ratio right now?
User avatar
ruralavalon
Posts: 23486
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Asset allocation question

Post by ruralavalon »

Welcome to the forum :) .

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
With "most" of your needs met by guaranteed income you can be as conservative or as aggressive as you wish.Consider 60/40.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
User avatar
bertilak
Posts: 9370
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Asset allocation question

Post by bertilak »

In your situation you can hardly make any significant stock/bond AA mistake. Think "can't go wrong with 50/50" as a starting point and that being more aggressive may be OK.

Considerations for holding back on bring more aggressive: How close to the edge of SS + pension NOT being enough are you and is inflation covered?
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
dbr
Posts: 41361
Joined: Sun Mar 04, 2007 9:50 am

Re: Asset allocation question

Post by dbr »

I think the serious concern in a situation like this is as mentioned above how valid it is that expenses are covered by pension and SS.

The other side of that is that if the issue is just for eventual contingencies then again the exact asset allocation doesn't matter.

Also allocating at the extremes is probably foolish because they are extremes. A danger is not having some idea what to expect resulting in behavioral errors. That is why I recommend looking at some history.
Rajsx
Posts: 769
Joined: Wed Mar 21, 2007 10:07 pm
Location: Florida

Re: Asset allocation question

Post by Rajsx »

Great replies are given above,

Given your situation, I would start with 60 Stocks /40 Fixed Income & then change if needed after you get a feel for how things go.
60/40 is plenty diversified, tried & tested.
We do not stop laughing because we grow old, we grow old because we stop laughing !!
User avatar
Taylor Larimore
Advisory Board
Posts: 31393
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Asset allocation question

Post by Taylor Larimore »

pesakerns wrote: Tue Jun 21, 2022 1:16 pm I am retired and am seeking guidance as to what is an appropriate portfolio equity allocation for a married couple. Most of our financial needs are met by social security and a pension.
pesakerns:

Welcome to the Bogleheads Forum!

Vanguard offers this asset-allocation tool:

https://retirementplans.vanguard.com/VG ... -OX77-OGQQ

I use this simple rule: "Money I cannot afford to lose should not be in stocks."

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Choose a balance of stocks and bonds according to your unique circumstances--your investment objective, your time horizon, your level of comfort with risk, and your financial resources."
"Simplicity is the master key to financial success." -- Jack Bogle
Post Reply