Why should I not stay with 100% stocks?

[Hatton]

For a high net worth individual, having SPIA is something like having a financial advisor with a 6 % AUM. You are basically handing the money over to them and they are investing it and taking their cut and giving you a fixed sum each month. With Roth Conversions, cash and SS why should we not do the same, invest it ourselves and keep that money that we are handing over an insurance company.

I can see the value of annuity for someone who has not earned well and who has just saved barely enough for retirement. But for someone with $5M+ net worth, there is no way that they do not enough money to spend each year till they die, should they retire after age 55. In 99% of the cases, you will barely spend enough to overcome the compounding of the invested money that you will end up with even greater net worth when you die than when you retired.

That will happen to all the supersavers on this board.

SPIA instead of bonds is one way to look at this. This concept works best for those not trying to leave a large estate for heirs.

[uksho]

Target date funds start converting increasing amounts of stocks into bonds and other fixed income instruments as the target date approaches. You thing you are 100% into stocks but they change it for you as the date approaches.

Thanks , I am aware of that. My question should have been: should I get out of target and get more into index funds , if I have pension?

[Tangler]

Also younger forum members, some who never invested in a real/prolonged bear, have ability to tolerate more risk bc longer horizon, etc etc

Yes if you are young you are the bond fund.

Your human capital is robust and you provide a “bond-like” constant stream of new cash.

You are more able/willing to work extra calls and you have years of full time work in front of you.

You can DCA or value average new $ into stocks and don’t have enough invested to have fear.

Time = your most powerful weapon.

[billy]

Thanks , I am aware of that. My question should have been: should I get out of target and get more into index funds , if I have pension?

just value your pension as part of your bond allocation- if its enough to cover that percent, then the rest should be all equities or target date funds with a later date (so more equities in their allocation).

[uksho]

just value your pension as part of your bond allocation- if its enough to cover that percent, then the rest should be all equities or target date funds with a later date (so more equities in their allocation).

Thanks, I hope I can last till 60-62 and pension should be enough to cover my expenses in retirement .

[Tinroofsundae]

Excellent discussion. Thanks for all your insights! This forum is an awesome resource!

[Larry Ragman]

just value your pension as part of your bond allocation- if its enough to cover that percent, then the rest should be all equities or target date funds with a later date (so more equities in their allocation).

This is a valid way to think about the pension-bond allocation balance, but just to provide another perspective I do it differently. Specifically, I plan to income. Let’s say I want $150K a year in retirement and I have a $50K pension. I would discount the pension and do all my planning to manage risk and achieve $100K difference for income. So, if I say 60-40 I mean on the AA of the portfolio I plan to use to hit that $100k. Maybe this is unnecessary binning. I dunno. Just seems easier.