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  • Retirement Investment strategy

    For those of you who are already retired, what is your breakdown bonds to stocks? I’ve seen 50/50, 60/40, 40/60, 70/30.


  • #2
    It’ll also depend on how much they have, how much they need, retirement goals, etc.

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    • #3
      I’m not a fan of trying to maintain a fixed ratio in or approaching retirement. I prefer a bucket strategy based on estimated yearly spending equivalents. Cash/Bonds/Equities buckets. My comfort level has 10-12 years in cash and bonds, the rest in equities (~70-75%). Once SS starts at 70 I plan to lower my cash/bonds position.

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      • #4
        Originally posted by GasFIRE View Post
        I’m not a fan of trying to maintain a fixed ratio in or approaching retirement. I prefer a bucket strategy based on estimated yearly spending equivalents. Cash/Bonds/Equities buckets. My comfort level has 10-12 years in cash and bonds, the rest in equities (~70-75%). Once SS starts at 70 I plan to lower my cash/bonds position.
        Not as much cash and bonds, 3 to 5 years. When SS starts, reduce the cash but not quite 5 year of SS.

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        • #5
          Whatever I have in the stock market, it is all stocks or mutual funds and ETFs that are in stocks. No bonds at all and don't expect any in the future.

          I plan to have cash for 2 years living expenses. I have invested in real estate in a couple of town homes and some businesses that give out cash distributions. Whatever is excess of that 2 years retirement cash and money needed for taxes will be reinvested.

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          • #6
            70/30. Stocks to bonds plus cash equivalents. I have some ibonds also. Cash may be a drag but actually in retirement it allows you to sleep.

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            • #7
              I’m reading Wade Pfau’s Retirement Planning Guidebook. He really pushes annuities. Variable annuities still seem like a giant pile of crap, but unless you have way more money than you need it’s hard to see why using bonds or a bond ladder is a better option than an immediate annuity. You come out ahead by transferring longevity risk to the insurance company so you get to spend more. The only significant losers are your heirs if you die early.

              The only aspect I’m not sure how to plan for is the loss of purchasing power. I guess you could buy a new policy to supplement your old one every few years.

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              • #8
                I am two years out, but had originally planned to retire this year so I am set up to do so. Like Hatton I am 70/30 stocks to bonds, but the 30% includes the money that I mentally bin as my cash bucket. As others have said, I plan 3-5 years of expenses in bonds or cash.

                The other factor here is asset location. In my case I have the money I plan to spend first, which is in my 457f, which has to be taken the year I retire, in bonds. It will pay off the mortgage and kick off the cash fund "bucket." Then my next money is in a 457b. I have that deployed in a 30/70 split. That way I will get some growth over the next 7 years, which includes the 5 years I intend to spend it down. The rest of the investments are more aggressive, driving the overall allocation to 70/30.

                By the way, like Kamban I have a few rental properties. I don't know why I never count them in my AA, but I don't. If I include the real estate I guess I am more like 65/28/7.

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                • #9
                  Originally posted by Lithium View Post
                  I’m reading Wade Pfau’s Retirement Planning Guidebook. He really pushes annuities. Variable annuities still seem like a giant pile of crap, but unless you have way more money than you need it’s hard to see why using bonds or a bond ladder is a better option than an immediate annuity. You come out ahead by transferring longevity risk to the insurance company so you get to spend more. The only significant losers are your heirs if you die early.

                  The only aspect I’m not sure how to plan for is the loss of purchasing power. I guess you could buy a new policy to supplement your old one every few years.
                  SPIAs make a lot of sense if you don't have pension. You could either buy one as a bridge to SS, or if you wanted the annuity to be a fixed income substitute for your whole retirement, you would probably get better pricing buying a SPIA for now and a deferred income annuity for later.

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                  • #10
                    One year from semiretirement. I am 70/30 and plan to continue that way. Five years of expenses in cash and some bonds. Will work 5-10 hours a week in semiretirement (I am a psychiatrist in private practice and these hours will be with extremely stable long term patients with whom I enjoy working) as will my wife, which will mean no withdrawals from assets until we decide to stop completely.
                    My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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                    • #11
                      Not in retirement, but agree with the above regarding bucket strategy versus fixed percentage allocation.

                      Plan will be for five years in cash+bonds and the rest in equities, with some passive real estate income to supplement.

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                      • #12
                        Originally posted by Lithium View Post
                        I’m reading Wade Pfau’s Retirement Planning Guidebook. He really pushes annuities. Variable annuities still seem like a giant pile of crap, but unless you have way more money than you need it’s hard to see why using bonds or a bond ladder is a better option than an immediate annuity. You come out ahead by transferring longevity risk to the insurance company so you get to spend more. The only significant losers are your heirs if you die early.

                        The only aspect I’m not sure how to plan for is the loss of purchasing power. I guess you could buy a new policy to supplement your old one every few years.
                        Agree. Variable annuities gave the entire industry a bad name. I just bought a QLAC. As long as you understand them and have no strong legacy needs they can make sense.

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                        • #13
                          Originally posted by Lithium View Post
                          I’m reading Wade Pfau’s Retirement Planning Guidebook. He really pushes annuities. Variable annuities still seem like a giant pile of crap, but unless you have way more money than you need it’s hard to see why using bonds or a bond ladder is a better option than an immediate annuity. You come out ahead by transferring longevity risk to the insurance company so you get to spend more. The only significant losers are your heirs if you die early.

                          The only aspect I’m not sure how to plan for is the loss of purchasing power. I guess you could buy a new policy to supplement your old one every few years.
                          Wade Pfau is a very accomplished individual. However, there is very little disclosure of his financial ties to the insurance industry as a whole.
                          https://www.theamericancollege.edu/a...y%20management.

                          He and the organization have some built in conflicts that are not disclosed prominently with the insurance industry. That is not an evalution of his work product, simply that the organization has ties to be considered.
                          He, pharma funds med schools and physicians.

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