Not looking for a debate about what is “the” right approach, and know of the various rules that are out there. More curious about what this group of at least moderately informed investors actually do.
I just checked mine to see if I need to rebalance. I’m 61 and no plans to retire until at least 70 barring something unforeseen.
64% Stocks (mainly mixed index funds mostly broad market, some foreign, some my own choices)
30% Bonds
6% SPDR Gold ETF
<1% Cash
I haven’t been as disciplined about rebalancing as I should be but it’s not far off from where I want it. Mean to do it once a year.
I’m soon to be 67. I’ve had a great investment advisor for ten years. After assuming the portfolio he rebalanced it to have some additional risk. When I turned 62 (2016) he rebalanced to better fit my IRA and 401(k) distribution plans. At age 65 he did it again for Medicare. And last year again because Social Security benefits were starting.
I don’t want to look up the percentages but the last two decreased my risk. My advisor now rebalances only if I inform him a year ahead of some large projected expenditure, like the new roof planned for this year. He develops an aggressive package for the year (or whatever) and reverts back to a conservative package when the expenditure takes place.
I do not think that raising the risk before some big expenditure is a sensible strategy, but as in the last 11 years stocks have mostly gone up (except during a couple of weeks last year that were unexpectedly recovered very fast and a small pause three years ago), this strategy has paid off for you. Congratulations! But it is not normal for stocks to rise that many years in a row. You have found a great fair weather advisor, I hope you don’t have to test him in hard times.
I don’t go by a percentage allocation, I go by the number of months worth of withdrawals in each bucket. I ran a budget in the two years before retirement and figured out how much I needed to withdraw each month in retirement.
My short term reserves bucket, cash and cash equivalents, has 24 months worth of withdrawals in it.
My bond bucket has; as a target, 8 years worth of withdrawals in it. It used to be seven, but I bumped it to 8 because I was a little stock heavy. It also currently has an extra $30,000 in there because I will probably be buying an automobile during the next decade.
Everything else is in stocks. Currently my allocation is 2.1% cash and cash equivalents, 10.3% bonds, and 87.6% stocks.
If you follow the advice, that’s way too much stock for a 70 year old, but in my case I really don’t need the money and I’m primarily investing money for my heirs, so I’m more looking at their time span rather than mine. I could lose every penny in the stock fund and would still have enough money to last a decade without changing my lifestyle, and with a certain amount of downsizing I’m pretty sure I’d have enough to last the rest of my life.
I don’t rebalance, Once a quarter or so I’ll take a look and see how I’m doing. Over the last few years I occasionally move money from a traditional IRA to a Roth, taking the tax hit now rather than later when the required minimum distributions might push me into the high income tax penalties; raising my Medicare premiums and jumping me into the 24% bracket.
Not enough info. For example, with a federal pension the answer would be different. We also don’t know approximate amounts nor the other side of the balance sheet.
In our situation, we are ~100% stocks and are under 50.
Currently about 50 years old. Portfolio has been about 5% bonds for a long time with annual rebalancing.
Have been edging the target up toward ten percent bonds over the past couple of years, and will probably keep ratcheting the target upward every year until we get to maybe 25% by age 60.
I’m 67 and retired for the second time a year ago, husband is 64 and just re-retired for the 3rd time. We’ve had a financial planner thru our credit union for about 8 years and he has us set up with a couple of annuities, an IRA for quick funds access, and a longer-term investment account that’s mainly for our granddaughter’s education fund. We meet with him once or twice a year. He shows us where things stand, asks us about what’s going on with our work/personal life and plans, and explains things to us like we’re children, which is what we need when it comes to investment matters.
I don’t entirely understand all of it, but he’s got us in funds that have appreciated significantly over the years, and 2 of the funds have built-in annual locks to protect us if there’s a big market drop. We didn’t invest for wealth - we wanted security with minimal risk. We feel like he’s done well by us, and we are inclined to trust his advice. I just hope he outlives us.
I used to manage all of it myself researching various mutual fund ratings, choosing my own mix of stocks and bonds, re-balancing every year, etc.
But at age 50 I found I wasn’t putting as much time into it as I should and research found opinions all over the place so I gave up and moved everything into a Target date fund.
Sure there may be better strategies out there but while 20% of them may be better 80% of them are worse.
I check my asset allocation a couple of times a year. 100% in stocks right now. Allocation is 14% international, 56% S&P 500, 25% small cap or all market funds, and 5% individual stocks. The allocation hasn’t varied much over the last few years, so I don’t rebalance, though I may take it into account when I make my IRA contribution.
I did manage an account for my parents that was six funds and an allocation of 30% stocks and 70% bonds. In that case I kept a closer eye on things and rebalanced when the allocation imbalance went over 5% (say 33% and 67%). That turned out to be a good guideline, I didn’t need to rebalance very often but when I did it was worth it.
One thing that’s worthing noting about the current environment with interest rates so low is that there is massive risk in longer-dated bonds, probably almost as much risk as there is in stocks. So be cautious about treating any bond with a maturity of ten years or more as the “safe” part of your portfolio if the maturity is not matched to when you expect to need to withdraw the money.
That’s not to say that there’s any easy definitive answer to this. I now have no fixed income investment beyond two year maturity, but that could turn out to be a mistake if interest rates go negative.
5 years into retirement, and I’m about 45% fixed income and 55% equities. My portfolio is targeted for income generation, not increase in value. I don’t go up as fast as the market, but then I don’t go down as fast as the market either.
For me it is all about cash flow. I generate enough income every year to live on with Social Security, and later this year I go off my wife’s Social Security and onto mine at 70, so that cash flow improves. I have an annuity I haven’t touched yet either which I bought when I cashed in my pension. No debts, mortgage paid off, so I can live to 120 and be fine.
But I was a lot more aggressive when I was younger and still working.