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Well you don't know annual income needs either. Let's say it's 30k and SS would provide 15k your cash would only last 20 years and that's with no inflation, no unexpected expenses etc. If your income need is 45k a year your bucket of cash only makes it 10 years not adjusted for inflation or unexpected expenses. You are running a high probability of running out of money before you die but you can lower this by adding bonds and equities. It really is that simple but I don't think you actually are wanting to learn anything
For one, why do you need $45,000 a year at retirement? Two, let's say you do need $45,000 a year at retirement with expectation that SS would bring in $15,000 a year and you might live from 65 - 90 (25 years). You need at least $750,000 already generated by 65 for this to work, if you don't have that amount already generated I don't think it makes sense to try and take on high risk investments at the last minute (60 plus) to try and catch up.
In addition, with that $750,000 you have already generated, you guys are saying leave 30% of that in Stocks ($225,000) in which there could be a chance of losses, wouldn't that AGAIN be too risky for this person to take on?
OP here. Let me give you some FACTS that may help you out a little bit.
Your idea of losing 50% of your assets because they were in the market is false.
As mentioned before, the allocation is now 33% in VOO (S&P500) and 67% in BND (bond index). In the 2008 recession, the VOO went down around 37% and bounced back up by 26%, 15%, 2%, 16% and 32% respectively the following years.
The BND, went UP in 2008 by 5%, and 6%, 6%, 7%, 4%, -2% after that for each respective year.
so, if someone had most of their money in a Bond index, they had much less potential for GROWTH (compared with VOO), but at the same time, much less chance of losing during a recession (as you just saw above. hopefully)
i hope you understand a bit more about what everyone's talking about, now that i've shown you with some historical facts. in other words, the possibility of a Bond Index heavy asset allocation to lose 50% is low enough that it makes it worth the risk. (of course not to everyone.)
Like I said, do what you want to do man. The Fed has been pumping up the Stock market with QE all this time and at some point the bubble is going to have to burst. Would hate to hear you come back on the forum having put 35% of your assets in the Market and are victim of a major Economic Crash, while Low Expectations and the Scooby Doo Gang give you countless buckets of "optimism".
I don't know what will happen, okay? Maybe you can get 10% year over year returns until you die? All I'm saying is that I think it's a little risky for a guy over 60 to still have a significant amount in Stocks, the only amount I would put in there is what I can reasonably afford to lose if the worse case situation occurs.
Like I said, do what you want to do man. The Fed has been pumping up the Stock market with QE all this time and at some point the bubble is going to have to burst. Would hate to hear you come back on the forum having put 35% of your assets in the Market and are victim of a major Economic Crash, while Low Expectations and the Scooby Doo Gang give you countless buckets of "optimism".
I don't know what will happen, okay? Maybe you can get 10% year over year returns until you die? All I'm saying is that I think it's a little risky for a guy over 60 to still have a significant amount in Stocks, the only amount I would put in there is what I can reasonably afford to lose if the worse case situation occurs.
The amount we're talking about is about 150k in the market. 1 year worth of expenses already in cash for Emergencies. The above excludes assets of 3 paid off homes, totaling 2.2M, generating 4k of income monthly.
AT this point, don't invest in ANY fund. Put your money in a CD or an Annuity, something that's guaranteed with FDIC or State Insurance Association protection. You are too old to weather any ups and downs of a fund. A good fund over 10 years might average 6% but that's with years of losing money and years of having positive gains.
like we all said , you need an education on the decumulation stage and what safe withdrawal rates are and consists of.
once you do that you will see how poor your advice really is.
in fact highest failure rates over any 30 year retirement are zero % equities and bonds , not even using lower returning cash.
nothing had more failed retirement time frames.
100% equities would have surpassed 90% success rates every rolling 30 year time frame going back 146 years including the great depression period.
not that retirees would do that but it did pass nicely. the up years more than compensated for the down years in every time frame.
The amount we're talking about is about 150k in the market. 1 year worth of expenses already in cash for Emergencies. The above excludes assets of 3 paid off homes, totaling 2.2M, generating 4k of income monthly.
When you say one year of cash for emergencies, is that one year based on the rental income from the houses? So are you talking $48,000 for emergencies and $150,000 that's going in the market, for a total of about $200k in total liquid?
I would put $20k in the market and the remaining $180k in conservative investments, but that's just me.
For one, why do you need $45,000 a year at retirement? Two, let's say you do need $45,000 a year at retirement with expectation that SS would bring in $15,000 a year and you might live from 65 - 90 (25 years). You need at least $750,000 already generated by 65 for this to work, if you don't have that amount already generated I don't think it makes sense to try and take on high risk investments at the last minute (60 plus) to try and catch up.
In addition, with that $750,000 you have already generated, you guys are saying leave 30% of that in Stocks ($225,000) in which there could be a chance of losses, wouldn't that AGAIN be too risky for this person to take on?
Why are you asking why someone would need 45k a year in retirement? You also shouldn't use a SWR of 4% on your 750k if you are staying in cash. It's clear you would rather not learn. Equities are a vital part in a retirement investment plan to increase the odds you do not outlive your money
Why are you asking why someone would need 45k a year in retirement? You also shouldn't use a SWR of 4% on your 750k if you are staying in cash. It's clear you would rather not learn. Equities are a vital part in a retirement investment plan to increase the odds you do not outlive your money
Yes you can leave 30% in equities or more
It's not that I'm unwilling to learn, I already know what you guys are talking about and in my personal opinion, I think it's too risky once you get to that age.
I also don't believe that you need to invest in Stocks to get high returns only, there are other investments out there like Real Estate and Owning Your Business that if managed properly will give MUCH higher annual returns than a Stock Market can ever produce.
But it's all about balance, if the OP wants to take those risks at that age, that's his decision. This is a Discussion Forum where people come and post their various opinions, and in my opinion it's too risky at that age. I would have made the money I'm going to make in Stocks from 21 - 55 (or until 58) and I would be looking at converting those into conservative investments living on my fixed income. But again, that's just ME
It's not that I'm unwilling to learn, I already know what you guys are talking about and in my personal opinion, I think it's too risky once you get to that age.
I also don't believe that you need to invest in Stocks to get high returns only, there are other investments out there like Real Estate and Owning Your Business that if managed properly will give MUCH higher annual returns than a Stock Market can ever produce.
But it's all about balance, if the OP wants to take those risks at that age, that's his decision. This is a Discussion Forum where people come and post their various opinions, and in my opinion it's too risky at that age. I would have made the money I'm going to make in Stocks from 21 - 55 (or until 58) and I would be looking at converting those into conservative investments living on my fixed income. But again, that's just ME
How much in assets do you hope to accumulate by age 58 to give you enough capital to live on a fixed income FOR THE REST OF YOUR LIFE?
Please, at 31 I have a higher Net Worth and a higher amount of Assets than over 90% of the people in this country based on the reports I have seen. So I know "a little bit" of something in relation to this area.
I can guarantee that the majority of the folks responding to your post have a higher net worth than you. This forum does not represent average America, it tends to represent fairly successful individuals who know a lot more about retirement investing and appropriately managing risk than you do.
Assuming you're near retirement, which funds should you try to invest in? Is S&P500 too risky for someone near retirement? Would a total Bond Index be more appropriate? perhaps a combination of both? (what ratio would you say?)
100% in an S&P 500 Index fund would be too aggressive. 100% in a total bond index fund would be too conservative.
Vanguard Wellington (65% stocks / 35% bonds) or Vanguard Balanced Index (60% stocks / 40% bonds) would be about right. From a purely asset allocation standpoint, you actually do want to be somewhat heavy in stocks.
But for those who just can't stomach the volatility of a stock heavy portfolio, there's Vanguard Wellesley Income, which is 40% dividend paying stocks & 60% investment grade bonds. It is one of the top performers in the "conservative allocation" fund category. That said, it probably won't do as well over a 20 or 30 year period than the other 2 choices above. Interest rates on bonds are just too low right now to provide much return.
I think Vanguard Wellington would be the best choice, followed by Balanced Index, followed by Wellesley Income.
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