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Really, age is the least? I've always been told be aggressive when you're young, and conservative when you're old.
I'd hate to be 80 years old, and lose 50% of my portfolio.
Hard to argue with that sentiment!
I think what others are acknowledging is simply that age (as a single variable) is a grossly-simplified surrogate for a much more complex equation that includes factors like... how long do you expect to live (and need money), what other resources do you have, what is your tolerance for risk, do you plan to spend it down or maximize what you leave for heirs, what is your tax situation, etc, etc, etc?
Bottom line, it's a crude rule of thumb that has been around forever. You probably don't want to allocate your resources on that rule alone, but it makes it easy to gets a broad concept across... and it's easy for financial planners to trot out in presentations over steak dinner, without losing their audience.
Bottom line, it's a crude rule of thumb that has been around forever. You probably don't want to allocate your resources on that rule alone, but it makes it easy to gets a broad concept across... and it's easy for financial planners to trot out in presentations over steak dinner, without losing their audience.
I agree. I'm 66 and I'm about 70% in equities so I'm violating that rule. I'm slowly increasing fixed income but I'm not in a rush. Some factors influencing my decision: my income from SS and a couple of small pensions provides for most of my basic expenses and a little more. Much of my spending is "wants" and can be cut back, although I might whine a little (and so would our church treasurer). I've been through down cycles and know that if you have a good balanced portfolio you can ride it out.
his why we say you need to get yourself up to speed on retirement portfolio planning .
a 75/25 portfolio can generate all the income a safe withdrawal rate needs merely rebalncing each year .../ nooooooo cash is ever needed in theory . cash buffers are something we may like mentally but they do nothing financially
Really, age is the least? I've always been told be aggressive when you're young, and conservative when you're old.
I'd hate to be 80 years old, and lose 50% of my portfolio.
I despise “rules of thumb”. They don’t take anything into consideration, except their stupid rule. If your retirement fund consists of $50,000, you probably shouldn’t be in stocks at all.
If your retirement fund is in the millions, you should be very diversified.
Really, age is the least? I've always been told be aggressive when you're young, and conservative when you're old.
I'd hate to be 80 years old, and lose 50% of my portfolio.
I think the idea with the 4% safe withdrawal rate is you won't run out of money even with a 50% drop some day, so you can continue your 4% inflation adjusted withdrawals even with a 50% drop.
I think the idea with equities is say you've been 100% in the S&P 500 for 30 years by the time you hit 80, then even after the 50% drop and the 4% SWR you'd still be way ahead of someone 100% in bonds or CDs.
It's a historical fact that over all 30-year periods since 1926 that include the occasional 50% drops, the S&P 500 has never lost money but in fact returned between 8% annualized and 14% annualized, even with 50% drops such as 1973-74 and 2000-2002 and 2007-2008, and the many 25% drops like 1987 (Black Monday), 1991 (First Gulf War), 1997 (Asian crisis).
Of course the future may not turn out to be like the past, but even Warren Buffett says his advice to his family is to be 90% stock index funds and 10% bonds regardless of age.
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Solly says — Be nice!
