Is 70/30 too aggressive? Portfolio help!

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Makoman
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Is 70/30 too aggressive? Portfolio help!

Post by Makoman »

Dear Bogleheads:

We are looking at retiring in 3-4 years when we are mid to late 50’s. We are really struggling with bond allocation as we see stocks at an all time high and bonds a bad investment.

Questions:

1. is 70/30 too aggressive for where we are currently with a 3-5 year goal?
2. what alternatives are there to bonds in this environment?
3. is a higher international allocation a reasonable move in our equity portion?
4. one of us will only have 30 years of earnings for SS, do we each receive the $2500 ss states we will on our current course? In other words does SS pay out spousal benefits only if both worked for 30-35 years?
5. Are we realistic with retirement dates?

***Ages: 53/51
*** income $175000
***State-PA
***Children: 2- 19 and 12
***Tax deferred $1,650,000
***Taxable $2,350,000
**AA 60/30/10 (cash)
*** Intl 15% of equity
***Portfolio consists of essentially a total market, total international, total bond, with a small value index and small cap value tilt
*** No debt
***$600k home
***$135000 current spend with healthcare paid by employers
*** Anticipating $115 k spend and another $20k for health insurance until Medicare kicks in at 65.
***SS states each of us will be due $2500 per month at 67

Any feedback is very much appreciated and thanks for what seems to me to be the best retirement site on the internet!!!
Montgomery
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Montgomery »

We are in a somewhat similar situation.

I think you will find AA is a very personal decision because it involves risk comfort. IMO if you are that close to retirement and have run the spend numbers, going more aggressive and possibly encountering a big downturn, would be devastating.
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David Jay
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Re: Is 70/30 too aggressive? Portfolio help!

Post by David Jay »

Welcome to the forum!

Let me address #4 and #5:

The main page of your SS home page shows a SS amount assuming that you continue to work to the specified retirement age. There is an link you can click on which shows “if you retire now” or something to that effect.

One receives Social Security benefits if one works 40 quarters (ten years cumulative work history), but the calculation for benefit amount is based on one’s top 35 years of earnings. If one retires with 30 years of work history, there will be 5 “zeros” in the average of your top 35 years.

Spousal benefit can only be claimed after the primary spouse has filed for benefits. Spousal benefits are reduced if the one filing for spousal benefits files for either spousal or personal benefits before NRA (normal retirement age, presumably 67 based on your work history).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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watchnerd
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

Makoman wrote: Sun May 02, 2021 3:53 pm Dear Bogleheads:

We are looking at retiring in 3-4 years when we are mid to late 50’s. We are really struggling with bond allocation as we see stocks at an all time high and bonds a bad investment.
Yes, it's a real Hobson's choice.

But we chose to reduce our equity allocation to lock in a non-rolling bond ladder that will cover our current 'everyday' living expenses all the way from planned early retirement at 55 (we're 51 now) to age 67.

We view it as an insurance policy -- and insurance costs money.

We have 'enough' and opted to pay the opportunity cost to get 'even more', because we already have more than we need, anyway.

The remaining funds are going into a Risk Portfolio, where a 2.5% SWR should cover luxuries, discretionary spending, and occasional big ticket items.
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windaar
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Re: Is 70/30 too aggressive? Portfolio help!

Post by windaar »

If you were 70/30 and the stock market fell 50% would you sell? If so then it is too aggressive.
Nobody knows nothing.
TropikThunder
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Re: Is 70/30 too aggressive? Portfolio help!

Post by TropikThunder »

Makoman wrote: Sun May 02, 2021 3:53 pm ***No debt
***$600k home
***$135000 current spend with healthcare paid by employers
Does “no debt” include no mortgage? I’m having trouble wrapping my head around $135,000 current spending of it's without a mortgage.
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Makoman
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Makoman »

David Jay wrote: Sun May 02, 2021 5:12 pm Welcome to the forum!

Let me address #4 and #5:

The main page of your SS home page shows a SS amount assuming that you continue to work to the specified retirement age. There is an link you can click on which shows “if you retire now” or something to that effect.

One receives Social Security benefits if one works 40 quarters (ten years cumulative work history), but the calculation for benefit amount is based on one’s top 35 years of earnings. If one retires with 30 years of work history, there will be 5 “zeros” in the average of your top 35 years.

Spousal benefit can only be claimed after the primary spouse has filed for benefits. Spousal benefits are reduced if the one filing for spousal benefits files for either spousal or personal benefits before NRA (normal retirement age, presumably 67 based on your work history).
Who is the primary? The one with higher earnings or the first to take them? Thanks
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watchnerd
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

David Jay wrote: Sun May 02, 2021 5:12 pm One receives Social Security benefits if one works 40 quarters (ten years cumulative work history), but the calculation for benefit amount is based on one’s top 35 years of earnings. If one retires with 30 years of work history, there will be 5 “zeros” in the average of your top 35 years.
In my case, the zeros I get will just replace the teenage / college work years at the beginning of my work history.

Starting with my first SS deductions at age 16, my average SS taxable earnings for age 16-23 (3 of which were 0 years) was $463/year. :P
Last edited by watchnerd on Sun May 02, 2021 5:38 pm, edited 1 time in total.
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David Jay
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Re: Is 70/30 too aggressive? Portfolio help!

Post by David Jay »

Makoman wrote: Sun May 02, 2021 5:30 pm
David Jay wrote: Sun May 02, 2021 5:12 pm Welcome to the forum!

Let me address #4 and #5:

The main page of your SS home page shows a SS amount assuming that you continue to work to the specified retirement age. There is an link you can click on which shows “if you retire now” or something to that effect.

One receives Social Security benefits if one works 40 quarters (ten years cumulative work history), but the calculation for benefit amount is based on one’s top 35 years of earnings. If one retires with 30 years of work history, there will be 5 “zeros” in the average of your top 35 years.

Spousal benefit can only be claimed after the primary spouse has filed for benefits. Spousal benefits are reduced if the one filing for spousal benefits files for either spousal or personal benefits before NRA (normal retirement age, presumably 67 based on your work history).
Who is the primary? The one with higher earnings or the first to take them? Thanks
The higher earner. SSA does not use the term “primary”, that is my word for the spouse who’s benefit is used to calculate the spousal benefit.

I would like to recommend Mike Piper’s book “Social Security Made Simple”, it is a great reference for all question SS related.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
shess
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Re: Is 70/30 too aggressive? Portfolio help!

Post by shess »

David Jay wrote: Sun May 02, 2021 5:12 pm The main page of your SS home page shows a SS amount assuming that you continue to work to the specified retirement age. There is an link you can click on which shows “if you retire now” or something to that effect.
I didn't see this, and I can't change my retirement parameters very much (like to now, since I retired early). BUT, I can set my average future annual salary to $0 (or they just figured it out based on my past few years of taxes), which I think probably means the same thing?
fortunefavored
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Re: Is 70/30 too aggressive? Portfolio help!

Post by fortunefavored »

Couple years younger but similar allocation and early retirement. It sucks all around - 30% bonds earning nothing (or negative) along with the large risk of a an extended bear for the 70% in stock. We don't have enough money to pile into safe assets, and I am not willing to work another 5 or 10 years to make it happen.

I've just accepted the risk and hope it works out. You can improve your fixed asset portion slightly by moving to CDs, or multi-year guaranteed annuities.. but for me the complexity doesn't seem worth it.

Do run your real social security history through https://ssa.tools/ - nearly always it is best for the lower earning spouse to claim as early as possible, and for the higher earning spouse to wait until 70 for maximum benefit.

All the best, tricky times to be wealthy but not ultra-wealthy. Sure beats being poor though. :)
J295
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Re: Is 70/30 too aggressive? Portfolio help!

Post by J295 »

Can you manage MAGI to get PTC under ACA? We have done so in early retirement to the tune of about mice annual savings on health insurance premiums… $0 this year instead of $25,000 for example.

Need help with acronyms let me know.
TropikThunder
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Re: Is 70/30 too aggressive? Portfolio help!

Post by TropikThunder »

watchnerd wrote: Sun May 02, 2021 5:35 pm
David Jay wrote: Sun May 02, 2021 5:12 pm One receives Social Security benefits if one works 40 quarters (ten years cumulative work history), but the calculation for benefit amount is based on one’s top 35 years of earnings. If one retires with 30 years of work history, there will be 5 “zeros” in the average of your top 35 years.
In my case, the zeros I get will just replace the teenage / college work years at the beginning of my work history.

Starting with my first SS deductions at age 16, my average SS taxable earnings for age 16-23 (3 of which were 0 years) was $463/year. :P
But those will index well into the low 4 figures! :P
shess
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Re: Is 70/30 too aggressive? Portfolio help!

Post by shess »

Makoman wrote: Sun May 02, 2021 3:53 pm Dear Bogleheads:

We are looking at retiring in 3-4 years when we are mid to late 50’s. We are really struggling with bond allocation as we see stocks at an all time high and bonds a bad investment.

Questions:

1. is 70/30 too aggressive for where we are currently with a 3-5 year goal?
2. what alternatives are there to bonds in this environment?
3. is a higher international allocation a reasonable move in our equity portion?
I don't think 70/30 is too aggressive, but I retired and am still 80/20, mostly for the reasons you've given about feeling like bonds are a poor choice. The problem is, each year the situation seems to get worse WRT stocks being at new highs and bonds being at lower yields, so I'm starting to think that maybe I should pick my chair and sit down before the music ends.

A notion for fixed income is to keep in mind that there is an AA component where you want it to make uncorrelated moves WRT your equities, but there's also the stable-value component. So, for instance, you might setup a CD or bond ladder with duration geared towards providing a reliable yearly income base for five or ten years. I think the percentage-of-AA system muddies the waters in this area, because it's attempting to straddle both issues at the same time.

WRT international, I have had 35% of my equity position in INTL for decades, and it hasn't paid me well for my loyalty. Will it someday pay out? No idea. I don't think it's an unreasonable amount, but I find it hard to compose a strong argument for an increased allocation to INTL, either. I can certainly see the point of people who are 100% US for their equity position.

We have a kid in college and one a year away from starting, and I can see that there would have been some advantage to still working until they were past college. We made provisions for it, but healthcare and college costs are very notable bits of our cash-flow situation right now. I can objectively calculate how things will change as the kids age, but meanwhile it definitely is a bit stressful. I know that once we have an empty nest, we might have other expenses like increased travel, but IMHO those are more directly addressable between my spouse and I.
bpAgent86
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Re: Is 70/30 too aggressive? Portfolio help!

Post by bpAgent86 »

I didn't see in your post but do you or your wife have any pensions coming your way?
Freefun
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Freefun »

I don't understand the common critique that "bonds are a poor choice." Of course it is now.. stocks are going up. If this continues I'd be more inclined to add to the underperformer.

There was an article in today's WSJ headlining that more and more people are plowing into equities. This doesn't end well-but of course no one knows when.

I'm sticking to my AA w/ rebalancing, since it reflects my risk tolerance. My fixed income portion is primarily to damper volatility and not for returns.
Remember when you wanted what you currently have?
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Re: Is 70/30 too aggressive? Portfolio help!

Post by ivgrivchuck »

Makoman wrote: Sun May 02, 2021 3:53 pm 1. is 70/30 too aggressive for where we are currently with a 3-5 year goal?
Only you can tell... A good stress test is to pretend that stock market drops by 50%. Can your portfolio/plans survive it?
2. what alternatives are there to bonds in this environment?
Some bogleheads in your situation are moving money into MYGAs. There are a lot of threads in the forum.
3. is a higher international allocation a reasonable move in our equity portion?
Anything in 15%-50% range is fully reasonable (some even advocate 0%). I believe that 30% is a reasonable compromise. However don't go back and forth, just pick a number and stick with it...
5. Are we realistic with retirement dates?
You should play around with retirement calculators to find it out...
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

Freefun wrote: Sun May 02, 2021 6:18 pm I don't understand the common critique that "bonds are a poor choice." Of course it is now.. stocks are going up. If this continues I'd be more inclined to add to the underperformer.
Bonds aren't so bad if you have enough of them. ;)

Seriously, though, over the long run, I expect near 0 real return from Treasuries, a hair more than that from TBM.

Right now, we have negative real bond yields. But I'm over-buying them with inflated stock valuation money, so it evens out. ;)
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Freefun
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Freefun »

watchnerd wrote: Sun May 02, 2021 6:22 pm
Freefun wrote: Sun May 02, 2021 6:18 pm I don't understand the common critique that "bonds are a poor choice." Of course it is now.. stocks are going up. If this continues I'd be more inclined to add to the underperformer.
Bonds aren't so bad if you have enough of them. ;)

Seriously, though, over the long run, I expect near 0 real return from Treasuries, a hair more than that from TBM.

Right now, we have negative real bond yields. But I'm over-buying them with inflated stock valuation money, so it evens out. ;)
Exactly.

And as the saying goes, the elevator goes down much faster than it goes up.
Remember when you wanted what you currently have?
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Makoman
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Makoman »

bpAgent86 wrote: Sun May 02, 2021 6:17 pm I didn't see in your post but do you or your wife have any pensions coming your way?
No pensions. And to a prior reply, yes our spend is 115k per year. No mortgage
humblecoder
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Re: Is 70/30 too aggressive? Portfolio help!

Post by humblecoder »

Makoman wrote: Sun May 02, 2021 3:53 pm Questions:

1. is 70/30 too aggressive for where we are currently with a 3-5 year goal?
2. what alternatives are there to bonds in this environment?
3. is a higher international allocation a reasonable move in our equity portion?
4. one of us will only have 30 years of earnings for SS, do we each receive the $2500 ss states we will on our current course? In other words does SS pay out spousal benefits only if both worked for 30-35 years?
5. Are we realistic with retirement dates?
Based upon what you have posted, you currently have $4 million saved and have an anticipated expenses of $135K/year. That would represent about a 3.3% withdrawal rate. That is below the Trinity study benchmark of 4% (which is based upon not running out of money over a 30 year horizon with a 60/40 asset allocation). Based upon that, I would say you are in pretty decent shape given that you are still planning to work another few years. The one wildcard are your children's college tuition. You didn't mention whether or not you have a separate pool of money for their college, or if the $135K/year includes tuition. If you haven't thought about that, you should.

To answer your questions specifically:

1. There are two ways to approach asset allocation in your case. One perspective is that you have already saved close to 30 times annual expenses so why continue to take unneeded risk. Better to take your foot off the gas since you have already reached your goal. The other perspective is to say that since you have already reached your goal, you can afford to take some additional risk. Even if the market goes down, you still have a reasonable chance of being able to keep to your plan. I think it comes down to your own personal risk tolerance.

For perspective, most of the Target Date 2025 funds are about 60/40, so you would be slightly more aggressive than that.

2. Personally, I am sticking with Total Bond Market. That provides diversification among various bond types and durations. Total Bond Market funds generally hold bonds with both short durations (which benefit if yields rise) and long durations (which benefit if yields fall). I see no reason to market time with respect to bonds, but I do acknowledge that today's low yields do have people spooked.

3. Most Target Date funds will hold around 30%-40% of equities in international, so a higher percentage certainly is reasonable.

I am splitting 4 into two questions.

4A (what if I have only 30 years of work record - will I still get the SSA's projection). Short answer is "no". My understand is that the SSA projection is based upon having a work record through your full retirement age. If you stop working before that with less than 35 years, you will have five years of zeros averaged into your benefit calculation. SSA has a way to get a personalized projection based upon only working for 30 years. I would use that to project.

4B (does SS pay out spousal benefits only if both worked for 30-35 years). Short answer is "no". My understanding of spousal benefits is that Spouse A will get one-half of Spouse B's SS amount based upon Spouse B's record. So even if Spouse A didn't work a day in his/her life, he/she would still get one-half of Spouse B's full retirement age benefit if Spouse A claims at their Full Retirement Age. This, of course, is adjusted based upon at what age Spouse A claims social security. Furthermore, if Spouse A can get a higher benefit on his/her own record (because the benefit on their own record exceeds that of 1/2 of Spouse B's record), then Spouse A would get that higher benefit instead.

I know that sounds confusing. I would highly recommend visiting the Open Social Security web site (https://opensocialsecurity.com) which will calculate what your benefit would be based upon different ages when you claim. This is one of the best (if not THE best) Social Security modeling site.

EDIT: I re-read your original post. You say that SSA.gov says that you will both get $2500/month EACH at full retirement age. That implies that neither of you would get spousal benefits. You would get Social Security based upon your own records since that would be higher than spousal benefits (1/2 the other spouse's benefit).

5. As I mentioned above, you've already saved 30 times expenses, which seems to put you in good shape barring any catastrophe. As I said, you didn't mention anything about college expenses, so that would be the main wildcard.
DidItMyWay
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Re: Is 70/30 too aggressive? Portfolio help!

Post by DidItMyWay »

As others have mentioned, whether or not it is too aggressive is a purely personal decsion.

I also intend to retire in 3-4 years, and my AA is 55/45; however that is what I am comfortable at. Others are comfortable at 60/40, 70/30, or even 80/20, and that's okay for them. I agree with the "50% test": If your equities drop by 50%, will you be able to stay calm, do nothing, and stick to your allocation, or will you have a pit in your stomach and want to move funds?

I do think your target retirement date sounds reasonable and that you are in good shape.

I think international holdings of 15% of your total equities is also reasonable.
averagedude
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Re: Is 70/30 too aggressive? Portfolio help!

Post by averagedude »

70/30 is aggressive but reasonable, especially if you have substantial International equities. This is my exact asset allocation and I plan on retiring next year. As stocks keep moving higher, we keep buying bonds (and hold our nose) to rebalance to our target AA.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by J295 »

averagedude wrote: Sun May 02, 2021 9:33 pm 70/30 is aggressive but reasonable, especially if you have substantial International equities. This is my exact asset allocation and I plan on retiring next year. As stocks keep moving higher, we keep buying bonds (and hold our nose) to rebalance to our target AA.
Good for you. We were 100% equities thinking about early retirement then 2008-09 happened. Before the Great Recession it seemed like our accounts were going non stop to the moon. Until the music stopped! Delayed actual retirement until the end of 2012, then implemented a more conservative AA at age 53. In hindsight should have considered a less than 100% allocation near end of working.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

J295 wrote: Mon May 03, 2021 9:25 am
averagedude wrote: Sun May 02, 2021 9:33 pm 70/30 is aggressive but reasonable, especially if you have substantial International equities. This is my exact asset allocation and I plan on retiring next year. As stocks keep moving higher, we keep buying bonds (and hold our nose) to rebalance to our target AA.
Good for you. We were 100% equities thinking about early retirement then 2008-09 happened. Before the Great Recession it seemed like our accounts were going non stop to the moon. Until the music stopped! Delayed actual retirement until the end of 2012, then implemented a more conservative AA at age 53. In hindsight should have considered a less than 100% allocation while still working.
Wow, glad it worked out okay.

That's a serious Sequence of Returns Risk example.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by prairieman »

We were in a similar place and I couldn’t stomach 70/30 or even 60/40 without my income.
We went with 50/50 and did well enough with that to start thinking about 60/40. We migrated up to 60/40 during the Covid crash and have held it ever since.
There is nothing that says you have to keep your AA for life.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by Turkishcoffee »

I am seeing more and more people i respect state with bonds where they are for the foreseeable future, a 70/30 portfolio is the new 60/40 for people in this age group.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

Turkishcoffee wrote: Mon May 03, 2021 10:24 am I am seeing more and more people i respect state with bonds where they are for the foreseeable future, a 70/30 portfolio is the new 60/40 for people in this age group.
I've heard others say this, too, and I have admit, I don't buy into the reasoning.

Allocating more to equities doesn't get you 'better bonds'.

At the same time, a 10% increase to equities doesn't move the CAGR needle much, either.

Vanguard shows a 0.3% difference in CAGR between 70/30 and 60/40 AA models over long periods of time.

In sum, I don't think it solves the problem of returns being reduced by low bond yields.

You'd need to to make a much bigger shift into equities to really move the needle enough to close the gap.

Or you could hold riskier bonds.
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59Gibson
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Re: Is 70/30 too aggressive? Portfolio help!

Post by 59Gibson »

fortunefavored wrote: Sun May 02, 2021 5:57 pm Couple years younger but similar allocation and early retirement. It sucks all around - 30% bonds earning nothing (or negative) along with the large risk of a an extended bear for the 70% in stock. We don't have enough money to pile into safe assets, and I am not willing to work another 5 or 10 years to make it happen.

I've just accepted the risk and hope it works out. You can improve your fixed asset portion slightly by moving to CDs, or multi-year guaranteed annuities.. but for me the complexity doesn't seem worth it.

Do run your real social security history through https://ssa.tools/ - nearly always it is best for the lower earning spouse to claim as early as possible, and for the higher earning spouse to wait until 70 for maximum benefit.

All the best, tricky times to be wealthy but not ultra-wealthy. Sure beats being poor though. :)
The last line is very true, by reducing some of your stock exposure you pay a return price(insurance premium) but maybe gain some peace of mind?. Possibly miss gains and additional income to spend..To me personally those differences are not the end of the world at your level.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by razorbacker »

I would not be so bold as to tell you what allocation you would be conformable with. You and the wife will have to decide that. I will say I'm much older than you at 67/62 and at the same 70/30 allocation. I am still working but plan to retire in three years. No one knows where the market will be in three years but I'm willing to sleep on the possibility that the market will be higher. Bonds and cash are basically returning nothing so I'm a little strong in stock for my age. I notice that Fidelity and Vanguard 2025 target retirement funds are generally around 60/40. I plan to reduce down to 50-60% stock over the next three years. I plan to continue with at least 50% stock into retirement years.
Last edited by razorbacker on Tue May 04, 2021 8:52 pm, edited 1 time in total.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by chazas »

razorbacker wrote: Mon May 03, 2021 10:20 pm I would not be so bold as to tell you what allocation you would be conformable with. You and the wife will have to decide that. I will say I'm much older than you at 67/62 and at the same 70/30 allocation. I am still working but plan to retire in three years. No one knows where the market will be in three years but I'm willing to sleep on the possibility that the market will be higher. Bonds and cash are basically returning nothing so I'm a little strong in stock for my age. I notice that Fidelity and Vanguard 2025 target retirement funds are generally around 70/30. I plan to reduce down to 50-60% stock over the next three years. I plan to continue with at least 50% stock into retirement years.
Have the allocation you want, but here’s the actual Vanguard 2025 allocation:


58.14% Stocks
40.79% Bonds
1.07% Short-term reserves
razorbacker
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Re: Is 70/30 too aggressive? Portfolio help!

Post by razorbacker »

chazas wrote: Mon May 03, 2021 10:47 pm
razorbacker wrote: Mon May 03, 2021 10:20 pm I would not be so bold as to tell you what allocation you would be conformable with. You and the wife will have to decide that. I will say I'm much older than you at 67/62 and at the same 70/30 allocation. I am still working but plan to retire in three years. No one knows where the market will be in three years but I'm willing to sleep on the possibility that the market will be higher. Bonds and cash are basically returning nothing so I'm a little strong in stock for my age. I notice that Fidelity and Vanguard 2025 target retirement funds are generally around 70/30. I plan to reduce down to 50-60% stock over the next three years. I plan to continue with at least 50% stock into retirement years.
Have the allocation you want, but here’s the actual Vanguard 2025 allocation:


58.14% Stocks
40.79% Bonds
1.07% Short-term reserves
Yes, you are correct.
JoeQ
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Re: Is 70/30 too aggressive? Portfolio help!

Post by JoeQ »

watchnerd wrote: Sun May 02, 2021 5:35 pm

In my case, the zeros I get will just replace the teenage / college work years at the beginning of my work history.

Starting with my first SS deductions at age 16, my average SS taxable earnings for age 16-23 (3 of which were 0 years) was $463/year. :P
Isn't SS based on top 35 years? In which case, your zeroes will not have any impact on your average, assuming you have 35 years with some earnings.
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watchnerd
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Re: Is 70/30 too aggressive? Portfolio help!

Post by watchnerd »

JoeQ wrote: Tue May 04, 2021 1:35 pm
watchnerd wrote: Sun May 02, 2021 5:35 pm

In my case, the zeros I get will just replace the teenage / college work years at the beginning of my work history.

Starting with my first SS deductions at age 16, my average SS taxable earnings for age 16-23 (3 of which were 0 years) was $463/year. :P
Isn't SS based on top 35 years? In which case, your zeroes will not have any impact on your average, assuming you have 35 years with some earnings.
Correct.

I've been maxed out on SS for, I dunno, 20+ years of those 35.

I'll be sad to see my high school earnings drop off the cart, though.
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
DoctorWu
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Re: Is 70/30 too aggressive? Portfolio help!

Post by DoctorWu »

While far from well versed or having expertise in these areas, I have paid attention, read a lot and listened to an advisor for years. We are both 59 years old now and have both IRA and non-IRA funds with an AA of 60-40%. When I looked at it, it appeared the historical return was about 8.7% with a worst loss in one year of -30%. Bumping to go 70-30% made it 9.1% and -40% loss in the worst year. So I am comfortable not chasing that 4/10's of 1% at this point. (We have baskets consisting of 3 different ROTHs accounting for about 17%, SEP-IRA 40%, and non-IRA investments accounting for 43% for our total and $40K in an HSA. No debt. Am told we are good to go any time we want now and anticipate starting SS at 67.)
benway
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Re: Is 70/30 too aggressive? Portfolio help!

Post by benway »

It's a very individual decision based on many factors. I needed data to help me reach a comfort level with my asset allocation. That included running numbers in calculators like those below. I prefer not to take more risk than is necessary.

- NewRetirement.com
- Fidelity retirement planner (the planner behind their login, that I think anyone can get to if they register for a free account)
- Vanguard Nest Egg Calculator
- Schwab's Intelligent Portfolio recommendation
- i-ORP
- cFireSim
- Firecalc
- Calculating my own funding ratio (see here: viewtopic.php?f=2&t=205824)
- The linked article in this thread: viewtopic.php?t=198079
Last edited by benway on Fri May 07, 2021 9:22 am, edited 3 times in total.
bulliegolfer
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Re: Is 70/30 too aggressive? Portfolio help!

Post by bulliegolfer »

windaar wrote: Sun May 02, 2021 5:25 pm If you were 70/30 and the stock market fell 50% would you sell? If so then it is too aggressive.
+1. I'm retired and a 67 y/o. I'm closer to a 30/70 AA. No way I would be comfortable if the markets declined 50% with your AA. But a lot of people are so more power to those. As far as bonds go, I do have exposure to bonds through a balanced fund I have with Fidelity but some of my FI allocation is in MYGA's. I've been moving money into those as CD's matured.
sandan
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Re: Is 70/30 too aggressive? Portfolio help!

Post by sandan »

I got my blood test back today.

70/30 feels like one of those numbers that is "safe" but needs caution.
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Re: Is 70/30 too aggressive? Portfolio help!

Post by abuss368 »

Makoman wrote: Sun May 02, 2021 3:53 pm Dear Bogleheads:

We are looking at retiring in 3-4 years when we are mid to late 50’s. We are really struggling with bond allocation as we see stocks at an all time high and bonds a bad investment.

Questions:

1. is 70/30 too aggressive for where we are currently with a 3-5 year goal?
2. what alternatives are there to bonds in this environment?
3. is a higher international allocation a reasonable move in our equity portion?
4. one of us will only have 30 years of earnings for SS, do we each receive the $2500 ss states we will on our current course? In other words does SS pay out spousal benefits only if both worked for 30-35 years?
5. Are we realistic with retirement dates?

***Ages: 53/51
*** income $175000
***State-PA
***Children: 2- 19 and 12
***Tax deferred $1,650,000
***Taxable $2,350,000
**AA 60/30/10 (cash)
*** Intl 15% of equity
***Portfolio consists of essentially a total market, total international, total bond, with a small value index and small cap value tilt
*** No debt
***$600k home
***$135000 current spend with healthcare paid by employers
*** Anticipating $115 k spend and another $20k for health insurance until Medicare kicks in at 65.
***SS states each of us will be due $2500 per month at 67

Any feedback is very much appreciated and thanks for what seems to me to be the best retirement site on the internet!!!
Only you can answer that. If the market pulls back 50% (or more), will you be up at night?

If I needed the money in 5 years or so, I would not be in the stock market. Warren Buffett has mentioned 10 years or so.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
ChinchillaWhiplash
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Re: Is 70/30 too aggressive? Portfolio help!

Post by ChinchillaWhiplash »

You are probably fine. Large savings amount and diversified with no debt. You could up the fixed income and you won’t have a problem. Do you rebalance?
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