I would like some feedback on my stock allocation for my portfolio.
I am 39 years old. My wife is 36 years old. I plan on retiring at age 70. We'll see how if my wife can make it to that age.
Here is our current portfolio:
- I am currently a participant in the Arizona State Retirement System, which upon retirement would give me 60% of my salary a year for the rest of my life. I imagine this would be my major source of retirement income (if the pension system remains solvent), with SS making up the rest.
I also have a Roth IRA with Vanguard, currently invested in 80% 2050 Target Date Fund (VFIFX) and 20% Small Cap Value Fund (VSIAX). I consider this a supplemental retirement income stream.
My wife has a traditional 403b through her employer, invested in a 2045 Target Date Fund with JP Morgan.
And we have a taxable account for intermediate funds, currently in a 3-fund portfolio of Total Stock Market (VTSAX), Total International Market (VTIAX) and Long Term Treasuries (VLGSX). Our current allocation in this taxable account is 90/10, with plans to add bonds at 2-4% each year, starting at my age of 41, until we reach a 50/50 allocation at age 70.
My first question involves my Roth IRA (and, to a lesser extent, our taxable account). Since I have access to a pretty generous pension, I wanted to take a more aggressive position with my IRA. I am thinking of adopting a 100% allocation in stocks (split between Total Stock Market, Total International Stocks, and Small Cap Value) in my IRA account until I turn 60, and then add bonds at maybe 4-5% a year until I reach either a 50/50 allocation or a 60/40 allocation by the start of retirement. I figure I have about 20 years of hopefully solid growth before I ease into the retirement phase.
What do you guys think? Is this a viable plan? I feel like I'm one of those in-between investors, not 25 years old with no concern for market crashes or recessions because I have 40-50 years of work ahead of me, nor 65 years old at the cusp of retirement. I want to maximize my portfolio's potential while I still can, while also being reasonable and pragmatic.
So, do you guys think adopting a 100% stock allocation in my IRA is a solid strategy, considering I have a pension as a safety net? Or should I stay in a 90/10 allocation, or even adopt a more conservative allocation, considering my age?
And my second question is what kind of stock allocation is considered the norm in retirement. Vanguard's TDF funds seem like they start at about 50/50 upon retirement, and then end at 30/70 seven years later. But based on bond yields, is that still a viable allocation, or should I think of something like 50/50 or even 60/40 in retirement? What are your recommendations?
Any help is always greatly appreciated. Thank you.