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Well really, as soon as you hit retirement, your savings should NOT be in such a volatile place where you'll eventually go bankrupt. Sure, some of it still in s
by _dark_matter_ 11y ago
Well really, as soon as you hit retirement, your savings should NOT be in such a volatile place where you'll eventually go bankrupt. Sure, some of it still in stocks, but you should be moving over to less return/lower risk portfolio options even as you start nearing retirement age. (In fact, this should be a gradual change as you rebalance your portfolio every year. You are rebalancing, right?)
- RockyMcNuts 11y agoyes, assumes annual rebalancing, but static allocation eg. 60/40 stocks/bonds. you're retiring for 30 years so you generally do better with a hefty allocation of stocks. try it, that's what the calculator is for :) given an average return over your retirement, the order and volatility of returns has a significant impact on the amount it's safe to spend. by choosing a less volatile portfolio you reduce risk allowing you to safely spend more, but you also reduce the return forcing you to spend less. that's why I did the calculator, how to allocate and how much is safe to spend is not a question with an obvious answer. there's a tradeoff between desire to spend as much as possible, on the one hand, and shortfall risk, on the other. interestingly, approaches that reduce equity allocation as you get older don't really improve the tradeoff much v. a static equity allocation.