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|Subject: Re: IRA Direct Transfer - Questioning my Decisi||Date: 5/11/2013 1:34 PM|
|Author: gdett2||Number: 72229 of 74489|
Can you give me an idea (%) what that investment mix would look like going into retirement, and after retirement?
This is a very individual notion. It really depends on your exact situation. What your retirement income from pension/SSa will be. How much you have saved. What your expenses will look like for your locale. Let's look at a couple different, but simple, scenarios.
1. A person who retires and has 100% of their living expenses covered by pension/SSA. Their reliance on savings for day-to-day living is nil. They might use savings for auto replacement, an annual trip and emergency expenses. They might opt to have a higher amount in stock and keep a small bond portion with a cash position to support their planned expense(auto, etc) and emergencies.
2. A person who has 80% covered by pension/SSA. They require money from savings to pay monthly bills. They need to balance growth of their savings, protect downside and protect expense cash. The last part is important to avoid selling securities when the market takes a breather like 2007-2009. Carefully managing your investments is important.
3. A person who has 10% of expenses covered at retirement which will increase later when SSA kicks in. Again, planning growth and protecting down-side risk is important but having protected cash is critical.
These 3 different people/couples have decidedly different requirements for their savings. They rely on savings at very different levels. Add to that the personality, life-style, locale and investor knowledge differences and the variations can be endless.
There is that "traditional" mix that stocks at (100 - your age) percent. Another is straight 50/50, always.
The trouble with bonds, in particular long-term bonds, in our current environment is yield and a potential loss of value as interest rates rise.
I believe that the yield and growth from the traditional mix may not support a retirement like it did in the past.
You need to look at your expenses and income first. See what your short-fall might be. Plan your coverage cash then make a reasonable balance to your portfolio to support that while managing risk with diversification.
I know this is a non-answer to your direct question, however I do not believe there is any formula or one-size-fits-all percentage that is correct.
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