The critical issue here is that your nest egg provides for expenses over and above your other income.If you have SS income,and or pension income, that is someone inflation adjusted, you do not need to 'replace that' with withdrawals from your portfolio.This SS and pension income can be looked at as an annuity equivalent, or an indexed bond. It is a fixed income asset, and inflation adjusted to boot. Thus, you can easily justify a higher percentage of stocks in your portfolio. However, the Safe Withdrawal Studies indicate that the survivability of al all stock portfolio for 30 years is dependent upon taking no more than 2.3% or so of your nest egg initial value for that 30 years period. (more if less years). Yes, there have been several times in history when all all stock portfolio failed the 4% SWR test. around 1966 and 1972 I believe are 2 of the times. MOst of the previous studies were done based upon 30 year treasury bonds (they were the only things with a track record going back that far). Now you can diversify with REITS, GNMA funds, I-bonds and TIPs in various accounts. You might wish to consider international exposure, both in bonds and stocks since this is a global economy. Scott Burns writes a weekly column and has tracked his 'Couch Potato' portfolio. Lots of good reading at his site. Remember, the stock market crashed in 1929, and took over 2 decades to recover to the same level! If you had 50% bonds in 1929, you would have not been all that unhappy compared to someone with 'all stock' - even dividend paying ones. Dividends got quickly chopped in the depression! t.
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