The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  https://boards.fool.com/quotgenerally-the-reduce-risk-proponents-are-34834034.aspx

Subject:  Re: How and When to Reduce Risk as Retirement Ne Date:  5/16/2021  6:54 AM
Author:  iampops5 Number:  102766 of 104848

"Generally the reduce risk proponents are saying reduce equities and get bonds. Many people today are retiring with 30 plus years of retirement ahead. Even moderate inflation -- the kind the Fed wants of say 2% to 3% will be significant over long time frames. 30 years at 2.5% will raise the price of hamburger from $4.69 a pound to $9.84 - and similarly for most other stuff."

I think that is why Michael Kitces offers the idea of reverting back to a 'rising equity glide path' as you age during retirement.

His idea is that you move toward more bonds and fewer equities in the last few years leading up to retirement and during early retirement to protect yourself from 'sequence risk' i.e., a large crash early in retirement.

But as you age and your time horizon begins to shrink again, and you can phase back into a higher equity allocation for better long term returns.

We have had this conversation hundreds of times, but it is on topic:

https://www.kitces.com/blog/managing-portfolio-size-effect-w...
Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us