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First, look at all of your assets. The most important thing is asset allocation – how much is in equity and how much is in bonds.

"Think about everything, not just your investment program. That means think about Social Security. If you're fortunate, it can be $25,000 a year. It's great money. When you do your asset allocation, you want to include that. At 5 percent, that $25,000 is like having $500,000 [in assets]. As a life income, it's more like $350,000. That should be part of your calculation."

Suppose, for example, that your Social Security income is $17,000 a year – a typical figure for a couple – and your 401(k) rollover account and other financial assets are $400,000. Then you start your asset allocation with a conservative value for your Social Security at 14 times the income, or $238,000. Added to your $400,000 in savings, this means you have the equivalent of $638,000. In effect, 38 percent of it is already allocated to a bond equivalent.

"Don't count your house as long as you are going to live in it," Mr. Bogle said.



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