Quote:
Originally Posted by Happydaz
Are you saying a retired person living in the Villages should have 100% of his portfolio in the stock market? A balanced account will have a mixture of stocks and bonds and the return has been in the 6-8% range. If we had a stock market crash that lasted a number of years an elderly person would be grateful that half his money was in bonds as he needs to take money out each year to live on.
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correct, though the proportion of bonds shouldn't be static, but should be based upon real interest rates. If interest rates are higher than inflation, there should be a higher proportion of bonds, and if rtes are less than inflation, there should be a smaller proportion of bonds, and a larger proportion based upon age.
Too many people who had a set it and forget it 401K allocation while working, have a recency bias of wanting a similar set it and forget it desire. Unfortunately in retirement a set it and forget it approach may result in an unfortunately large drawdown while not being able to make the loss back very quickly or at all. . .
The future is always uncertain, and sometimes it's more uncertain than other times. . like now.