What’s your Retirement Asset Allocation?

ams25

If you’re retired, or close to being, what’s your asset and allocation and why? When you’re working it’s fine to be 80% or so invested in equities (as I was) but once the paycheques stop everything changes. So it would be fascinating to learn how people approach this. I hope you’ll participate in this thread/survey so we can expand our collective knowledge on this topic. I’ve structured some questions to guide consistent inputs.

Age now:
..and when you stopped working/earning:

Are you already retired and/or living off investments? If not how many years to go:

How much of your income will come from investments after State/DB pensions?

Are these pensions in payment, if not how many years to go?

What is your current asset allocation?
% Equities
% bonds
% Cash
% Property (ex. Primary residence)
% Alternatives
… which ones?

How many years expenses do you hold in cash, if any:

Brief Rational for current allocation:

Any lessons learned since you stopped working/has your allocation changed?


I’ll kick it off in the next post…

ams25

Age now: 53
..and when you stopped working/earning: 52

Are you already retired and/or living off investments? If not how many years to go: Yes

How much of your income will come from investments after State/DB pensions? 47%

Are these pensions in payment, if not how many years to go?: 7 for DB and 14 for SP

What is your current asset allocation?
55% Equities
20% bonds
10% Cash
4% Property (exc. Primary residence)
11% Alternatives
… which ones? 4% P2P, 7% Absolute Return

How many years expenses do you hold in cash, if any: 2 to 3.

Brief Rational for current allocation:
To hold enough in cash/bonds/ less volatile investments to bridge 7 years to DB pension and 14 to SP being available so in the worst case I could avoid selling equities in a bear market over the next 5-7 years. I recognise I am quite risk adverse right now, but I am not sure how I would cope with taking a big hit in a market crash when there are no other sources of income. However, I do plan to increase equities % as I get closer to my DB, probably at or close to 70% once DB is in payment.

Any lessons learned since you stopped working/has your allocation changed?
That investing in the accumulation phase when working is very different from the deaccumulation/living off investments phase once you stop. I did not give it enough thought until I stopped working. I've held this allocation since deciding on it, but only about 1 year so far!

Linton

Age now:68, stopped earning at 56.
Income from fixed rate annuities (SP deferred):50% of expenditure

Equity - 60%
Bonds - 13%
Cash - 17%
Other - 10%

Cash is about 3 years total expenses or 6 years current drawdown requirement. It is temporarily high, I expect to reduce the cash % to below 10%

"Other" includes a directly held private equity fund and all sorts of derivatives that form part of some income and wealth preservation funds.

Rational is that the allocation is what it turns out to be given an overall 3/7,2/7,2/7 split between a growth portfolio, income portfolio, and a wealth preservation portfolio.

Major change/lesson learnt has been the setting up of the wealth preservation portfolio once I realised the growth portfolio was increasing my total assets well beyond both my plans and conceivable needs. Wealth Preservation is important and not just for people who cant take risk.

Another lesson learnt - deferring SP is a great way of buying future indexed income, especially at 10%. The payback time is not the most important factor.

Alexland

If retiring now and going into drawdown I would be 60pc equitues with 10pc cash or short term bonds (enough to draw for a few years for next time markets crash). I would consider buying an annuity with some of my wife's pension as so far she has lead a healthy lifestyle and I expect her to significantly outlive me. We would mostly draw on my pension and only draw enough from hers for tax free income leaving it mostly invested for after I am gone.

bostonerimus

Age now: 56
..and when you stopped working/earning: retired at 52, but I still do some part time consulting.

Are you already retired and/or living off investments? If not how many years to go: I live off final salary pension and rental income.....I save my part time earnings.

How much of your income will come from investments after State/DB pensions? 0% I expect US and UK state pensions and my DB pension to be about twice my annual spending when I reach age 67.

Are these pensions in payment, if not how many years to go? DB pension is paying now....US state pension could start at age 62 and UK state pension starts at age 67.

What is your current asset allocation?
% Equities 68%
% bonds 21%
% Cash 1%
% Property (ex. Primary residence) 10% rental property that is mortgage free.
% Alternatives 0%
… which ones?

How many years expenses do you hold in cash, if any: about 1 year

Brief Rational for current allocation: I bought a BTL years ago for retirement income and I'm happy with a fairly high equity allocation as I have my income needs covered from guaranteed sources.

Any lessons learned since you stopped working/has your allocation changed? I don't worry about my allocation as much. I am letting the equity percentage rise as I've stopped rebalancing.....I might actually be up to 70% equity allocation by now.

atush

Do you intend on taking your US SS at age 62?

I am consdiering it, but havent decided yet.

bostonerimus

atush wrote: »

Do you intend on taking your US SS at age 62?

I am consdiering it, but havent decided yet.

I'll probably wait until full SS age of 66 so I get a bigger check and I can make a few more IRA to ROTH rollovers in a low tax bracket. I don't need the extra cash flow of taking SS early, but it is a very useful option to have and waiting until 70 seems like tempting fate too much,