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It’s been a topsy-turvy year in the financial markets. Has that prompted you to make any changes to your portfolio’s asset allocation? I’m thinking about four key dimensions:
If you’ve tweaked your asset allocation, I’d love to know what changes you’ve made—and why.
Yesterday I discussed one aspect of our finances with my spouse and it may result in an allocation change. G has had a very interesting career which means she has a public pension and a work record in the private sector. She has sufficient credits to get social security on her own work record. In the past the rough numbers indicated that because of SS rules she would not receive most of that benefit because of her public pension, so we ignored it in our retirement calculations.
Changes in law now indicate she will get that stipend. I consider it to be a bond. She is scheduling a visit to the social security office to finalize this.
If in fact she does get her full benefit that will be a significant change in retirement income. We’ll either gift more each year or increase our stock allocation, or both.
A little late to the party on this post but, for whatever it’s worth…
We closed, transferred or zeroed out a rarely used checking account, an account at Betterment, an account at Treasury Direct, and two of my recently retired spouse’s 403(b)s. All basically in furtherance of simplification.
Within our VG holdings, we consolidated a 6 fund portfolio to a Bogleheads 3 Fund portfolio eliminating small positions in a REIT, small cap value, and large cap value. Again further simplification after a realization that these relatively small slices were not going to move the needle in any meaningful way regardless of performance.
Did a reallocation within retirement accounts resulting in Roths being 100% equity and bond holdings (along w equities) maintained in tax-deferred. Assumption is Roths are likely last to be used and probably legacy accounts for the kids so hoping for better performance over time w equities.
Changed overall AA from roughly 72/28 to 65/35 and did same for US vs Int’l on equity side which was previously 76/24. Took some winnings off the table after last few years and find it hard to believe that US overperformance will continue into next decade. Also, at this point, more motivated by benefits of diversification than picking the right horse. Also, easy to remember. It’s 65/35 and 65/35.
Tax deferred vs Roth is 2:1.
Although we are 65/35, we are comfortable letting the AA float up going forward should equities outperform fixed income. Reason being is we still have 1 large untapped SS benefit coming down the pike. The way I see it, the closer we get to SS, the less we will need to rely on the security of our fixed income piece.
We continue to do yearly Roth conversions as tax brackets permit as well as buy small amounts of Total US and Total Int’l index funds in an after tax account if there are $$$ leftover each month.
Started a 529 for a new grandchild w recurring monthly deposits going forward.
I do wish we had more in non-qualified investments as this would make gifting or writing a mortgage for a child (a la Mr. Clements) more feasible. Digging into the tax deferred accounts has obvious adverse tax consequences and I’m reluctant to tap the Roths and sacrifice their long-term growth potential.
Anyway, that’s my story and I’m sticking to it. 🙂 Feel free to critique as need be. Always impressed by the extent of knowledge and diverse opinions here.
We are now one and a half years into retirement. Last year I realized that we had no need for excessive risk in our portfolio, and slowly moved from an asset allocation of over 80% equities to just under 75%. We mostly maintain our AA through the past few months by redeeming from specific asset classes. However, I did a second rebalance when markets were skewed. Overall, I took advantage of the dip and did my annual Roth conversion earlier than expected, buying more equities to bring my AA back to the desired level. Moved from money market fund to a low expense ratio Vanguard fund tilted towards large cap companies.
I didn’t change our asset allocation this year although I did adjust in the middle of last year from 50/50 to 60/40 after buying some deferred annuities when interest rates were going to get cut and stocks were humming along. In fact, I am planning to raise it further to 70/30 when my wife and I claim delayed SS, small pensions and conservatively invested deferred compensation next year. We are generally going with the rising equity glidepath plan in retirement as more income is from guaranteed and low risk sources. This year all we have done is rebalance and half of our planned annual partial Roth conversion near the lows in April. Sleeping well.