I had the following insightful comment left;
I think that when one reaches the sixties in age, they should consider their Social Security Payements as Bond equivalents. (i.e. $i500 monthly SS payments would be equal to having a five percent long bond worth $360,000 in your portfolio. Also, any defined benefit pensions and fixed annuities etc., should be similarly classed. Then the Asset Allocation between Stock and Bonds will then be decided on the basis of your full portfolio, and avoids bond overweighting. Some Financial planners recommend this method.
This makes sense. Someone in their 60s can probably count on social security. I don't know that someone my age can and I'm not sure at what age the Mendoza line is for this but I like the logic for a 60 year old. The next 20 years are probably a good bet.
I think I want to ponder this a little bit more but it is insightful
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4 comments:
Totally logical evaluation in matching assets to income streams. The big question for me, who is going to manage the assets as I live longer but not capable of handling the sophisticated transactions needed to keep up with a good return on my money. I wish someone would develop a tool set that following it would return a risk/reward balance of X. That way you could put some in an equity tool that is forecasted to yield X and a bond yield of Y. Just don't see this happening or am I missing it.
I wouldn't worry about SS being ther for you. The Boomers have stuffed so much money into that fund ov er the last forty years that it will never run out unless it has been horribly mismanaged or outright looted.
Have a nice day.
Um, for the first comment, isn't that what hiring a financial professional to handle your finances for you is all about? If you are unable to handle it or your spouse isn't able to handle it, they will handle it for you - for a price.
I like the premis! The idea is in keeping with my prior post suggesting that most folks load up to much on bonds. As life expectancies continue to increase, retirment accounts need much more exposure to long term growth.
Those who do not have trustworthy portfolio managers are fools. No index or program exist today that can replace sound human logic. Those who invest for a living need help with their own affairs.
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