Author Topic: 75% stock/25% bonds if you retired early. What allocation at age 65?  (Read 585 times)

FIREin2018

  • Stubble
  • **
  • Posts: 173
  • I did decide to Fire in 2018 @Age47! :)
I'm age 49. I fired in 2018 at age 47.

The link in this post says if you retire early, it's recommended to have 75% stock/25% bonds if you plan to live 45 more years at 4% safe withdrawal rate:
https://forum.mrmoneymustache.com/welcome-to-the-forum/i-can-last-45years-on-the-4-rule/msg2301362/#msg2301362

do I keep that 75%/25% forever?
If not, do i goto 40% stock /60% bonds like the general consensus for those that retire at the normal age of around 65?

and if i'm supposed to keep the 75%/25% allocation forever, why that recommendation for those that FiRE?

iluvzbeach

  • Bristles
  • ***
  • Posts: 485
Re: 75% stock/25% bonds if you retired early. What allocation at age 65?
« Reply #1 on: March 26, 2020, 09:24:06 PM »
PTF, as Iím interested in the responses. We are 75%/25% and FI. DH is RE and Iím working PT. In anticipation of full FIRE, want to see other replies. Thanks for letting me tag along.

BicycleB

  • Magnum Stache
  • ******
  • Posts: 3118
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: 75% stock/25% bonds if you retired early. What allocation at age 65?
« Reply #2 on: March 26, 2020, 09:24:59 PM »
I believe that:
1) Yes, the link expects you to stay at 75/25
2) The discrepancy is due to differing interpretations of what's safest, perhaps including different assumptions about the investor's behavior
3) FIRE analysts tend to emphasize a longer period because we assume you'll take care of your health
4) Longer periods usually benefit from higher stock %

FIREin2018

  • Stubble
  • **
  • Posts: 173
  • I did decide to Fire in 2018 @Age47! :)
Re: 75% stock/25% bonds if you retired early. What allocation at age 65?
« Reply #3 on: March 27, 2020, 08:33:59 AM »
I believe that:
1) Yes, the link expects you to stay at 75/25
2) The discrepancy is due to differing interpretations of what's safest, perhaps including different assumptions about the investor's behavior
3) FIRE analysts tend to emphasize a longer period because we assume you'll take care of your health
4) Longer periods usually benefit from higher stock %
interesting about health. avg lifespan of a male is 76.
Lets say those that FiRE lives to an avg of 80.

lets say the avg male retires at age 66, giving him 10years in retirement. the recommended allocation for him is 40/60.
for those that FiRE, why keep 75/25 instead of 40/60 when we turn 70?

yes, longer periods benefit from higher stock %.
but at age 70, we dont have that much of a time period left (on avg).
« Last Edit: March 27, 2020, 08:40:22 AM by FIREin2018 »

BicycleB

  • Magnum Stache
  • ******
  • Posts: 3118
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: 75% stock/25% bonds if you retired early. What allocation at age 65?
« Reply #4 on: March 27, 2020, 12:34:50 PM »
Because you might not be average! Lots of people live past 90.

Look, you can make your own choice. Either one is probably pretty good. But neither of them is guaranteed. Each position that such-and-such exact portfolio is the best is subject to very very legit arguments against it.

If you sleep much better at night with 60/40 instead of 75/25, do 60/40... if you can stick with it. But don't go selling stock right after your stock dropped. Either option done consistently is a hell of a lot better than switching from one to the other. Because most of us switch at the wrong time.