The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: FIREin2018 on May 02, 2018, 08:13:45 AM
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single, no kids, age 47
mortgage paid off
$500k 401k/Roth, $100k in bank
$20k/yr expenses
what i read for people that retire at normal age is an allocation of:
40% stocks/60% bonds
ie: 20% total market/20% Total international/60% total bonds
same holds true if i FIRE?
if not, then what allocation?
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No, that is way too much in bonds for everyone who plans to live more than 15 years. Put 10%-40% in bonds, at least 50% in stocks, not more than 50% in US stocks. Maybe 45 US : 30 international : 25 bonds. Or something in those ranges that makes you feel most confident.
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You should spend some time using www.cFIREsim.com and/or www.firecalc.com and see what affect different allocations had on past success rates. In general, the greater percentage of bonds, the lower the success rates. Personally, I'd pick something like 80/20 or 70/30 stock/bond as that's a pretty good spot between receiving the growth from stocks and having some volatility protection from bonds. But of course asset allocation is a very personal thing and none of us can judge your risk tolerance for you.
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You could do the rising equity glide path described here:
https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/
You would start with a much smaller stock allocation and ramp it up slowly over a decade of FIRE to protect against SORR, which is a greater concern with today's high stock valulations.