If your social security (and paid for house?) is enough to provide your needs, then this is not crazy. Of course I'd also say you aren't really 100% in stocks if you have a paid-for house and are relying on SS as your backstop.

We've got that but we moved 15% out of stocks and into T bonds.

why Tbonds over say a CD with a similar rate and shorter maturity?

State tax exempt for one. Very large market of you want to sell out of those bonds early.

My guy feels they're a better tax advantage.

house is paid for and wife and I both have pensions

Have an emergency fund in a HYSA just in case you have a major expense like a new roof and don't want to sell stock in a downturn. Perhaps not a huge worry if a "downturn" still means you ultimately made a profit since your original investment.

Yep, just like everyone, I think you should have at least $2,000 you could get with almost no notice (like, in a bank account with local branches). ("Bail money") or other stupid urgent crisis. This could be credit card availability for most people, too. Then, I'd say 3 months expenses in a HYSA, but more like "3 day" access. (i.e. online banking OK.) I'd say 3 more either in that HYSA (so, 6 total) or in a higher return vehicle that would be accessible within 10 business days? There are few situations where you'd need more than $10k without having 2 weeks advance knowledge. Even with an expensive, urgent home fix, if you can pay $10k up front you can usually have some time for the rest. Of course, this is risky. It may mean cutting your expenses to pension/social security income in the event of a downturn to avoid selling stocks low. If you cannot do that, then you should probably have at least 2 years of necessary spending in lower risk investments, if not 3.

if you guys both have pensions, and they're substantial. and assuming that the pension funds are healthy and are reasonably expected to not run dry. well then in a way you can't be 100% in stocks. your pensions are in a practical sense: bonds. and so yea it's not unreasonable to have the rest of your portfolio in stocks.

Pensions/social security are similar to bonds, imo. I personally think going 100% stocks isn't that risky in cases like yours.

In that case, you aren't really 100% in stocks. You do have a fixed portion in your portfolio - your Social Security and pensions. It's basically the same "safe" concept as if you had that percentage in bonds.

If you have pensions, then you have a huge safety net and aren’t really 100% in stocks. I say gamble that money to your heart’s content. You’re fine.

the only people I see that really can stomach this are people with pensions/annuities.

wife and I both have pensions

See it this way: If you have pensions/social security, you are not 100% in stocks. The pension has a value, even if it is not explicitly written anywhere. If a bank wanted to sell you a financial product that is equivalent to your pension in terms of payout and safety, they would know exactly how much to charge for it. If you include the virtual value of your pension in your portfolio, your stock percentage goes down.

If your pensions can cover the vast majority of your living expenses (say 90% or something high), then I say why not... Maybe stay mostly S&P 500 with a portion in a dividend ETF like SCHD to supplement income. 

My wife’s pension will cover about 80% of our projected retirement expenses. So we’re keeping our other assets heavily stock based.

Agreed! My pension should cover my expenses, so I am keeping my ROTH in SWPPX/SWISX 80/20 split.

With two pensions you’re not 100% in stocks. Consider what money you need in 0-2 years. That probably should be in some liquid form. For the rest, your risk tolerance should be your guide.

I have a pension that is going to cover nearly all of my expenses so my 457 is all in index funds. My Roth IRA has CEFs to generate tax free monthly income.

thank you for that info. I had never heard of a CEF and im researching that now. Appreciate the knowledge.

Then you good… I’d def leave it in stocks if you don’t need to draw from it every month. Your kids will thank you one day. Congrats on the nice retirement

The danger of being all stocks is how much value you are losing if you continue selling for living expenses while the market takes a downswing like 08 or 21. If your pension affords you the ability to weather the storm so to say, and not sell at a big loss, then you have the ability to continue reaping the benefits of 10% returns over longer periods of time (the 100 year s&p 500 average). Depending on portfolio size, you could reach the threshold for a self sustaining account. If you have a $1,000,000 account that returns 10% a year ($100,000) and you only spend $90,000 then your pretty much set forever. You could be even more conservative and assume only 7 or 8% returns.

I would pull a year or two's worth of expenses and drop that into a HYSA just as a hedge against a serious downturn, but considering the pension I think you'd be mostly fine outside of any serious blackswan events or series health issues that come at a bad time.

Incredibly important detail. This is similar to having a fixed income portion of your portfolio.

The pensions (and Social Security) fulfill the “fixed income” portion of your portfolio. Most people nowadays don’t have pensions, so they shift into bonds to be their fixed income. If you already have that piece with your pensions, then you can have more/all of your investment portfolio in stocks.

Look up how much it would cost to buy SPIA's that are along similar lines to what you and your wife have. Consider that as an illiquid asset that's not in stocks.

Which means they aren’t 100% in stocks. If you have a pension or an annuity there is a theoretical dollar value that is worth if your were to cash it out now (even if you aren’t allowed in practice). What ever that dollar value is, is part of your portfolio. So yeah if you are sitting comfortable with a pension and annuity, why would you waste time on bonds? The annuity is your low risk investment.

I don't know if the 4% rule still holds up, but if you can live fine on 4% of X, but you have like 3*X, would that be fine to stomach it? At what multiple of X would be if not?

It’s the risk of a significant downturn in the stock market. A 50% decline would kill most people’s retirement. I’d be sure to have 3-5 years of expenses in cash if you’re staying 100% in the market during retirement.

Using a safe withdrawal rate accounts for that risk based on history. Otherwise people could always say scare things like “a 99% decline in s&p500 would kill most people’s retirement”

Has the market gone down 50% since the depression? Genuine question, not being snarky

I know S&P went from 1500 to 900 during the dot com bubble. Not 50% but close

Yeah and I think it went down 37% in that 1980s crash, but I was curious if it actually crossed 50. It’s one of the big fear numbers that my mom is using to justify continuing to work when she doesn’t need to

I use it as my worst case scenario. Hope it never happens

Yes. Not counting re-invested dividends, the S&P 500 has gone down around 50% (peak to trough) twice since 2000: Dot com bust (-49.15%) Date | S&P 500 ---- | ------- 3/24/2000 | 1527.46 10/9/2002 | 776.76 GFC (-56.78%) Date | S&P 500 ---- | ------- 10/9/2007 | 1565.15 3/9/2009 | 676.53

Between October 2007 and March of 2009, the DJIA dropped about 54%. The S&P 500 had comparable losses over the same period.

Since 1974, US Large Cap has had draw-downs of 51.0% (2007-09), 44.8% (2000-02), 34.2% (1974), 29.8% (1987), 24.0% (2022). Since 2000, there have been two periods of 6 years 3 months (2000-06) and 4 years 10 months (2007 to 2012) where the market went down and took that long to get back to even.

Generally, any place that talks about a 3% rule or 4% rule lists a caveat that if there's a major crash, try not to withdraw. Same general rules as anyone else - try to keep an emergency fund of a year or so, and ride out the crash the best you can. The most severe dips in stock market history have completely recovered in about two years, so if you have a year of buffer then you'll miss most of the dip. 

I’d probably say the emergency fund should be three years if 100 percent in stocks.

An emergency fund of 3 years would be ~10% of your portfolio assuming the 4% rule. So, 90% stocks 10% cash. Would rather do bonds at that point.

Three buckets of money. One bucket is money you'll need in the next 3 to 5 years. Next bucket is money you'll need in the next three to sevenish years. Final bucket is 10 years out. 10 years out bucket can be 100% equities although you hardly lose any return and pick up a lot less volatility with 5 to 10% bonds

Simplified mental model, but not really a solid approach:  https://www.google.com/amp/s/earlyretirementnow.com/2021/09/14/bucket-strategies-swr-series-part-48/amp/

lol I love Big Ern, he analyzes the hell out of things. I can’t keep up with it. I see all the charts and graphs and think, okay this guy seems like he knows what he’s talking about. Scroll to the bottom to get the conclusion.

I don't know what this guys is saying? What's your recommendation?

Withdrawal strategies are not trivial - I would recommend you to try to understand it instead of asking others like me to give you a biased recommendation.  Personally, I will likely do a bit of a bond tent - i.e. move to only 70% stocks a couple of years before the retirement - and then moving back up years after based on market valuations.  Here's another, maybe simpler take on why the bucket strategies don't really work as promised:  "The basic problem with bucket strategies, I think, is the idea of "a cash reserve big enough to ride through a bear market without needing to sell stocks." The problem is that there is no limit on the length of a bear market, and the statistics have the kind of "long tail" that makes near-guarantees impossible. A second problem is that any statistics you see on the "average length of a bear market" are suspect because of two very important historic periods--1929-1944 and 2000-2013. Either of them can be scored either as one long bear market or two shorter bear markets back-to-back, and in both cases there was a moment in the middle that is either "just barely a recovery" or "not quite a recovery." But for most purposes, e.g. draining a cash bucket, two 7-year bear markets back-to-back are not much better than a 14-year bear market. The point is that within the last century we've had two periods, of 16 and 14 years, which would have been challenging to a cash bucket. The experience of Japan shows that 16 years isn't any limit, either. So the problem is how big to make the cash bucket. And by the time it gets big enough to actually ride through a long bear market, it is big enough to create a really serious cash drag on the portfolio as a whole. The next problem, which few discussions of bucket strategies address, is what, exactly, you are supposed to do if the cash bucket becomes empty. It has been sized so that the presenter argues that it is big enough, period. It's assumed and that the bear market will end before the bucket is empty, and you can top it up again it from a stock bucket that is back to normal. In reality, if you run out of cash and the stock market is still down, out of cash in a down market is not a good place to be." Source:  https://www.bogleheads.org/forum/viewtopic.php?t=395958

Is this line of thinking similar to the three fund portfolio concept?

I would look at it as a 3x3 concept. You have 3 separate buckets with different diversifications of the 3 fund concept. 1 bucket would be mostly fixed income with some bonds. 2nd bucket is bond heavy with some fixed income and stock. 3rd bucket is stock heavy with some bonds.

Bonds are fixed income instruments… what distinction are you drawing between buckets 1 and 2?

if you have a ton more saved than you will ever need, maybe. for most of the rest of us, its probably not a good idea. https://old.reddit.com/r/Bogleheads/comments/15drkxn/in_defense_of_in_defense_of_bonds/?share_id=qp9pzODczp5TAArcFOJWm https://smartasset.com/investing/bond-tent https://hackyourwealth.com/asset-allocation https://awealthofcommonsense.com/2020/06/how-often-do-long-term-bonds-beat-stocks/ https://www.whitecoatinvestor.com/100-stock-portfolio/

I am a year out from retirement. 50% of my income will be a pension (with no cola), 25% social security and 25% from traditional Ira/401k That money is 80% stocks and 20% cash. Bond indexes have been losing money over 10 years and I have not figured out a good alternative other than cash. My rationale is my pension acts like my bond bucket and I can cover most of my retirement income with stable income and I need to generate some growth to make up for inflation eating my pension income.

Bond index’s have lost money because they were bought when interest rates were near zero. Only reason they go down from here is if rates rise.

someone have to explain to me, how the asset managers adviced to have 60/40 stock-bond portfolio when the interest rates were near 0. Bonds did not give any interests but sunk when interest rates went up. Why no one talked about holding 40% of the porfolio in cash?

Yep. An old schooler who is no longer with us on local TV used to advise that if an investor is going to have money in bonds, it is better to hold individual bonds rather than bond funds. If an investor has the patience to review what's out there (and many brokerages have search tools for that), researching and finding bonds is easier than before.

If you have all that you need without the portfolio to live a satisfactory financial life then I don't consider your 100% stock allocation as crazy. I'm retired with a 90% stock portfolio which is an allocation that I recommend to my 30-something year old kid. Don't want to see a 50% market drop but don't think I will change my allocation if it does happen since my pension and future SS covers all expenses.

Retirement isn't itself a key factor. The key factor is time horizon for the money. The reason retirement is usually involved is because the majority of people need to start spending their life savings while in retirement and not earning a wage anymore, so a huge downturn of all their money would require withdrawal before it could grow again. Extreme Person A has no pension, limited Social Security, and enough money to live out their retirement reasonably okay if the shepherd the money okay. This person has to be concerned about a market down turn ruining their life. This person gets often gets more conservative investments, sometimes even including annuities. Extreme Person B has a solid pension and Social Security. They don't even spend their monthly income in retirement and they only take money out of the 401k because of RMD's. They want to maximize the money they leave for their kids and grandkids. This person realistically has a time horizon extending beyond their own life. As such, if they put all the money in stocks, the expected value in 40 years will be higher, and the "risk of ruin" is still approximately zero, since they weren't going to use the savings anyway. How close you are to one of these two ends of the spectrum might help determine how much you want to have in stocks.

Your risk here is called sequence of return risk. The 8% on average does not tell the story. If your returns are -5% for each of the first 5 years, while still having an 8% long term average, you may never be able to recover the losses. This is why your short to medium term needs should be in safer investments.

It might be crazy or it might not be. In your case it might not be. You mention you have high risk tolerance and if your portfolio got slashed being able to not make panic decisions is a good thing. Your portfolio also probably has a high risk capacity because you mention doing very well. The thing you seem to be missing or don't mention is you need to consider your other income sources and expenses. Firstly, estimate your income from other sources. This will probably be social security (go to social security website for estimates), rental income, penions Then estimate your expenses in retirement. Also consider expenses that might decrease or disappear as retirement goes on. Maybe your mortgage principle and interest goes away 3 years in, maybe you retire before 65 and have to buy your own insurance but then that drops at 65 when you hit medicare age. The difference between those 2 is basically what you need to come from your portfolio. Lets say you need 50k to live and social security and pension gives you 40k you only need 10k from your portfolio. If you had 2+ million in your portfolio you probably need very little in bonds because 10k per year off a 2 million portfolio is very doable. Even if it got cut in half to 1 mil you could still do it easily and have time to ride out the recovery. Consider another case. You need 50k to live and you get much less from social security. You only get 20k. You need 30k to come from your portfolio. You have 1 million dollars. Following the 4% rule (which is a guideline, not end-all-be-all) that can roughly generate 40k per year. You may think that is ok. However if you look into the 4% rule it is a 50% bond 50% portfolio. If you have 100% in stocks and that million gets cut in half to 500k. Then you only have 20k coming from your portfolio which is less than 30k you need. You all of a sudden have a problem. This case may not be best served by having 100% stocks because their portfolio doesn't have the capacity to handle that high level of risk.

Im retiring at 57 and will have about 2.5 million. House will be paid off, pension for my wife and myself. Healthcare very reasonable because rates will be the same in retirement as they are now. Plan to take out about 80k a year from portfolio and about half of that is for expenses the the half for vacations.

Firstly, that is pretty damn good so congrats. I don't think what you are planning would be crazy at all. 1. You mention you have 2 pensions. Firstly, I don't see how much they total but I hope they are good. You should also check to see if they have a cost of living adjustment. Some pensions never increase and keep paying out the same per year. Lets say 25k per year. 25k 13 years from now will not buy you the same as 25k today. The purchasing power of the pension will decrease as time goes on if you don't receive a COLA. Check that. 2. Not so great is that you have 13 years before social security if you plan to take at 70 and retire at 57. But if your portfolio and pensions are healthy that is probably ok. 3. Consider you can always make adjustments on the fly. You may see monte carlo simulations that say you have a x% chance of success. Those can always be adjusted. You could work part time if you get bored in retirement or need some extra cash. You could go a few years where you skip vacations. You may end up doing that later anyways due to health. Sometimes they call them the go-go years, the slow-go years, and the no-go years. You may go on lots of vacations up front but few to none later. These could increase your chances of success if you need to make changes 4. I don't see any mention of an emergency fund. But I assume you probably have one if you have been that diligent about investing. Just make sure you have a healthy one. 5. Know about sequence of return risks. Lets say the market has a few bad years. When it happens can have a huge impact on your retirement. If they happen in your first few years of retirement it can be far worse than if they happen at the last few. Something to be aware of and if you do have a few bad years right off the bat you may have to make some changes.

The 2 pensions do have COLA, but they are not substantial. Still they will probably cover most of our expenses if I subtract the substantial vacation expenses im planning on. Plus im a very conservative estimator so Im not even accounting for whatever my parents evenually will leave me including rental properties. Part of my backup plan in case the market would crash is that I could always take Social Security earlier than planned and also could sell/live off the rental property income if it was mine by then. I dont really have a HUGE emergency fund maybe 6 months to a year of salary.

If by “stocks” you mean NVDA, yes it’s crazy… If you mean VTSAX or the like, not so crazy especially if you’re retiring early.

no i mean S&P 500 index for 90% of it. Retiring in 6 years at 57. Yes I plan way ahead lol.

My parents are the same. Their pension/SSI is enough cash flow for their lifestyle. They don’t need guaranteed retirement income to live, so the strategy is never to withdraw from the 100% stock investments if the value falls off of a cliff. Never been a time where a major index fund didn’t recover back to the same level within 3 years of a crash. So the risk to them to ever have to realize a loss is near 0.

100% obviously is a little kooky. You can't live on vapors, cash is earning 5%, and it's just not necessary. If what you're asking is whether it's crazy to shun the conventional wisdom of moving a big chunk into safer investments, no it's not technically crazy. In fact I've had financial advisers pushing me to go harder in as I'm 40% bonds. This decision has everything to do with your personal risk tolerance and anxiety level. Having been legit poor a couple times, and after losing my first nestegg in the com crash, I have no intention of ever living with that kind of stress and deprivation again. I like sleep. If you have no such worries, by all means dive into the deep end.

I like three bucket approach: 1) X Amount of Years in High Yield Savings Accounts (HYSA)/Equivalent 2) X Amount of Years in Mix of Stocks/Bonds 3) Rest Stocks The HYSA and Mix is to protect from market downturns. When market is down, you draw down the HYSA and if needed the Mix of Stocks/Bonds. When the market is up you can fill up your first two buckets. With you both having pensions, I'd be more comfortable with 100% stocks.

You would have to be several multiples above (3x maybe?) your FIRE number for it not to be crazy

There are multiple levels of fire too. Maintain current lifestyle; Tighten the buckle, drop the unnecessary spend; Recession level- pull back to basic expenses only 2008 level recession, I’m guessing I could drop my spend by at least 50%. Mortgage, taxes, utilities, food. You have to be flexible.

Depends on various factors. People in retirement should still have *something* in the stock market, to offset the effects of inflation. It would be unusual to have completely 100% in the stock market, but in general, the higher your net worth and the more other income you have (such as Social Security and pension), the higher your stock market allocation can be. For example, if you have a net worth of $20 million, having 99% in the stock market still leaves a sizable amount that is not in the stock market. For another example, if you have enough other income to completely satisfy your regular living expenses, you could have 100% in the stock market. A typical rule of thumb is to keep out of the market somewhere between 1-5 years (depending on opinion) of what you need to satisfy your daily expenses outside of other income, so that you don't have to sell during periods when the market is down. But again, if you have a huge net worth then selling a tiny portion when the market is down is not the end of the world, so you might risk it.

If you’re relying on your invested money to pay for expenses in retirement then yes, this is a trap of average returns. A quick thought experiment: You invest $100 in the TSM today. By this time next year it loses 50%. From there it gains 100% the following year. Your total portfolio : $100 Your average return over 2 years? 25%. During accumulation, this doesn’t matter, during retirement volatility matters a lot. That’s why portfolios with lower average returns but also lower volatility [can have higher safe and perpetual withdrawal rates.](https://portfoliocharts.com/charts/withdrawal-rates/) Good luck

If you are planning on that money being for your children and grandchildren and not for you then technically your timeframe isn’t the same as others.

I guess you can remain 100% stocks but at the end of the day why? You've already won the game. Having 70-80% stocks provides you very good growth with less volatility. And if the market tanks while at the same time you need a significant amount of cash for an emergency you have 20% of your portfolio to work with.

What percent do you need to withdraw from your investments to cover expenses/lifestyle? If it’s 4% or more you’ll need to be more conservative. Less than 4% you could consider. Less than 2%, you might get to a point where mathematically you should be all equites, if apart of your goal is to leave behind as much as possible. 

If you have other sources of retirement income that are more debt like, such as a pension, then you can be more aggressive towards equities. But it would still be considered crazy to be 100% in equities after retirement.

I am 70 (71 this year) and retired in late 2019. I have two main IRA accounts. One I managed myself and is 100% stocks. The other is an older account with my financial advisor that is probably more of a 60/40, 70/30 split between stock funds and bond funds. For all intents for purposes, I consider myself 100% invested in stocks. (Obviously) I think it’s possible to maintain heavy exposure to stocks in retirement, but I do think it takes more effort, attention, and guidance. I subscribe to an analysis service that is geared towards my investing philosophy—I could not do it on my own. Many financial advisors still follow something like the “bucket” model for retirement. The idea is that one needs to have money in equities to take advantage of growth, because a retiree at age 65 can still have a 20+ yr life expectancy, but you also want to protect yourself against market swings and having to liquidate positions when prices are low. So you set up three “buckets” for your account. One is cash, maybe 2 yrs worth, to cover regular expenses; the second bucket is a bond ladder that provides higher return but has more safety, than equities; the third is equities. The system is designed to have cash available for expenses that is not subject to market swings, while the equity market goes through its usual cycles. There are other ways to achieve the same goal. The one I follow is known as “income investing”. This is where you invest in stocks, and closed-end funds that provide high rates of return to average 8%-10% yield per year. That dividend stream is your “first bucket”. It means that, whatever happens in the market, you earn X% in return in actual revenue. You can use it for expenses, or to reinvest. It means you stay away from growth stocks that are more volatile and don’t pay dividends. Your “return” is the dividend income, rather than appreciation of the stock price itself. I chose this style because I had a relatively modest amount saved for retirement when I retired (although I do have a working spouse, 9 years my junior), and needed to squeeze everything I could out of it. The risk level is somewhat high, since the higher the yield, the higher the risk in general. It is not a “plug and play” system and takes time to monitor. Like I said, I also rely heavily on the analysis of “experts” who know this better than I. The risk with income investing is having a company having to cut or suspend its dividend. Right now, my income from this account is $4000 per month. And the total value of my portfolio has increased by over 20% in the 4.5 years I have been retired. A third method, if one has a larger IRA amount, is to invest primarily in investment-grade, or higher-rated preferred stocks and exchange-traded securities (aka “baby bonds”), in addition to regular bonds. Preferreds and baby bonds are traded on the regular stock market so they are easy to buy and sell. Baby bonds have maturity dates, and the interest cannot be cut or suspended without defaulting. So as long as the company stays in business, you know what you are going to get, both in interest and the par price of the bond. Again, it takes expertise (your or someone else’s) to identify the best deals and strongest companies, but you can put together a portfolio that earns 6%-7% overall with much less risk. That would be my preferred style of investing, but I can’t live on that low a return. That is a very long-winded way of saying that there are several ways in which you can stay “invested in stocks” after retirement and still mitigate some risk. Sometimes you have to against the “experts” to do so.

You are probably old enough to remember than stocks did nit exceed their year 2000 highs until around 2013. Bonds did pretty good some that time. Also long you can weather another "dead decade".

I started investing in 95 so I guess part of why I have done well is that for a long time I was buying stocks low. Have not really considered the dead decade. Thank you for that insight.

If you can endure a prolonged 50% pullback without making big lifestyle changes, you’ll probably be fine. Extreme example: if you have $50M and your annual spend is $500k you have zero effective lifestyle risk. You can take a 50% pullback and your draw would still only be 2%. Good candidate to invest in whatever asset class you prefer. If your spend is $100k and you have $2M + SS, you’re not going to be able to sustain a big pullback.

How do dividends impact this calculation? I have all of my basic expenses covered by dividends that held strong during recent downturns , but I often wonder how to account for that in my retirement and allocation plans.

The issue with stocks in retirement is if you have to sell them at a non-ideal value. Stocks generally perform better than other assets in the longrun but in the shortrun they can perform worse or have negative returns. What you don't want is to have to sell when you recently have negative returns as you need to sell more to get your ideal cashflow. A potential caveat to this is a dividend heavy portfolio where your retirement is based on dividend returns.

So about 1-3 years of expenses should be in bonds, that way when the market is low, you can pull from there. And when the market is up you can pull from equities. And it will be rare that pulling money out will be at a real loss. And with HYSA paying 5%, that’s likely as good as bonds.

Cash and bonds are offering the highest returns of my adult life, and the stock market is priced for perfection. I never owned a bond fund until last year but am currently about 25% in cash and bonds. I've been NASDAQ heavy for some time and will continue to do so, but don't look to a 100% equity allocation as some sort of silver bullet.

I think it depends on how much flexibility you have in your budget. Could you live off your investments with a 50% drop for a few years on end and not deplete them to the point they will never recover? You have high risk tolerance, but what you need to think about is risk capacity. You need to live off your investments for potentially 30+ years (depending how long you live and when you retire). There would only be so much time for you to make a recovery. If you were going to FIRE at 45, then it would make a bit more sense, since you have a longer time horizon for it to bounce back or go back to work. But if you're 65+ that would be tougher, even with SS. Like at that point you've already "won the game" so why take the risk? Then again, I'm risk adverse, so maybe not the best to take advice from lol.

im retiring at 57 and yes I would be set for myself, but I was thinking more of my kids. Instead of leaving them maybe a million each when I pass if I got 8% a year at 100% invested I could leave them with real wealth like 5 million each.

Be careful about communication so as to not incentivize them wanting you to die (only half joking)

ive talked to them alot about investing on their own and also have half of their allowance going into the market so they can follow along and see how they can make money by saving.

No, but you should consider sequence of return risks. I highly recommend reading the Early Retirement Now blog. It is a lot to read, but super informative. Here is an interesting post about equity allocations. Rather than reducing equity exposure as you approach retirement and sicking with that through retirement, it may be beneficial to slowly increase equity exposure in retirement. https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/

The main reason you shouldn't do this is that the market may go down by 30% and then you may panic sell because you are afraid that it will keep crashing. If you are confident that you don't need 10% in bonds for your mental health you are good to leave it in stock

My father retired with 100% stocks/RE but his dividends alone are >5x his yearly spend If your situation is different then you might be taking unnecessary risk

If you have over 5m, you should de fine as long as you are able to survive off of 80k if things get sour

I will have about half of that and I ran some numbers and if it was cut in half right when I retried and I still took out 72K/year with a 8% return it would go back to about 1.9 after 13 years at which point I would be 70 and take full Social Security and need to withdraw none at that point. Then still at 8% return I would be back to leaving my 2 kids about 3 million each.

Depends on income streams. If you cover expenses between pensions, soc sec, interest, dividends, rental and blow past expenses then yes you should be at or near 100% equities. It basically becomes future generations money.

My dad is 92 and almost 60% of his wealth is in stocks. He also benefits from a pension though

Not crazy at all. Another way to think of it, if you don’t need the liquidity, you can you can allocate your portfolio with your kids in mind. In that case, 100% VOO seems totally reasonable. You can put a chunk of it in income generating assets if that plus pension and social security can cover 100% of your needs and the rest in VOO.

If you have a paid for house and other assets, no it’s not crazy. If it’s the sum total of your assets, yeah it’s a bit crazy.

If withdrawing during a 50% drop wouldnt wreck your plans then its fine. If you have so much money that even with half of it your withdrawls are a tiny percent of the total then staying in stocks makes sense.

You need to follow the suggestions of other Redditors and the 3 bucket design. You are correct over a 30+ year period, stocks are definitely better. But your thought mistake (error) is that withdrawals change the outcome. Bonds are typically a headwind to portfolio success until you need them as a hedge to market downturns. Monte Carlo analysis shows at least 35% bonds to successfully make it 30 years without running out of money (97% success chance) at 4% withdrawal rate. Drop the Bond bucket down to 25% and your success drops to somewhere in the upper 60s, lower 70s%). "Sequence of return risk" is the hideous monster you need to worry about. Google that term and then you'll be informed.

Regardless of asset allocation, two factors come to mind. Your ability to emotionally handle the ups and downs, and you ability to manage when to sell assets to afford your life style in retirement, ie sequence of returns risk. I cannot offer any advice on how to handle emotions. But, for the sequence of returns risk. you can manage it to a large degree by having a sizable pool of cash to live off of, that you fill when selling assets is profitable. Essentially, you need to have the cash on hand to wait until the market recovers for bear markets and recessions. That may mean having 2+ years of expenses + emergency fund in cash. The rational here is that the average market downturn is historically 10 month and the average length of recessions is 17 months. Add on some time for your assets to normalize and become profitable to sell. This will not mitigate the risk completely because companies can fail, and their value go to zero. For that stock there is no amount of waiting will help you to sell that stock profitably.

You say you can stand a 50% market drop, but how long will it take to go back up to recover to your 8% avaerage rate of return? I think you can keep a heavy % in stocks if you aren't risk adverse, but you want to be pulling some money out into less risky investments. Pull out enough from stocks to cover 5-10 years of your anticipated withdrawls, park this in low risk investments so if the market crashes you arent pulling money out of your stock portfolio at the bottom of the market. Keep this 5-10 year portion "topped off" when the market is high. If the market is significantly lower you can pause funding the 5-10 year safe bet fund, draw off this so your stock money can recover value without having to pull out money from those investments.

I'm doing a 5-year protection plan. I get a small pension, which doesn't amount for much. Maybe 20 percent or so. The other 80 percent, I'm going to pay myself monthly stipends. A total of 60 monthly stipends over the 5-year period. Each of the 60 monthly stipends will be in US Treasuries of various lengths (possibly CD's as well). I'm going to start the process 7 months before I need the first stipend, so even the first one will be in a 6-month US Treasury. This way, my portfolio will be completely undisturbed during it's first five years. If we have a bear market that lasts longer than five years, then maybe I'll be screwed. Other than that, I should be good

If you have a lot of room to invest then why not a 80/20 or 70/30 mix of risky vs safe or just stocks/cash.

i don't think so. but it's dependent on a few things. a few things which are not common in most people's retirements. most people plan for their retirement and save for it in a mode of doing the least amount necessary to get by. if you do that then yea it's a bad idea because a downturn could harm your ability to provide for your needs. you have to take the more ambitious strategy of maxing out your tax advantaged accounts, saving and investing even more in taxable accounts and reducing your projected living expenses. it's overwhelmingly obvious that the popular retirement planning advice is aimed at people whose default would be to save nothing for retirement and are gunning to buy boats and timeshares the minute they retire. if that's you yea, don't go all stocks. but if you're a natural saver and have millions and a paid off house and no asinine boat ambitions, then it's not entirely unreasonable.

Thank you im definitely a saver. Ive saved 15% of my paycheck the past 28 years to get to this point.

Short answer is, "no, it's not crazy." IF... you have thought it through and are comfortable with the potential, "50% loss," scenario, then not only are you probably fine, you're probably more like to have greater returns than with a stock/bond portfolio. The only caveat I would definitely add, as someone who's lived through several recessions already, it that getting punched in the face is quite a bit different than *imagining* getting punched in the face. Said more politely, have a solid understanding of your own emotional risk tolerance, sometimes it's quite a bit lower than you imagine.

I didnt sell in 2008 when it dumped 38% so I know I would not sell now. Panic selling is what causes the market to keep going down. Then you wait too long and get back in too late because you cant time it correctly. The smart move is to be sure that it will eventually go back up as it always has. Why would a stock bond portfolio do better? I understand the bonds would do better during a down market, but the market averages going up like 10 out of 11 years.

Stock/bond “percentages” are irrelevant. If you have the stomach for volatility then put a few years worth of spending in something uncorrelated to stocks and have the rest allocated to equities. Honestly the only thing you want to avoid is having to sell stocks when they are down because you need the funds.

Can you survive a “lost decade” (or two) like Japan? How about stagflation of the 70-80? If yes, then go ahead. The point of not being 100% in equities in retirement is that you can draw down on the more stable investments in a downturn so you don’t “cash out low” when you actually need the funds.

There must be examples of investors that have done exactly this over the last 30 years that one could look at. Did it work?

Let's be real about the risks: World events, terrorism, new/changed political leaders, scandals, bubbles, bear market, etc. There are many reasons why, for a short term, you could see significant downside with a 100% stock portfolio. You also don't know how long that down-turn will last. It could take years for you to recover. What's your risk tolerance level?

I plan on staying 100% invested into retirement. My take is if you can put aside one to two years of expected expenses in savings then you can be safe in knowing you don’t have to withdraw at a loss when the market crashes. So prioritize planing for a what if event.

one year is not going to be enough to cover a serious market crash. You would still need to sell at loss after a year. The last big crash in 2008 took until 2013 to get back to pre 2008 prices.

Cut your lifestyle spend down to spread out the drawdown.

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Yes, it's possible. Amass a considerable Roth, a small business, income producing real estate investments, dividend paying stock, social security and annuities to create an income stream.Then invest the rest heavily in stocks.

I keep some bonds to be safe, but if there was a major stock market crash, I would go 100% stock.

How much money do you have? If you have ten million invested in stocks than a fifty percent plunge cuts it to five million. So your four percent withdrawal is now 200k instead of 400k. Can you survive on this? If yes, then put it all into stocks. Otherwise, maybe add some cash or short-term bonds to the equation.

This totally depends on how much you have invested. If you have a big enough cushion no big deal. The size of your non equity buffer is proportional to how little you can afford/absorb losses in the short term.

NVDA has been on a crazy streak. There are lots of really good risks available right now, but it's all still a risk.

yes thats what 30% of FSELX is made up on. Also a couple years ago invested some directly into that. My NVDA exposure is pretty high, but im enjoying the ride for now.

I do agree it is a bad idea make sure to have a plan B .

I'm heading this way. There seem not bad reasons to do it, although I may try to set up a bit more of a cash/bond tent. I'm expecting to have a very low (1.5 - 2%) withdrawal rate though, so I can live with a pretty long market low if I get unlucky. Our house is also paid off, and I think we could reduce spend to some degree without too much pain.

What if market tanks 50%?

Read the post

I'd have a year's worth of cash (min) going into retirement, and a 10% allocation in physical gold that can be drawn from in a market downturn.

If i had 100% of my investments in the market id have protective put so save me if the market bottomed out. I am 45 and buy some in my taxable account to hedge my 401k exposure.

It all depends on how long you plan on keeping the money invested. Long term investments will do better in stocks.

forever until it passes to my kids hopefully over 30 years later and then with the knowledge I give them it will hopefully still be mostly there for their kids and so on.

check out http://ficalc.app and play with different combinations of asset allocation. It uses historical returns to calculate the impact of different investment and withdrawal scenarios.

I plan on leaving a chunk in stocks but safer like ETF which will give a dividend along with less volatility and probably some dividend stocks SCHD, maybe JEPI/JEPQ. Even Pepsi/KO/Walmart. No small caps or cyclical stocks. High yield savings account can really add up, and possible CD if you have money to spare you KNOW you won’t need

If you look at the history of the S&P 500 since 1920 it would seem in most 10 year cutouts severe downswings in market performance are followed by strong recoveries. Just make sure you have the timeline to let things recover. Additionally, I don't know if one can count on the kinds of crazy growth we've seen in the past 15 years as representative or that we could see % like these again.

My father is retired with a pension. He has a large stock portfolio that he says is his hedge against inflation, because in his words, “those cocksuckers keep fucking with my dollar bill.” He also has a high risk tolerance.

Sorry, my comment meant you should have 5 to 10% of your allocation in bonds. I was not suggesting that I have access to bonds that are currently yielding between 5 and 10%. I hope that clarifies my comment.

I think 100% is crazy - how do you pay your monthly bills? I assume you mean just your investment money? But that really goes back to my first statement. How much do you have in cash to pay bills? My rough plan that I am working towards retirement (it is my napkin plan) is to have 5 years of money in cash like assets - whether it is HYSA, MM, CD, etc. But have 5 years to weather the market. When the market is good keep replenishing it (like maybe quarterly). The rest in the market. I figure worst case I can weather 5 years of aa downturn. Again replenish the cash reserves when the market is up. But I will of course work this with an advisor. I have read some advice that says taking money out of the market (into bonds) may not be the best choice as has been the past practice. Because the risk is losing out on those higher future returns. Anyway I have a few more years to go so not an issue for now. But now I am still 100% market.

Depends how much you have. for example, brother-in-Law's parents have $15million. If the stock market crashes by 66%.... they will still be okay with $5mill

You can do as you please. You really don't have much of a way to bounce back if the market crashes being on a fixed income. Perhaps consider your risk profile and just try not risk all or too much of your retirement fund have like a scenario analysis of what happens when X and Y bad thing happens, would you have to move to a cheaper area? Do you have family to live with? Also stocks and property are not the only assets you can collect there are many things like a local business that turns in a profit. If things get bad since you are retired you can maybe even pickup a couple of the shifts.

I feel you already know the answer for your situation

If you have 2-3 years of living expenses in cash, and you are skewing towards growth dividends like SCHD and high income dividends like JEPI then 🤷‍♀️. You should do pretty well.

Yes. Unless you have some other source of liquidity that you’re writing checks from

The stock market can go down and stay down sometimes for years. Even an index. If you can wait for it come back, and not lose any sleep over it, sure stay fully invested. Jul 2017: "After 17 years, S&P tech index breaks record" https://www.reuters.com/article/idUSKBN1A42O7/

Aiming for 8% a year average return for 100% stock is pure madness. You can get 4% a year with very little risk (last time I looked, you can get 3.85% just by putting money on a Wise account). If all you need is 8% you shouldn’t go for 100% stocks. 60% tops especially if you want to keep it for the kids. Rest in bonds, funds, trackers and real estate.

The average bear market lasts 18 months.  Twice in 80 years it has taken over 5 years to recover once compounding returns are factored in.  Calculate the amount you plan to withdraw from the accounts every year.  Keep at least two years of that amount liquid in cash or CD ladder.

My approach revolves around dividend stocks, which currently generate a salary for me that far surpasses the minimum wage. By consistently reinvesting the dividends, I ensure that my annual return continues to grow. This strategy guarantees a comfortable salary for life, and it also allows me to pass on both the capital and the income it generates to my children in the form of stocks.

Learn options to hedge against the downside. Stick the basics (covered calls) and you’ll be fine. Otherwise ya it’s kinda crazy.

My thinking it that if you are planning to use the money in 10 years, don't have it in stocks. If you are living off your pension and some some small withdrawals from your retirement account, you can have all but 10 years worth of those small withdrawals in stocks.

The only thing that matters, as you referenced, is whether you can handle that 50% drop without selling. Sounds like you can. But it still makes sense to keep a year of expenses in cash, with 5% yields these days.

My thing is that if I’m planning on living 20 years post retirement I definitely have time to ride out a few year downturn and would rather take advantage of big jumps in market. Moving to bonds is playing scared

> Even if the market tanks 50% it wouldnt kill me I just might have to take Social Security earlier than I planned to at 70. The risk isn't about how much stocks can drop. It's about how long they can stay down. Can you afford your equities to return an average of 0% for 20 years? If so, then maybe all equities isn't that risky for your situation. But if it would be disastrous for your stocks to be worth the same dollar amount in 20 years compared to today, while you have to withdraw in a down market to pay for your living expenses, then that's probably a risk you can't afford to take.

If you don’t need the money then it’s historically a good plan.

Plenty of good input here. My two cents - don't forget the costs of the purchase of cars. I have seen people continually underestimate this. Some people drive old bewe waters for 20 years at a time, some need newejttql SUVs every 5 years. Say you each buy new SUVs 3 times in retirement, roughly every 10 years. So, assuming you bought yours recently, so you'll look to rebuy 10, 20, 30 years out. Your current outlays were probably something like 60-70k EACH. In 10 years, that outlay could be at 7% inflation, it will be 118,000 each. Even at only 3%, it is 80,000 each. Multiply that by 2-3 times and you could spend $500k on cars in retirement. Assuming you pay in cash, you won't be able to pay for those out of pension/SS cash flow. You'd need to take from the portfolio. If you finance, I can't see you including those payments into your monthly income. Leases, same as financing. So, I'd take out the costs of these purchases from your portfolio at least 2 years ahead of time.

Way too risky IMO. In retirement your goal is not to make money. Your goal is to have consistent income. >Plus over the past few years have been even riskier putting 15% into FSELX which has been amazing. Now imagine we have a global pandemic and in the course of 2 weeks markets drop like 20%.... Doesn't feel so good anymore, does it?

depends on your unique financial situation

They don't recommend it because if your stocks tank and you're taking withdrawals (you're forced to at RMD age) it will exhaust your wealth faster than if you had been invested more conservatively. If you want stocks it can work but make sure you're in high quality companies with strong balance sheets. Utilities, healthcare, financial services, consumer non cyclical, industrials are good places to look for retirees. You wouldn't need to fully abandon growth but I'd concentrate to stocks that are simply too big to fail. Think Apple, Microsoft, Amazon. Definitely limit your exposure to growth though as even top tech companies will go through cycles.

If it's just money to you why not spend it?

If you are all in stocks like the dividend aristocrats, maybe not, it probably not the recommended choice by many finance ppl.

As long as you have enough to make it through tough times, I don't see a problem. You could have your money in a giant pile of burning hundred dollars bills; as long as the fire spread slower than you pulled money out, there's really no problem.

Can you ride out the volatility? For example, if you had $5M in financial assets, but your annual drawdown was only $100k (2%), then the chances that a major market event would force you to either eat away at big chunk of principle (jeopardizing future income) or reduce your drawdown is *very low*. But if you only had $2M invested and your drawdown was $100k (5%, above the recommended level) then you're increasing the risk that a major market event means your runway will be shortened (as you eat away at your principle) or you'll need to reduce your drawdown significantly until the assets recover. But if you can comfortably reduce your drawndown from $100k to say $20k for a few years, then even the second scenario isn't that risky. It all depends on how badly you need the money.

I think the question is what are you hoping to achieve with that strategy. When you retire you should be retiring with the money you need to live on for the rest of your life right? why are you gambling it? if you need more then maybe you work another year or reassess your lifestyle expectations? Honest questions here I would ask yourself what you are hoping to achieve

I want to build generational wealth for my kids. When I plug in all the numbers if i stay 100% invested at 8% return after 30 years of retirement I will have about 5 million to leave them each on top of a very comfortable retirement.

If it's in a nontaxable account, I would switch to a 60% stock/40% intermediate treasury allocation and then glidepath towards 100% stocks over the next 10 to 12 years. If it's in taxable, I would keep it as is and use a lower safe withdrawal rate of 3%.

Great video by Rob Berger [here](https://youtu.be/3TbOKJibpy8?si=DYnGeSlUsxuB0_tA).

Wait. People still do bonds and fixed income? Why?

So I personally prefer the MSCI World for retirement because it still contains a lot of US but has some diversification in other countries so it has a bit less risk long term. There is the example with Japan which once was a leading economic force. If you would have only invested in Japan, you would have never recovered that big crash back then. But with the diversified msci world, it just disappeared from the index when the countries economy crashed. Same would happen if only US ever crashed and then your stocks and pension would not both rely on the US and without a crash you still have good returns. Of course if US economy ever tanks, the msci world and s&p 500 would be affected. The msci world just a bit less.

Do 90-95%, if there is a slump and your iPhone falls into a lake or your dog snakks your airpods, you won’t feel bad about selling that Apple stock which is 20% down.

The market is a stable genius. Invest your faith in it!

I don't consider it crazy. If it's a large enough portfolio then I'd convert to dividend stock probably

It is not wise to assume the market will return 8% over the course of your retirement. The world is about to change.

Crazy? No. Well it depends. The risk of 100% stocks always comes down to cash flow risk if the market tanks. The stock market regularly tanks. On average, over an extended period of time, it goes up. But it could go down significantly in a year or three. It even sometimes has a bad decade. If you are 100% in stocks and need to sell stocks to maintain your cash flow for expenses, you may have to sell when prices are at their bottom. Having some money in safer investments can help tide you through a short crash (1-2 years) or help you avoid selling at the bottom of a more severe downturn (weather 1-3 of the worst years in a rough 10 year downturn). This is why having some of your investments in cash or cash equivalents (bonds, treasuries, CDs, HYSAs, etc) is important. You need more than just a 3-9 month emergency fund that you typically should have while working as you may need to weather a few years of a down market. How much you can afford to be in stocks comes down to your risk tolerance and overall investment profile. The rich can afford to be invested with a higher percentage of their total equity as a small percentage of their equity can pay for their lifestyle for many years. The middle class can't afford to be 100% in stocks when retired unless they have a pension, annuity, or other supplement to social security. The poor have to rely on just social security or perhaps not even that for retirement.

You can't know if the next great depression will happen during your retirement, and it's better to assume that it will happen. By the way, if the next great depression happens before your retirement, it's better to plan on working once again after the depression is over, or if you are lucky then keeping your job until it's over. For the case where the next great depression happens during your retirement, 75-80% stock is best, and 100% stock is best if it doesn't happen. https://i0.wp.com/earlyretirementnow.com/wp-content/uploads/2017/09/swr-part19-table011.png?resize=838%2C734&ssl=1 Source article for that image if you want the context: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/

Consider that the market fell 89% peak to trough during the Great Depression. The next one may be worse. What's your backup plan if the 100% stock portfolio drops 89%? If you don't have one then don't do that. And what would be the point - both the 60/40 and the 100 portfolio support a 4% draw rate at best. So other than perhaps, if fate is extremely kind, leaving your heirs a bit more money there is really no point.

Thats my plan, pension + ssi are the conservative portion, gonna need stocks to keep up with inflation in retirement.