LinkBack URL
About LinkBacks
Reply With QuoteThe 63/37 split is in your first year of retirement?
TSP Starter
imported post
According to William Bengen, http://www.fpanet.org/journal/articl...nderforprint=1
there's a simple allocation plan for your retirement. Divide your portfolio into 63% stocks, and 37% bonds, initially. The stocks are divided equally between C and S, and the bonds equally between G and F. Nothing in I. In your 1st yr of retirement, withdraw 4.25% of this; in following years increase the withdrawal by the inflation rate. Each yr the stock allocation decreases by 1%; the bond fraction increases by 1%. This should last you 40 yrs, with a lump at the end to leave your kids. Very simple.
TSP Starter
imported post
The 63/37 split is in your first year of retirement?
TSP Starter
imported post
That's right. In the second year it's 62/38, etc. The 62% stock would be 31% each in C and S. The 38% bonds would be 19% each in G,F. Each year the 50:50 splits are maintained, while the overall stock allocation drops 1%. 40 yrs later you're still 23% in stocks. He tested this against many years of actual returns. The initial 63% Stock allocation could be raised to 75%, but there's downsides to this - see the study
link.
Posting Permissions
|
S&P 500 (C fund) 1d 5d 3m 6m 1y 2y | Dow Completion (S fund)
| EFA (I fund) 1d 5d 3m 6m 1y 2y | Bonds (F fund)
|
Bookmarks