Re: Risk for retirees ????
The 'age formula' is the opposite of what you posted. You take 100 (or, some say 110 now), subtract your age, and THAT is the amount you should have in equities.
- So, in your case: 100 - 65 = 35% C/S/I.
- Since you apparently intend to not use it and want to leave it to the youngin's maybe: 110 - 65 - 45% C/S/I
- The remainder (65% or 55%) is in G/F
An S&P500 (C-Fund) return of 9% (average) is much, much better than the return of the G-Fund. That 5% - 7% higher return is the difference between the Alpo Meal Deal Retirement and a very nice retirement with a Winnebago. It's not even close. I can't work the numbers at the moment, but your G-Fund is really just Social Security bonds. So, it would produce something a bit less than Social Security (the politicians overpromise Social Security).
As far as what your allocation should be I would strongly NOT recommend a high equity allocation. I would probably go with around 50%. You will lose to inflation guaranteed if you camp it all in G. And, look at this year to see what over-emphasizing C/S/I will do to your assets. Right now, if you camp G you will be -5% YtoD when factoring inflation - which is actually pretty good. Most years, however, you will be +-1% when you factor inflation. You will be eating principal as a normal part of your diet. Not good.
Lookin' up at the 'G Fund'!!!
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