Pensions within portfolio allocation

[banders]

I read in a thread somewhere someone was advising including pensions within the overall portfolio allocation. I've been thinking about that and can't decide if it's the right thing to do. As we know, allocating 60/40 to stock/bonds is protection against a stock market crash, whereby the bonds part will reduce the effect of a drastic drop in the stocks value. In my case right now, a 4% WR per month is about 40% of total future (kokumin nenkin + UK Basic State) pensions + current value of the index funds per month. I understand the pension part is 'safe' and is quite a large portion of the total, but, on the other hand, shouldn't the index funds still be protected against a crash; i.e., the index funds should still be kept as 60/40? In the event of a crash, the pensions are not going to be enough to survive on if the rest takes a severe beating. In my case, I'm talking about a 10-year time period until retirement.

[adamu]

They discussed this in a recent Bogleheads podcast: https://jonluskin.com/bogleheads-live-e ... llocation/

[Tkydon]

https://www.marketwatch.com/story/the-6 ... 1642618887


https://www.cnbc.com/2022/01/22/80/20-p ... nment.html


https://www.investopedia.com/articles/f ... enough.asp


https://www.gsam.com/content/gsam/us/en ... -dead.html


What they don't seem to mention is that as Interest Rates, and therefore Bond Yields go Up, Bond Prices must go Down.
This could end up eroding the value of the Bonds and Bond Funds in your portfolio, at the same time as Equity Prices decline.

[captainspoke]

Calculate what your living expenses will be (your projected budget), calculate what your pension will be. Subtract your pension from your living expenses. The remaining amount (if there is any) will be what your portfolio will need to cover.

Then assess how easily (or not) that your portfolio can meet that need, and how long it will be able to do so (perhaps using one or another safe withdrawal rate). Depending on how easy/difficult that looks to be, and how safely you'd like to approach covering that need, then make your allocation decisions from there.