Late start, portfolio allocation

[Newseishain]

I've still got 10 years of runway before retirement, but I've started to shift my retirement portfolio allocation slightly over the last few years.

I'm aware of a lot of the mainstream thoughts about portfolio allocation, but this is the current situation.

We've got a three-month emergency fund in cash that can be accessed at anytime, which we continue to add to with regular monthly contributions.

Also a corporate DC plan through my employer and a personal IDECO, both of which have the same allocation.

The allocation of these two might be overly aggressive, but for the last couple of years, I've been switching monthly allocation (not total holdings) from equities/REITs to bonds at a rate of 1% a year.

So current monthly contribution allocation is:

Equities 80% (70% Developed/10% Japan)
REITS 8% (4% Developed/4% Japan)
Bonds (2% Developed)

From next year, I plan to move 2% of the equities each year into bonds until retirement.

Any thoughts would be appreciated, but be gentle.

[RetireJapan]

This really depends on your personal psychology, what kind of pension income you are expecting, your baseline living expenses, total assets, etc.

I have been nominally retired for about a year and a half now, and I was surprised how much it bothered me not to have regular income. Also the spreadsheet is a lot less comforting when you start drawing down...

But it is a learning process. You are wise to make small changes gradually I think.

[Newseishain]

Thank you very much for the reply.

My biggest worry has been, am I wrong to ignore the "100 minus your age" blanket thinking about equities vs. bond allocation and the common advice of "you need more in bonds due to your age."

My personal feeling has been, as long as I'm working, I should have more in equities and less in bonds.

(Of course, my backup retirement plan is having a wife significantly younger than I am and who has a great salary and significant assets. And keeping her happy of course. )

[RetireJapan]

(Of course, my backup retirement plan is having a wife significantly younger than I am and who has a great salary and significant assets. And keeping her happy of course. )

Ah, the other, OTHER emergency fund

My biggest worry has been, am I wrong to ignore the "100 minus your age" blanket thinking about equities vs. bond allocation and the common advice of "you need more in bonds due to your age."

My personal feeling has been, as long as I'm working, I should have more in equities and less in bonds.

My personal feeling on that is that as a rule of thumb it is useful but once you understand the perameters you can diverge from it if you think that is the right thing for you.

My personal allocation in 'retirement' is something like 90-10... but that is because my baseline spending is very low and I could cut down discretionary spending if I needed to.

[captainspoke]

I looked this morning, was pleased to see the US mkt had come back up a little.

I'm 80% ETFs which tend either towards growth/tech, 10% in six dividend stocks, and 10% cash. That is my investment acct in the US, and I'm not going to fix the percentages, but I have about that much cash in simple bank accounts here.

I'll be 72 before the holidays. Pensions combine to ~¥2M/yr, perhaps going to 2.4 or 2.5 after my recent social security application/benefits get going. My plan is to continue as now, pulling some extra cash from an acct here as needed. I did draw on my US acct a couple times this year--using the card for hotel and some other things in california. I've also given some money to our two kids out of this US account, roughly $8k each. Probably the same next year. (Kids are 30 and 34, and independent.)

Similar to a few here, perhaps different from quite a few more, my wife always worked, and more years than I did so her combined pensions are a little bit more than mine. She also tutors online/zoom, which she likes, and that brings her pocket money above her pension. We split most living costs (utilities, food, etc), but we each handle out own cars/insurance and hobbies.

We went to california in late Feb this year, and spent four nights on Yakushima (two weeks ago, great weather). Our kids, now both in the US, want us to come there again next summer, which I hope will work out. Prepandemic I spent a good month in northern vietnam, and another year 'worked' at a B&B on the big island for nine weeks (wife had not retired then ).

One thing that's quite different to the US is health care. Through some quirk (障害者一級 combined with age?) my health care is now free. I still pay the 保険料 monthly, based on my tax filing, also 介護保険 (max I think), but copay is now 0%. That includes hospitalization, tho not meal fees, pajama sets, nor private room (or TV cards ).

Given all the numbers, I could probably spend things down much faster, but we're content, enjoy our lives, and eat well (two nice buri kama this evening) and I think that's the bottom line.

So allocation, to get back to that, is 80-10-10, but I won't need that for a good five years, and even with a generous assumption of 25yrs of life left (now till 95-97?!), we should be fine.


(yeah, no bonds, and that's come up here before--a discussion for a different thread? I just can't fathom having 60+% of my funds in bonds.)

[Beaglehound]

As Ben says, much depends on what your state pensions look like.

If the Ideco is absolutely crucial to finance your retirement I think there is a case for reducing your equity exposure, perhaps quite substantially as you approach the time to withdraw it. As someone who was invested during 2008, it was sobering to watch the values crash on a daily basis, and if something like that happened a year or two before you would be forced to withdraw it could be messy.