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At 70+ with $3.5 million in stocks, should we rebalance to a 60/40 portfolio?

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I am 73 and my wife is 70 and have a son. We have $235,000 in a savings account and we each have $250,000 in Roth IRAs. We also have $1.675 million in a brokerage account and $1.55 million in a 401(k). All but the two Roths are invested exclusively in stocks, and the two Roths are made up of 60% stocks and 40% bonds. With Social Security and pensions, our monthly income is $11,000 and we save about $3,800 monthly. Should we change our brokerage and 401(k) accounts to a 60/40 mix and move some of our savings into money market accounts or bonds?

–Randy

Good question, Randy. In your case, it may make sense to base this decision on what you want your money to do for you. Adjusting your asset allocation from 100% stocks to 60% stocks and 40% bonds is a pretty standard move for typical retirees, but I don’t think it’s necessary in your situation. However, depending on your goals, your current asset allocation may have room for improvement. (And if you need extra help managing and investing your retirement savings, consider working with a financial advisor.)

The main reason for maintaining a 60/40 portfolio in retirement is the balance between growth and stability. Ideally, the stock allocation will provide long-term growth for your portfolio so you don’t run out of money, while the bond portion generates income for withdrawals.

This asset allocation may make sense for many retirees who regularly withdraw money from their investments to cover retirement costs. However, it seems you are not in that position.

If I read your question correctly, you have a guaranteed income of €11,000 per month and you save almost €4,000 of that money. It appears that you are not making regular withdrawals from your savings and you don’t need to. If you have $235,000 in a savings account and a total of $500,000 in Roth IRAs already in a 60/40 split, that amounts to $735,000 in relatively stable money. That’s a pretty substantial balance of easily accessible money, especially if you don’t rely on it for regular cash flow. (And if you want an expert to evaluate your asset allocation or manage your portfolio, this free matching tool can connect you with up to three financial advisors.)

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A retired couple reviews their investments and decides whether to switch to a 60/40 portfolio.

You have several good options for the remaining money in your 401(k) and brokerage account. Depending on what you want to do with the money and the purpose it serves, I think you can either leave it aggressively invested or move to a more conservative allocation, such as a 60/40 split.

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