My opinion is that once all the dust settles intermediate bond funds are perfectly fine for the decades of retirement. That the returns are not totally predictable, that such funds can lose money at times, and that bonds are not perfectly negatively correlated with stocks are all true things but are not problems for the objective of the retiree withdrawing money from the portfolio over the length of a retirement.
Retirement withdrawal outcomes are not much affected by messing with asset allocation but do depend on managing withdrawals.
However, if a person feels uncomfortable with that sort of plan there are alternatives which include:
1. Consider the income plan starting with Social Security, pensions, annuities and other sources of income. Consider postponing SS to age 70.
2. Buy an SPIA with or without a COLA rider.
3. Buy a ladder of TIPS long enough to liquidate to the possible end of retirement, 30 years being available.
4. Eschew bonds in favor of CDs, stable value funds, maybe MYGAs, and in the extreme savings accounts and money market funds.
It is very difficult to show that any of all these alternatives are clearly able to provide a more lucrative or a more secure retirement relative to others, but the point that one can remove unknown and unpredictable outcomes from the plan is worth considering, if only for peace of mind. I think directly addressing income in the form of SPIA and TIPS ladder makes some sense and just messing with forms of fixed income makes little sense.
Retirement withdrawal outcomes are not much affected by messing with asset allocation but do depend on managing withdrawals.
However, if a person feels uncomfortable with that sort of plan there are alternatives which include:
1. Consider the income plan starting with Social Security, pensions, annuities and other sources of income. Consider postponing SS to age 70.
2. Buy an SPIA with or without a COLA rider.
3. Buy a ladder of TIPS long enough to liquidate to the possible end of retirement, 30 years being available.
4. Eschew bonds in favor of CDs, stable value funds, maybe MYGAs, and in the extreme savings accounts and money market funds.
It is very difficult to show that any of all these alternatives are clearly able to provide a more lucrative or a more secure retirement relative to others, but the point that one can remove unknown and unpredictable outcomes from the plan is worth considering, if only for peace of mind. I think directly addressing income in the form of SPIA and TIPS ladder makes some sense and just messing with forms of fixed income makes little sense.
Statistics: Posted by dbr — Wed Jan 01, 2025 2:00 pm