The Case Against the 60/40 Portfolio

Sub-3% Mortgage Rates Are Back
Money
Retire with Money
Elizabeth O'Brien is a senior writer at Money
The 60/40 portfolio has been the default for decades, but some experts recommend rethinking the rule. After all, times have changed. We have Bitcoin now! Even if you’re not buying cryptocurrency — I sure as heck am not — there are other alternative assets these days. Plus, the 60% stock and 40% bond allocation might not represent the ideal balance of risk and reward that it once did. That said, the 60/40 portfolio has its defenders. Learn about the debate in today’s edition.

Best wishes,
Elizabeth

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TIMELY RETIREMENT NEWS, INSIGHTS, AND ADVICE

 
The Classic 60/40 Investing Strategy Could Now Be Working Against You


It’s time to rethink your asset allocation, some experts argue.

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Sub-3% Mortgage Rates Are Back. How Fast Do Buyers Need to Act?


Most experts don’t see these super-low rates sticking around for long.

RETIRE WITH MONEY COMMUNITY NEWS
Please help me give a warm welcome to our Reader of the Week! Donna Skelcy, 64, lives in Decatur, Georgia, with her feisty 4-pound Yorkie, Lexie. She worked for State Farm Insurance for 27 years in many different jobs, including as an attorney, manager and trainer.

What are you up to these days?
Bert and Val

I retired in 2019 at age 62. Once retired, I played tennis on three different teams but then a knee injury forced me to take up pickleball instead, and I am enjoying this new sport very much. 

I have been taking French (for free) at Georgia State University. I have taken drawing and watercolor classes at the local Osher Lifelong Learning Institute. I also have a piano and like to play and practice for relaxation. 

My unrealized goal, which I assume is the same for many other retirees right now, is to travel extensively. I feel cheated out of a year because I am in good health and mobile and, as we know, that only lasts for so long. 

Very true. Do you have any advice for people as they prepare for retirement?

I maxed out on the 401(k) contributions every year for 27 years. My employer only contributed up to $900 every year to the 401(k) because they offered the pension to us. I have not started taking Social Security yet and plan to wait until age 70.

I discovered a blog called "How much Can I Afford to Spend in Retirement," which I highly recommend because they have great Excel spreadsheets that help you make the critical decision of how much to take out of your 401(k) each year.
 
In retirement, I found that I returned to those things I enjoyed as a kid: tennis, piano, learning, and art. I recommend that folks getting ready for retirement think back to what they loved doing as a kid because when you are retired, it is like you are a kid again with all that wonderful free time you enjoyed in those lazy days of summer.

That’s a lovely and helpful thought. Anything else you wanted to say?
 
I wish I had allocated more into the Roth vehicle inside my 401(k). It was all allocated into the traditional 401(k); this means when I have to take RMDs along with Social Security and the pension, I will be paying quite a bit in federal taxes and Medicare premiums once I turn 71 ½. For those not yet retired, think carefully about where to put your 401(k) savings for tax purposes.
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Elizabeth O'Brien is deputy editor at Money. She has covered retirement and health care for nearly a decade. A Brooklyn resident and mom of two boys, she navigates the alphabet soup of Medicare and the New York City subway system with equal ease. You can email her at elizabeth.obrien@money.com and follow her on Twitter at @elizobrien.

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