Yesterday, I told you about Joe and his 5% chance of success of making his money last in retirement. 

Joe’s problem is a common one. Many Americans are behind on retirement, but hope is not lost because with a few adjustments that Joe was able to live with, we got his chance of making his money last in retirement up to 82%. 

There are 4 primary factors that influence whether or not you’ll make your money last in retirement, and today I’m talking about the first factor, which is asset allocation. 

Asset allocation in the context of what I’m talking about today is simply - how much of your portfolio is in stocks, bonds, and cash. 

This has a massive influence on your retirement, and if you think about it, it makes sense why. The makeup of your portfolio is what determines your long-term returns, so it’s essential that you have a portfolio that is safe enough to withstand downturns, but invested enough in the stock market that you’ll have growth that can keep up with your withdrawals as well.

So the right balance is critical in retirement, and that’s why asset allocation is one of the 4 primary factors that influence your chances of making your money last in retirement. 

• If 100% of your portfolio is in cash you’re going to have a hard time keeping up with inflation and many of us simply don’t have enough saved for retirement to be this conservative with our money.
• At the other end of the spectrum, if 100% of your portfolio is in stocks, your returns are going to be much better than in cash, but you’re going to get clobbered in down markets like we’re facing right now, and most of us can’t afford to lose 30, 40, or 50% of our portfolio value in a down market because everything is in stocks. 

I’m a big believer in asset allocation, and it serves as the foundation of every client’s portfolio. If you would like to get my age-based asset allocation cheat sheet that helps you determine the right mix of stocks and bonds for your age, just email me at [email protected]. That’s [email protected] and I’ll send that to you so you can figure out for yourself what mix is right for you. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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