The Oxford Club recently held a Private Wealth Seminar at the Four Seasons Resort in Santa Fe, New Mexico and they’ve developed an answer as to how much of one’s portfolio should be in stocks at the time of retirement. Several factors come into play such as one’s age, state of health, monthly expenses, and the size of the portfolio.
Americans are living longer during retirement than ever before and this must be part of the equation. If you have two or three decades to invest while you’re working then a portfolio that’s heavily invested in stocks is a good thing. However, retirees are faced with the prospect of having too much money invested in stocks. A bear market can present great buying opportunities for younger folks still saving for the golden years. Retirees, on the other hand, when faced with a bear market and the need to liquidate stock holdings are faced with a serious decline in their portfolios. This is where retirement rebalancing comes in to provide a framework for this crucial consideration.
Retirement rebalancing takes an alternative approach and considers stock holdings last. First, retirees should determine how much they need in low-risk vehicles like bonds and cash to meet their monthly expenses. After this determination is made then it is recommended by the Oxford Club that five years worth of living expenses be set aside. This is a conservative figure designed to outlast any bear market which helps retirees avoid selling stocks at market lows. The next step is to live off the reserve funds and replenish them from stock holdings when the market recovers and reaches new highs again.
The Oxford Club is a private international organization of investors and entrepreneurs. Their goal is to help their members achieve financial independence with investment opportunities that the mainstream ignores.
The Investment U arm of the Oxford Club is an excellent purveyor of financial education materials which help their members thrive. They offer courses, conferences, and videos by the Oxford Club to help them on their path to financial freedom.