I am about to celebrate my 54th birthday! Each year at this time, I look at my retirement funds and reassess how they are allocated. When I started saving for retirement in my early 20’s, retirement seemed so far away. Now it seems to be right around the corner. When I set up my first IRA at age 21, I knew I had years on my side and I could be aggressive with my portfolio. Now I am pulling back on that stance and building a more conservative mix of investments.
Experts say that a mix of 60% stocks and 40% bonds is a conventional mix for someone my age. Currently, because I have been willing to take a bit more risk, my asset allocation looks more like 70/30. I am not certain of my retirement date from full-time teaching, but it will be within the next 5 – 8 years. Because of that I am saving more (having kids graduate from college helps with that) and moving to a more conservative mix of investments that includes more income assets. Even though the market has been hot lately – maybe because it has been so hot. I am feeling like I need to be rebalancing to get my portfolio closer to to 60/40 model.
The key to remember is that asset allocation depends on a number of individual factors such as your age, the number of work years ahead, risk tolerance, income and savings levels, and the big unknown – how many years of retirement need to be funded. This is where my plan is very helpful! As my retirement date is getting closer, I know I am becoming more conservative with and protective of my portfolio.