This is a common question, yet people really don’t know how to answer it. So here is a rule of thumb you should follow when considering balancing risk inside your retirement plan.

  • Don’t risk anything you can’t afford to lose!)
  • Don’t risk your income needs. The last thing you want to happen when you are retired and enjoying all the free time you now have, is to risk the Income you need every month coming into your household
  • Don’t risk the monies you want to leave to your loved ones
  • Don’t risk your play money, this is the money you want to tap in to for all those extra fun things you can do in retirement because you now have the time.

A good starting point is to consider the Rule of 100, founded by Vanguard’s John Bogle. The rule of 100 states to subtract your age from the number 100. That number tells you how much risk you should have inside your investments. So let’s walk through what that would look like. If you are 60 years old, subtract 60 from the number 100, your answer is 40. 40% of your portfolio is okay to be exposed to Risk. However, this rule may need to be adjusted based on other factors, such as your income requirements, and life expectancy. Let’s discuss this rule when we have our meeting.