The bucket investor's guide to setting asset allocation for retirement

Use anticipated spending needs and probabilities of a positive return over your time horizon to back into the right mix of cash, bonds and stocks.

Christine Benz 31 August, 2018 | 5:00PM

Off-the-shelf asset allocation guidance doesn't vary significantly for people who are still accumulating assets for retirement. Sure, there are human capital considerations: A worker with a more volatile earnings trajectory, such as a commissioned salesperson, ought to have more safe assets than a tenured college professor. Similarly, the worker with a pension should be investing more aggressively than the investor who will rely exclusively on her own savings, plus government benefits, in retirement.

Beyond variations like those, however, glide paths for accumulators should look pretty similar: stock-heavy at the outset and well into middle age, transitioning to more bonds and cash as retirement approaches.

Closing in on retirement, however, one-size-fits-all recommendations won't cut it. Some retirees should have 50% (or even less) of their portfolios in stocks, while others should hold portfolios that are much more aggressive.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

About Author

Christine Benz

Christine Benz  Christine Benz is Morningstar's director of personal finance and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances and the Morningstar Guide to Mutual Funds: 5-Star Strategies for Success. Follow Christine on Twitter: @christine_benz.