How should non-portfolio assets affect your asset allocation?

They're part of your net worth, but they might not have a direct impact on your portfolio's stock/bond/cash mix.

Christine Benz 13 July, 2018 | 5:00PM

How many legs does your retirement "stool" have? If you're lucky, you might have three -- the traditional retirement-funding stool that consists of government benefits, a pension and your retirement assets. But more and more workers will have just two legs to rely on for their in-retirement cash flows: government benefits and their personal portfolios.

Setting aside the issue of whether a retirement portfolio plan can stand on two legs (I think it can, with some planning), another key question is how those non-portfolio assets, such as CPP/QPP benefits, should affect how you position your portfolio. If a healthy amount of your in-retirement income needs are being met by non-portfolio assets, does that mean you can reasonably maintain a more aggressive asset allocation with your investment portfolio? How should non-portfolio "assets" like whole life insurance and real estate holdings affect asset allocation, if at all?

Here's a look at some of the key "non-portfolio" assets that you might bring into retirement, along with how they might affect the asset allocation of your investment portfolio.

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.

© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies