Q. Loved your book. Given current 40 SC ratio and the early retirement years being a critical variable to SAFEMAX number might it be prudent to at retirement reduce stocks from 55% to 45% (increase bonds). Then in year 5 of retirement begin increasing stock allocation % again ?  T.

A. Excellent question.

As you know from my book, I endorse the concept of “risk management” for retirees. That means adjusting your equity allocation for perceived risk in the stock market. Thus, your suggestion appeals to me.

What should be the ideal allocation at any moment? That’s a tough question, and that’s why I use a third-party service to advise me on the matter. Currently, my service recommends holding 55% of your normal stock allocation. So, if your long-range stock allocation is 65% (I prefer that to 55%; see research report on my website), my service recommends holding about 35% in equities. And that’s what I have. That’s a bit lower than you suggested, but you are on the right track.

Yours for a richer retirement,

Bill Bengen