Interesting interview with William Berstein in MONEY.
Tell me what you think of this piece from the article:
So how should I be investing near and after retirement?
You want to end up with a portfolio that matches your liabilities, meaning the amount you’ll need to spend in retirement. The rule of thumb I came up with, based on annuity payouts and spending patterns late in life, is that you should save 20 to 25 times your residual living expenses — that is, the yearly shortfall you have to make up after Social Security and any pension.
This portfolio should be in safe assets: Treasury Inflation-Protected Securities, annuities, or even short-term bonds.
Anything above that, you can invest in risky assets. That’s your risk portfolio. If you dream about taking an around-the-world trip, and the risk portfolio does well, you can use it for that. If the risk portfolio doesn’t do well, at least you’re not pushing a shopping cart under an overpass.
That’s a pretty sizable chunk of change. Based on that number and NOT including social security, my wife and I are about 10% to 20% of the way there. OUCH! Granted, my goal is lofty. We’ll do what we can and not worry about it.
I also think Bernstein is pretty conservative. I don’t see a lot of people having that much money by the time they retire.