Asses Allocation

[jereece]

First Post - Asset Allocation

I am 54 years old. Approximately half of my retirement savings is in my employers 401k program. I have full control and a nice variety of funds to choose from. The other half of my retirement savings is in my employer funded cash balance pension. Obviously they manage this and the investment is in treasury bills. In the past, I have always heard that you should have your age in percent in bonds and the rest in stocks. So for me it would be 54% in bonds and the remainder in stocks. However, in the past, I have pretty much ignored that rule because I treated my pension being invested in treasury bills as the fixed income part of my retirement savings. However, as I get older, I plan to add a little to the bond fund in my 401k as needed to slowly increase the fixed income percent of my retirement savings.

My question: Is my logic sound? The reason I ask is I received an email from a company my employer hired to help us know if we are investing wisely. Mine said I was too aggressive being all in stocks. However their analysis did not consider our cash balance pension.

I appreciate your thoughts.

[violet80907]

It is curious to me that the company hired by your employer to analyzer your allocations does not know about the pension AND 401K assets. Though possible, I would think the employer would figure out a way to get the hired company all of the information they need in order to direct you.

Is it possible they do see both the pension and 401K, and think that your 401K is invested inappropriately? Are you maybe in funds that are heavily exposed to specific sectors?

From the information you provided, it is not obvious there is a problem. But maybe check your 401K allocations and verify they are broad in scope (index funds), and not sector specific.

[smk]

you are correct in evaluating the allocation of ALL of your assets. but since you are investing to pay your expenses when you retire, the first thing you should do is seee how your assets match against those expenses. the best way to do this is in some sort of financial planning software. TIP$TER Financial Planner and Portfolio Simulator: Live Smart and Prosper(TM) is a free program that can give you a sense of how you are doing versus TIPs, which can be used as a proxy for your expenses. you want to base your asset allocation based upon your situation, not rules of thumb.