Quote:
Originally Posted by 2000cs
Being 50 should not shorten the horizon which would be to end of life, or beyond if you are planning to leave your assets to a spouse or heirs. This is a common error in retirement planning. With a balanced portfolio (and some rebalance may be appropriate as retirement approaches to generate more cash income although selling cap gains is a better tax strategy than dividends/interest), retirement becomes essentially irrelevant to the analysis.
What does matter is cash flow. If retirement creates a cash flow deficit then you might be over leveraged or too early to retire and lose work income.
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I am going to go out on a limb and say the majority of people do not have enough saved by the time they want to retire to live off of capital gains and not care if there is a major market downturn (hopefully heavily in cash).
I personally am planning on getting into an FIA or similar product before retirement so that I can have a known and reliable income for the rest of my life. Whatever does not go into that will likely be play money and extra spending cash.
I think you would be hard pressed to find a financial analyst that would suggest you stay risky when you no longer have an income to fund the account, hence the reason the time horizon matters. That and a longer time horizon takes a lot more volatility out of the returns.