Stress-Testing Your Retirement Asset Allocations
The effects of changes in stock performance and time horizon.
Tuesday's column showcased stocks. It demonstrated that if equities continue to perform as they have since 1900, they could reasonably account for most of a retiree's initial asset allocation, assuming the retiree has a 30-year time horizon. Withdrawing money from an inconstant portfolio can be dangerous, but historically stocks have earned so much more than bonds/cash that their rewards have outweighed their drawbacks.