<< marco100 Well, I'm not a retirement advisor. In fact, neither is Dr. Choi, and he admits that later on in his article.

But, the general principle should be to avoid bad left tails, i.e., try to structure your portfolio in such a way that you avoid catastrophic or potentially catastrophic outcomes.

E.g. unrecoverable sequence of returns risks in the first 5-10 years of retirement from which your portfolio can't recover. >>

I think you need to re-read the first post in this thread.

100% stock is for people more than a decade from retirement. As you close in on your retirement date, you'll want a larger portion of your portfolio in cash and fixed income. The "safe retirement withdrawal" studies suggest as much as 40% in fixed income. The "4% rule" is the ultimate "sequence of returns" insurance.

As an early advocate of FIRE, I myself retired way back in 1994 at age 38 after a blissfully short 17-year career as an engineer in the oil & gas industry. Once I'd accumulated enough capital to live off the 4% rule, there was no way you were going to see me sitting in an office for 40+ hours/week.

I learned my lesson on steep stock market drops during the Black Monday 22.6% one-day drop in the DOW in 1987. Stayed out of the market sitting in fixed income for the next 2 years. I'm at least 25% poorer today as a result. Since then, it's been "Stocks for the long run" and I've maintained my asset allocation through thick and thin -- including 50% stock market drops in 2000 and 2008. In 2024, I reached 30 years in retirement with a portfolio balance of more than 10 times its starting (1994) value. Note that's "10 times it's starting value" after 30 years of inflation-adjusted annual withdrawals. Pretty amazing!

Of course, I happened to retire into a favorable sequence of returns. Someone who retired 5 years later in 1999 just before the 2000 dot-com bust experienced two 50% stock market declines in the first 8 years, yet today after 25 years of withdrawals our 60/40 retire who maintained his asset allocation through thick and thin still has his initial retirement portfolio balance intact, even under the burden of 25 years of annual withdrawals.

Why the 4% rule is the ultimate "sequence of returns risk" insurance
https://retireearlyhomepage.com/sequenceofreturnsr...

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