Looking for some feedback on working out an overall portfolio allocation moving forward into retirement.
Context - Currently sitting at 50/50 stock/bond allocation. This is a defensive allocation because we are one year from retirement and current market valuations have me a little worried. I was 80/20 for many years and moved us to a safer position over the last few months.
We are very fortunate to currently only need around 75% of our current portfolio to cover our annual spend at a 4% withdrawal rate.
I would like to work out an appropriate allocation to move into next year once we retire.
Here is what I am looking at:
First, think of the total portfolio as two pools of money (75%/25%), then blend them to calculate the final allocation. For the 75% of portfolio needed to cover spend, use the tried and true 60/40 allocation. For the remaining 25%, allocate 100% stocks. Blending them together then gives an overall allocation of around 72/28. That provides baseline cover for spend going forward, growth for the rest of the portfolio, and keeps me under 4% withdrawal.
I know there are a lot of details like asset location, sub-allocations, etc. This is just a broad brush approach for determining an overall allocation.
Sound logical as a starting point?
Thanks for any feedback!