Permalink Submitted by Alan - IRA critic on Thu, 2020-03-05 14:37
Typically, your allocation to stocks is reduced gradually the older you get, and bonds are increased. This cuts down the risk somewhat of major losses when you are no longer working and have less time remaining to make back the losses. If you have both an IRA and a taxable brokerage account, the IRA should generally hold the bonds and the taxable account holds the stocks because the stocks will get a basis adjustment at your death and LT cap gains and qualified dividends from the stocks are taxed at lower rates while you are alive. The actual IRA RMDs for you will start at age 72, but the withdrawals themselves do not drive the additional bond allocation. That said, you may have 30+ years remaining and you should still have stocks, usually in mutual funds or ETFs, to provide growth for your IRA. The actual %s of stocks vs bonds depends on your risk tolerance, but at age 60 the usual stock allocation would be 100% less your age (60), or around 40% and that figure would drop by 1% per year.
Permalink Submitted by Alan - IRA critic on Thu, 2020-03-05 14:37
Typically, your allocation to stocks is reduced gradually the older you get, and bonds are increased. This cuts down the risk somewhat of major losses when you are no longer working and have less time remaining to make back the losses. If you have both an IRA and a taxable brokerage account, the IRA should generally hold the bonds and the taxable account holds the stocks because the stocks will get a basis adjustment at your death and LT cap gains and qualified dividends from the stocks are taxed at lower rates while you are alive. The actual IRA RMDs for you will start at age 72, but the withdrawals themselves do not drive the additional bond allocation. That said, you may have 30+ years remaining and you should still have stocks, usually in mutual funds or ETFs, to provide growth for your IRA. The actual %s of stocks vs bonds depends on your risk tolerance, but at age 60 the usual stock allocation would be 100% less your age (60), or around 40% and that figure would drop by 1% per year.
Permalink Submitted by Bill Winters on Thu, 2020-03-05 15:44
I have robo adviser manging the IRA. Am I correct that the software takes age etc in consideration or do I change the risk?
Permalink Submitted by Alan - IRA critic on Thu, 2020-03-05 17:19
Not sure. It may depend on what the robo advisor is programmed for.