So we sorta did this.I don't understand why you're thinking about - and apparently actually considering doing - this now, 12-15 years before retirement. I wonder how many Bogleheads retiring now - at 62-65 - had such a bridge in place 12-15 years ago? And how many of those are happy about dropping their equity allocation considerably to build it?
Many years in advance of anticipated retirement, our primary non-equity investments were a cash-balance pension and a Stable Value Fund. The cash balance pension was sort of "forced" on us (although it has great terms so no real complaints), but we started gradually building up a bigger portfolio in the SVF. This was all tax-deferred and we did rebalance with it as well, but since it was overall increasing as a percentage it had the effect of "selling" stocks to "buy" more SVF.
At the time, I considered but rejected LT TIPS. I thought their real rates were way too low, and I thought it was better to hold less in SVF and more in stocks instead.
OK, then things changed rather dramatically a few years ago. We still have the cash-balance pension, but basically we sold the SVF to buy market TIPS at what by then were far higher real rates. I note in the passage of time, market TIPS were now a better choice for us than LT TIPS.
This is not the only TIPS we have, we also have a bridge in taxable that was part of our early retirement plan. All together, we have something like 10% total in TIPS by now, plus another 4% in the cash balance pension which I still basically count, and then we spend the dividends on stocks in taxable. That plus Social Security is the core retirement income plan.
Am I happy? Well, I am not UNhappy. With the benefit of hindsight, I should have been 100% stocks all the way to today, but I don't think like that. A modest shifting allocation to SVF and then to TIPS has contributed to us having a high comfort level retiring early. These days I would see no problem with using LT TIPS instead of a SVF, unless perhaps it was a really good one (like I still like the cash balance pension, the TSP G Fund, or so on).
Part of my point with all this is I think seeing things this way may actually help you compromise between something like 100% stocks and say 60/40, avoid the "one more year" problem, and so on.
Like if you do the math, you may conclude at current pricing, $N in TIPS would make your retirement spending plan really safe.
$N is probably a good-sized number, but then that's it--you don't need MORE than $N. And since this is isn't so much a percentage as an amount, it means you can feel more free with any additional amounts, maybe not so much care about market fluctuations for those other amounts, and so on. You've got your $N in TIPS regardless.
Statistics: Posted by NiceUnparticularMan — Sat Sep 13, 2025 12:04 pm — Replies 13 — Views 857