So here is the issue. We have Assets, a Stock Variable. i.e., $X at time Y. We have Cash Flows, a Flow Variable. $A for B years. To bridge this we need to use some NPV calculations.I view pension, SS, and any income producing assets such as rentals as simply income streams. The effect of an income stream is that it covers a portion of your expenses. You have identified that your pension will cover 30% of your anticipated expenses and SS will cover about 50%. So your retirement income (pension and SS) will cover 80% of your anticipated expenses. That means that your investment portfolio will need to cover 20% of your expenses.
My opinion is that your asset allocation should be geared towards its role, covering 20% of your expenses in retirement.
I am suggesting that one should explicitly turn Pensions, SS, and required retirement cashflow (a pseudo-liability) into assets. Everything is clearly stated, giving one a better insight to what is happening. I feel that this is important for pensions which do not have a COLA.
You are suggesting that one should implicitly squish Pensions, SS, and required retirement cashflow into, turn that into a pseudo-liability (i.e. 20% of your expenses).
The math is the same either way.
Statistics: Posted by alex_686 — Tue Jan 20, 2026 11:00 am — Replies 5 — Views 165