Pensions/Social Security as Fixed Assets
Does it make sense to treat vested pensions and social security as fixed assets, allowing retirees to invest largely in mutual funds and ETFs? I have never worried overmuch about the traditional bonds/cash vs stocks allocation recommendations since I do have the pensions/social security.
But I’ve never seen a discussion of this issue. I recognize that traditional pensions are disappearing in favor of 401ks (or, sadly, nothing at all), so my question will be increasingly moot, but I sure would like your insights nonetheless. And thanks! Always enjoy your column in the Orlando Sentinel.
Terry Says
I’m not quite sure I understand your question. If you have a vested pension, it means you will be entitled to a fixed monthly check for life in most cases. Social Security offers a lifetime monthly payment — BUT it is adjusted annually for inflation.
That all falls under the category of “income.”
Then you look at your other assets (aside from your home) to balance your risk and growth opportunity, depending on your age, stage of life, and personal goals.
So if you have a 40lk, and an IRA, and after tax savings, you might need independent help deciding on the appropriate mix of stocks, “cash”, and other alternatives. Independent means getting advice from someone who is not trying to sell you something and earn a commission, hidden or not!
Check this out: https://www.terrysavage.com/pam-krueger-wealthramp/
