OP my wife and I went thru this exercise about 4 years ago. The following is our approach, not just financial, but mental also getting ready for retirement.
1. Read my post “What happens if I die?”
2. Work backwards and see what is left over. Balance returns versus risk versus time constraints
3. Determine how much cash or liquid assets you need to live X years. We picked 5 years. You want a figure where you don’t care about the stock market going up or down. Bad from return standpoint, but good from a retirement view.
4. Making this up. 95% of all Financial advisors will not help on your non Financial investments since they don't get paid to cover that and that is not where their expertise is. We use our bankers, Commercial Realtor, and other similar Real Estate investors to give input on our REI.
5. Stocks- we are very uncomfortable with the economic environment. Thus dont like being in stocks near term. We have about 1/3 in stocks, so we look at growth. But this is for funds beyond 15 years. This was the left over allocation after all other needs were met.
6. Debt- we paid down all personal debt and some REI debt. This is a bad decision from average standpoint, but good mentally from a retirement standpoint. From a purely REI standpoint you should keep debt for leverage and to get a better Cash in cash return. Also with inflation you pay with cheaper dollars.
7. Fixed income- realize you’re talking about interest or dividend bearing. But we only consider that on our 5 year cash needs. We do have an annuity, social, 401k distributions, pensions, Consider those when you decide how much to invest in Fixed income. Longterm you will lose wealth the more your in Fixed income due to inflation.
8. Retired Lifestyle. We are in Iowa (cold during winter), have a house and Teak plantation in Belize, our son and Brother both happen to be in Italy for the next few years. Determine what your Retirement lifestyle might be and set aside funds for that. Could be a winter home or rental in a warm climate. Or several cruises or trips per year. Or a hobby, like buying an airplane.
9. To much money left over- so you set up your trust and have money designated for donations, have your lifestyle covered, no kids, no spouse. Your sibling kids are young. You decide to do generational wealth for the next 100 years. Ask your financial planner to find an Annuity/Insurance product. This will put them in the top 1% for the rest of their lives tax free.
10. Financial planner- ask your estate Attorney (not your regular attorney), ask your insurance person, your CPA, a large commercial realtor. Who would they recommend as a financial advisor. You want a high net worth advisor.
There is no set mix %. Fit to your needs.
