I’m not an advisor, and I can’t give individual advice. That said, I have long been of the perspective that your money is at risk no matter what you do with it. What matters is how you balance the various risks you face.
Too conservative: you risk losing ground to inflation and taxes over time. Too aggressive: you risk being forced to sell at a bad time because the bill collectors won’t wait, and you also risk seeing too large a part of your portfolio just outright fail.
The trick is finding the right balance. Where that balance sits is part art, part science. Personally, I like to address it from the perspective of “how much do I need to pull from my portfolio, and when do I need it?” In that framework, my personal balance point is 5 years (+ or - 2) of money I expect to need to pull from my portfolio in assets safer than stocks, with the rest available for more aggressive investments.
In my case, that 5-years + or - 2 looks like it’s shaping up to be an investment grade bond ladder, with each year’s rungs bumping up a bit for an inflation estimate.
As for why the + or - 2, that’s because the market sometimes drops, and sometimes, it goes up far faster than expected. That wiggle room gives me the chance to let the bond ladder shrink when the market is performing poorly and the chance to restore or extend its length when market is performing exceptionally well.
The key is a combination of having both a reasonable estimate of what I’ll need from my portfolio and awareness of where I’ll have flexibility in my plans.
I’m not living off my portfolio, but I do have a bond ladder — built because I am in the middle of a 12 year period where I expect one, often two kids in college at the same time. Thanks to scholarships, my older two kids’ 529 plans are able to cover their current costs, so I’m currently reinvesting rather than spending the maturing bonds. That said, the bond ladder has thus far worked as anticipated…
Regards,
-Chuck