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Secure Your Retirement with the 90/10 Investment Strategy

The 90/10 Retirement Strategy: A Simple Investment Approach for a Secure Future

Do you want to secure your retirement income for the long-term? Are you looking for an investment approach that is easy to implement, yet effective?

If your answer is yes, then the 90/10 retirement strategy might be worth considering. What is the 90/10 rule?

The 90/10 retirement strategy is an investment approach that involves dividing your portfolio into two categories – 90% stocks and 10% lower-risk assets such as bonds. The idea behind this is to invest the majority of your money in stocks, which typically offer higher returns, while also maintaining a buffer against market volatility by including lower-risk assets in the mix.

The 90% of your portfolio invested in stocks allows you to take advantage of potential long-term returns and compounding effects. Meanwhile, the 10% of your portfolio allocated to lower-risk assets, including bonds, helps to cushion losses and stabilize your portfolio during market downturns.

Advantages and Disadvantages of the 90/10 Retirement Strategy

The 90/10 retirement strategy has its advantages and disadvantages, which you should consider before implementing this approach:


1. Simple and easy to implement: One of the most significant benefits of the 90/10 strategy is that it is easy to understand and implement.

You do not have to be an investment expert to get started with this approach. 2.

Risk Management: This approach includes a mix of high-return assets and lower-risk assets, which can help you manage your portfolio’s risk exposure. 3.

Potential returns: By allocating most of your portfolio to stocks, you have the potential to earn higher returns over the long-term, which can grow your retirement income. Disadvantages:


Low risk tolerance: The 90/10 strategy might not be suitable for someone who has a low risk tolerance or cannot stomach stock market volatility. 2.

Volatility: The stock market can be volatile, and a significant market decline can impact the performance of your portfolio. 3.

Diversification: The 90/10 strategy is not as diversified as many other investment approaches, which could be a disadvantage if you prefer a high degree of diversification. Implementing the 90/10 Retirement Strategy

If you decide to implement the 90/10 retirement strategy, there are a few steps you should follow:


Invest in low-cost equity index funds: Allocate most of your portfolio (around 80-90%) to low-cost equity index funds. Investing in a diverse range of stocks through indexed funds can help to reduce your exposure to individual stock risk while still giving you broad market exposure.

2. Consider investing in an S&P 500 index fund: The S&P 500 index fund tracks the performance of the 500 largest publicly traded companies in the US.

Allocating some of your investments to an S&P 500 index fund can offer broad market exposure and the potential for long-term returns. 3.

Invest in short-term T-Bills: Allocate a small portion of your portfolio (around 5%) to short-term Treasury Bills to provide a buffer against market volatility. 4.

Include investment-grade bonds: Include investment-grade bonds in your portfolio to provide additional stability and potential income. 5.

Rebalance your portfolio: To maintain the 90/10 ratio, you will need to periodically rebalance your portfolio by selling some of your stocks and buying more bonds or other lower-risk assets as needed. This helps to ensure that your portfolio remains in line with your savings goals and risk tolerance.

Good to know

Before implementing the 90/10 retirement strategy, you should consider your retirement goals and your risk tolerance. Using a retirement calculator can help you determine how much money you will need to maintain your standard of living in retirement.

It is also a good idea to speak with a financial advisor to help you manage your portfolio and ensure that it is aligned with your retirement goals. In summary, the 90/10 retirement strategy is a straightforward investment approach that can help you secure your retirement income for the long-term.

By investing 90% of your portfolio in stocks and 10% in lower-risk assets, you can benefit from potential long-term returns while also managing your portfolio’s risk exposure. Remember, however, that no investment strategy can guarantee success, and you should always do your research and consult a financial advisor before making any investment decisions.

Other Retirement Planning Considerations:

Social Security,


Health Care Costs, and


Planning for retirement can be daunting. It requires balancing your income needs with risk management while considering a range of variables that can impact your retirement savings.

One of the keys to successful retirement planning is to understand the various factors that can impact your future financial security. In this article, we will examine

Social Security, taxes, health care costs, and inflation all of which are important retirement planning considerations.

Social Security

Social Security is an income source for many retirees. The average monthly

Social Security benefit in 2021 is $1,543 (source: SSA).

This amount can help supplement your retirement savings to meet your retirement income needs. However, it is important to note that

Social Security was never intended to support a lavish retirement lifestyle.

It is meant to provide a baseline of income to help you meet your basic needs. Therefore, it’s critical to develop your retirement plan around your personal spending needs.

When you begin taking

Social Security also impacts your overall retirement income. Claiming benefits before full retirement age (FRA) can significantly reduce your benefits.

Waiting until after your FRA can increase your benefits. A financial advisor can help you decide the best time to take

Social Security based on your unique needs.


Taxes can significantly impact your retirement income. As you plan for retirement, it’s important to seek the advice of a tax professional to ensure you are optimizing your tax situation.

Tax planning for retirement involves determining how to withdraw money from your retirement accounts while minimizing your tax liability. While traditional IRAs and 401(k)s allow you to defer taxes until retirement, withdrawals in retirement are taxed as ordinary income.

Roth IRAs and Roth 401(k)s, on the other hand, are funded with after-tax dollars, which means withdrawals in retirement are tax-free. There are also tax implications for

Social Security benefits depending on your income in retirement.

To optimize your tax situation, consider seeking advice from a tax professional early in the planning process to maximize your retirement savings and minimize your tax liability.

Health Care Costs

Health care costs can be significant in retirement, and they are expected to continue to rise. According to Fidelity, a couple who retire at 65 years old will need around $300,000 to cover their health care costs in retirement.

To mitigate these costs, consider enrolling in Medicare as soon as you are eligible. You can also consider purchasing a supplemental health care policy or a long-term care insurance policy to help cover some of your health care expenses in retirement.

It is also essential to maintain a healthy lifestyle, stay current on your health care screenings, and engage in preventive care programs. These steps may help you reduce your healthcare costs in retirement.


Inflation can significantly impact your retirement income and purchasing power.

Inflation refers to the rising prices of goods and services over time, which can reduce the value of your retirement savings.

To counteract the effects of inflation, you may consider allocating some of your retirement investments toward assets that can potentially help you hedge against inflation such as real estate, commodities, or Treasury

Inflation-Protected Securities (TIPS).

Bottom Line

Retirement planning is a complex process that requires consideration of many critical factors, including the 90/10 strategy,

Social Security, taxes, health care costs, and inflation. When planning for retirement, you should seek guidance from a financial advisor who can help you develop a personalized plan that considers all your unique assets, liabilities, risks, and goals.

Implementing a low-cost equity index funds-based strategy, combining high-return assets and lower-risk assets, can help manage portfolio risks and generate considerable returns in the long run. Starting savings early, optimizing tax and healthcare costs, and hedging against inflation can help you prepare for a financially secure retirement.

Ultimately, your finances should be customized to meet your unique lifestyle requirements, goals, and preferences as you move toward your retirement. In conclusion, retirement planning is a complex but essential task that requires careful consideration and proper management.

The 90/10 retirement strategy is an effective method for managing portfolio risks while generating long-term returns, but it is just one part of retirement planning. Other critical considerations include

Social Security, taxes, health care costs, and inflation.

You can secure your retirement through early saving, tax optimization, hedging against inflation, and maintaining healthy lifestyles. Working with a financial advisor can help you develop a personalized plan that considers all your unique assets, liabilities, risks, and goals, and ultimately ensure financial security in retirement.

Overall, the key takeaway is to start early, plan wisely and review your plans continually to ensure optimal outcomes.

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