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Retirement Allocations

In an unofficial meeting on May 15, 2007, Patrick Lyons discusses the importance of proactive financial planning in retirement. He emphasizes that investors must continually make allocation decisions, adapting to market conditions. Drawing from his experiences with TIAA since 1996, Lyons reflects on the ups and downs of market growth, suggesting that significant shifts in allocations may be necessary. He analyzes options between stocks, growth, real estate, and bonds to optimize retirement outcomes. The meeting aims to inspire discussion on these critical financial choices.

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Retirement Allocations

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  1. Retirement Allocations Patrick Lyons May 15, 2007

  2. Unofficial Informal Meeting • Disclaimer - I (PJL) am not a professional financial planner. • Purpose of meeting is to promote discussion. • I would like to hear other people’s opinions. • Like it or not, we all should (must) be proactive financial planners. • We continually make implicit (or explicit) allocation decisions.

  3. Allocations: Fixed for Life? • Should allocations change as overall market conditions change? • It’s been a wild ride • What will the next 30 years bring???

  4. TIAA Since May 1996 • Rode Growth up • Rode Growth down • TIAA advice – stick with it. It will come back eventually.

  5. TIAA Since Jan 2000 • Major alternatives • Stock • Growth • Real Estate • Inf Bond

  6. PJL Since Jan 2000 • Would have been nice to switch Growth to Real Estate • Unrealistic to expect • Would have $2.2mil + TIAA Traditional for retirement • But, …

  7. PJL Since Jan 2001 • One year later, Growth down 30% • Ready to switch to Real Estate, but just did not do it. • Would have $1.6mil + TIAA Traditional. Close to retirement goal.

  8. PJL Since Jan 2005 • Relative decision • Since July, 2006 • Stock better increase than Real Estate, but • Real Estate less volatile • Real Estate: • Only 1 withdrawal per quarter

  9. CREF Since May 1, 2006 • In previous graph, since July 18, 2006 • Slope of Stock (33%) better than • Slope of Real Estate (13%). • Even since May 1, 2006 • Slope of Stock slightly better than Real Estate.

  10. CREF Stock • Uses composite benchmark of: • Russell 3000 Index - broad U.S. stockmarket • MSCI EAFE+Canada Index – 22 developed nations • MSCI Emerging Markets Index – 25 emerging nations. • Benchmark weightings recalculated daily: • March 31, 2007 weights were: • 76.2% US • 22.6% developed nations • 1.2% emerging nations. • Morningstar Ratings – 5 star for 3, 5, 10 years

  11. Allocation History • Should I increase Stock and decrease Real Estate?

  12. Non TIAA-CREF Alternatives • Switch some to Fidelity? • Any investment similar to TIAA Real Estate? • Switch some to Met Life? • Any investment similar to TIAA Real Estate?

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