{"id":7033763,"date":"2026-08-08T15:04:27","date_gmt":"2026-08-08T15:04:27","guid":{"rendered":"https:\/\/som2nypost.com\/business\/investing\/asset-allocation-with-a-very-low-spending-rate-from-the-portfolio-oblivious-investor\/"},"modified":"2026-08-08T15:04:27","modified_gmt":"2026-08-08T15:04:27","slug":"asset-allocation-with-a-very-low-spending-rate-from-the-portfolio-oblivious-investor","status":"publish","type":"post","link":"https:\/\/som2nypost.com\/?p=7033763","title":{"rendered":"Asset Allocation with a Very Low Spending Rate from the Portfolio \u2014 Oblivious Investor"},"content":{"rendered":"


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A reader writes in, asking:<\/p>\n

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\u201cWhat is your view on owning TIPS ladder (Bogleheads preferred) or short term TIPS fund when the majority of expenses are covered by pension and\/or social security which are COLA adjusted.<\/p>\n

One view I read is from Charles Ellis, who views all sources of stable retirement income (pension, social security) as bond like assets, essentially an indirect TIPS ladder.\u201d<\/p>\n<\/blockquote>\n

On the \u201cshould Social Security or a pension be treated as a bond\u201d topic, my answer is that, no, they aren\u2019t bonds. They are clearly fixed-income. But they are not bonds. (For a more full explanation, please see Social Security: It is an Asset, But Not a Bond<\/a>.)<\/p>\n

The case in which Social Security or an inflation-adjusted pension entirely covers spending needs is just a subset of the broader category of cases in which the household is spending at a very low rate from the portfolio in retirement. That is, for this purpose, we can lump together all cases in which a household is spending anywhere from zero to roughly 2% of the portfolio per year.<\/p>\n

In cases like that, there is a huge range of asset allocations that would be reasonable. The household does not need high returns, so they can use a very conservative allocation. On the other hand, the volatility of an aggressive portfolio would not put their well-being at risk either, so an aggressive allocation would also be acceptable. Or anywhere in between.<\/p>\n

In other words, at this point, it becomes entirely a matter of preferences. The retirement spending goal has been entirely satisfied. So now the question becomes:<\/p>\n