I am 66 and have just taken my pension in a single sum payout. It is being rolled into my IRA rollover with T Rowe Price. In today's market I am concerned about investing this all in stock funds, as I have always done in the past. My current portfolio is about 85% diversified stock funds comprising 25 funds. I want to be more conservative with this rollover but I do not have nearly the expertise or confidence investing in bonds and other non-stock investments. I do have a brokerage account with Price and I hold a number of non-price funds in that account.

Thanks for your comments. 

H Bob,

Of course you are right about not holding all equities. But one piece of important information we need to know is how much (%) of your total portfolio will you need to withdraw annually. Your answer might have a bearing on the suggested AA. I assume you wil also receive social security as part of your income.

I also think 25 funds is an awful lot, and it does not automatically mean you are diversified.

Without knowing the withdrawal rate, but assuming it's under 4%, you would probably be fine with about a 50/50 portfolio. Take a good look at a few of TRP Retirement funds that have close to that AA. They are good, well diversified all-in-one funds.

Paul 

Consider purchasing a low cost Single Premium Immediate Annuity (SPIA) with a fraction of your money. Use it plus Social Security to meet your minimal needs. Be sure to include an inflation clause.

[Vanguard makes some available. They act as an intermediary. There are several low cost providers.]

Have fun.

John Walter Russell 

I'd avoid the annunity like the plague.  25 funds is not many, I have 70+,  it is due to the logic for having the holding, and to ensure they are diverse...  My sis had 10 funds @ the same family,  M* indicated they all contained over 50% the same stock...

With all my funds,  my largest holding in any stock is 0.04%..  some would say I'm spread too thin, I'm happy..

I wanted to gain access to all regions of the world, hence some targeted country funds.  BTW, not all china or india funds track together, so I opted for multiple different funds in a region.

I'd put the bulk into funds, over time to avoid the buy at the 'top'.  Some every few weeks/ months depending on the shape of the curve for that fund. (bigcharts.com)

bond funds for some security.  Look at the allowication taxable/ tax free.  look into Roth as well for tax free withdraw...

Ask questions, on different groups...  best of luck and skill

my recommendation for 500,000 at trp would be as follows,

25%-t.rowe price growth stock

20%-t.rowe price equity income

10%-new horizons

15%-overseas fund

10%-spectrum income

20%-new income fund

this should give you good diversification and peace of mind.

Looks like every one hasnt done their home work.

SPIA vs Variable are two diiferent animals.

The idea of how much are you going to withdraw each year is very important.  You should have at least two years of withdrawal monies available in cash (money market) or maybe laddered cd's.  Monies should be available without having to sell any stocks or mutual funds at a loss.  Two years is just a guestimate.  It could be more or even less depending on your situation.  An immediate annuity is not automatically a negative.  A variable annuity that pays out later is definitely a negative.  The immediate annuity could be a possible source of funds that could sustain you over a negative market crisis.  The immediate annuity is in place of a good pension if you do not have one.  If you have a good pension then the annuity may not be needed.  You need to check your portfolio for asset allocation and diversity.  Yes, one should ensure that you do not have holdings that are overlapping with stock or other securities.  I am 63 and will be preparing for the withdrawal phase of retirement.  Many people do not understand this phase of retirement.  All they think of is long term accumulation not withdrawal.

BobFe 

I am 66 and have just taken my pension in a single sum payout. It is being rolled into my IRA rollover with T Rowe Price. In today's market I am concerned about investing this all in stock funds, as I have always done in the past. My current portfolio is about 85% diversified stock funds comprising 25 funds. I want to be more conservative with this rollover but I do not have nearly the expertise or confidence investing in bonds and other non-stock investments. I do have a brokerage account with Price and I hold a number of non-price funds in that account.

Thanks for your comments. 

[/quote]

At 66, I would aim for the following allocation:

25% US large cap dividend paying common stocks
15% non-US large cap dividend paying common stocks
10% global large/mid cap growth common stocks
 5% high-yield bonds (but I would wait to buy into these until the economy gets better)
10% high grade US corporate bonds
10% Treasuries/TIPS (but I would wait to buy these until they come down in price and for now, I would consider a fund that invests in mortgage backed securities instead which I think are undervalued, but you have to be really careful with this so that you pick a good fund manager who knows what he/she is doing)
10% non-US high grade government bonds
15% cash in CDs and money market funds

REITs are worth looking into, too such as closed-end REIT funds if you can purchase at a signficant discount to NAV.  I like high grade preferred stocks purchased at a discount to par paying at least 7%, too.

I posted this NOTE at my site.

Older retirees should consider Single Premium Immediate Annuities (SPIA). There are several low cost providers.

I visited the Vanguard site. I found that a 65 year old single man could get a lifetime annuity with an inflation clause at a rate of 6.45%. This compares favorably with 2% TIPS, which would supply a similar income for only 19 years.

Younger retirees do not need the life insurance benefit of a Single Premium Immediate Annuity. They believe that they will always have their full mental capabilities. They gloss over the advantage of no hassle income. They confuse the traditional low cost Single Premium Immediate Annuities with high commission Variable Annuities. To them, Single Premium Immediate Annuities do not make sense. For older retirees, they make a lot of sense.

Have fun.

John Walter Russell 

I have to support JWR on this. The people who made knee jerk statements about annuities clearly do not understand what he was recommending.

 
There is a big difference bewteen SPIA and the high cost annuities such as variable annuities, equity indexed annuities and other products. Yes those products are high expense and high commission products, and make far more money for the salesman than the customer.

A good analogy is the difference between term insurance and the high commission  insurance/investment products (whole life, universal life, permanent life. whatever name for your poison). Nobody says don't buy term insurance just because the other products are not suitable for most people.

I am not saying that a SPIA is the answer in this case, we don't know enough of the details. However,  the suggestion by JWR to investigate this makes a lot of sense.