Sound Investing Retirement Distributions: All S&P 500 vs. 60/40 Portfolio
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Sep 24, 2025 Explore radical lifetime investment strategies by comparing an all-equity S&P 500 portfolio to a balanced 60/40 mix. Learn how these portfolios perform during major market downturns and the crucial role bonds play in protecting against withdrawal risks. Historical data reveals the long-term impacts on retirement distributions. Discover how different asset allocations can influence your financial stability in tough times, and why a conservative approach with some bonds might be a lifesaver in retirement.
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All-Equity Carries Deep Drawdown Risk
- An all-equity lifetime strategy exposes investors to rare but severe drawdowns that can exceed 50% in major crashes.
- Paul Merriman warns these losses are plausible and investors must be willing to accept them for long-term equity gains.
Study Long Historical Periods
- Use long historical windows to understand how different market regimes affect portfolios.
- Paul Merriman recommends studying 55 years (1970–2024) to capture varied market and bond environments.
60/40 Cuts Losses Roughly In Half
- A 60/40 portfolio had fewer losing years and smaller average losses than all equities over the 55-year span.
- Merriman shows the 60/40 lost less often and lost about half as much in bad years versus the S&P 500.