You’ve saved diligently for decades. Your portfolio has grown to 25 times your annual expenses. You’ve officially won the financial game. So why are you still checking stock prices daily?
The truth is, after you’ve won, your investment strategy should shift from “maximum growth” to “don’t lose what I’ve already got.” This isn’t about chasing the highest returns anymore—it’s about finding that perfect balance where market swings don’t keep you up at night.
Your “sleep-at-night” allocation is personal. It’s the precise mix of stocks, bonds, and cash that lets you live well without constant financial worry.
What it means to have “won the game” (and why you should stop playing)
You’ve saved diligently for decades. Your investment accounts have grown. And now you’re sitting on a pile of money that’s 20-25 times your yearly expenses. Congratulations – you’ve won the financial game.
William Bernstein, the respected investment advisor, puts it plainly: “When you’ve won the game, why keep playing it?” This simple question challenges a common investing mistake – continuing to take big risks after you no longer need to.
Having 20-25 times your annual essential expenses in investable assets means you’re financially independent. At a conservative 4% withdrawal rate, you can fund your lifestyle without working.
Where many investors make a critical mistake. During the 2008 financial crisis, countless people who had already “won” kept their money in risky stocks, panicked when markets crashed, sold at the bottom, and permanently damaged their retirement security.
Warren Buffett explains this mindset perfectly: “To make the money they didn’t have and didn’t need, they risked what they did have and did need—that’s foolish.”
This highlights the key asymmetry of risk after achieving wealth: Extra gains provide little additional happiness, but losses can be catastrophic to your lifestyle.
Consider what happened during recent market swings:
- The S&P 500 dropped 30% in March 2020 but recovered to finish the year up 16%
- Investors who stayed invested during the COVID crash gained approximately 30% more than those who sold and went to cash
- A 60/40 portfolio had a maximum drawdown of 23.55% in the 2022 bear market with an 18-month recovery
William Bernstein observed: “A lot of people had won the game before the 2008 crisis: They had saved enough for retirement and were still taking risk in equities. Afterward, many sold at or near the bottom and never bought back in. Those people irretrievably damaged themselves.”
Take the real example of a Bogleheads forum member with $11 million at age 54 ($7M in Vanguard index funds and $4M in paid-off real estate). Despite clearly winning financially, they struggled with whether to step back from active investing – showing that the psychological hurdle often exceeds the financial one.
Understanding sequence of returns risk in the retirement danger zone
The 20 years surrounding your retirement date – the decade before and the decade after – create what financial advisor Michael Kitces calls the “retirement red zone.” This is when your portfolio is most vulnerable.
Why? Because when your portfolio is at its largest size, market returns matter far more than your contributions. A 20% loss on a $200,000 portfolio early in your career can be offset by continued savings. But that same percentage loss on a $2 million retirement portfolio could derail your plans completely.
Losing 50% requires a 100% gain just to break even. And time isn’t on your side anymore.
According to Schwab data from the 1960s through 2023, the average time for a diversified stock index to recover from peak to peak is about 3.5 years. That might be tolerable for younger investors, but devastating if you’re taking withdrawals during the downturn.
Michael Kitces explains: “The final decade leading up to retirement, and the first decade of retirement itself, form a retirement danger zone, where the size of ongoing contributions and the benefits of continuing to work are dwarfed by the returns of the portfolio itself… Because the consequences of a bear market can be so severe when the portfolio’s value is at its peak, it becomes necessary to dampen down the volatility of the portfolio.”
To protect against this risk, experts recommend holding 2-4 years of living expenses in short-term bonds or CDs, allowing you to avoid selling stocks during market downturns.
The 2022 market delivered a harsh lesson in this regard. Both stocks AND bonds declined simultaneously (causing that 23.55% drop in a traditional 60/40 portfolio) as interest rates rose rapidly. This tested the conventional wisdom about diversification.
Consider the real case of Jane and John Anderson, both 61 with a $2.5 million portfolio. Their advisor at JNBA Financial shifted them from a Growth allocation to a Moderate Growth allocation specifically because “they did not need the potential return the added equity risk might provide.” They’d won the game – why keep playing?
Safe withdrawal rates have changed: What the 2025 research actually says
The famous 4% rule for retirement withdrawals is officially dead for 2025 retirees.
Morningstar’s 2025 recommendation is now 3.7% (down from 4.0% in 2024) for a 30-year retirement with 90% probability of success. Their research also suggests an optimal equity allocation of just 20-50%.
Vanguard Research is even more conservative, suggesting a range of 2.8% to 3.7% for a 50/50 portfolio, depending on your bequest motives and success thresholds. With a 95% success threshold, they recommend just 0.9% withdrawal rate, while an 85% threshold allows for 3.0%.
Why the decline? Today’s high equity valuations and bond market changes have reduced expected future returns.
There’s good news, however. Dynamic spending strategies (where you adjust withdrawals based on market performance) can increase sustainable rates to 4.3-5.0% for a 50/50 portfolio with 85% confidence over 35 years.
For early retirees planning a 50-year horizon, traditional withdrawal rates drop to 3.3%, but rise to 4.0% with dynamic spending adjustments.
Lower withdrawal rates give you more flexibility to de-risk your portfolio.
Christine Benz of Morningstar offers wise advice: “For retirees and preretirees who are convinced that it’s a good time to derisk, the question is how to do it. First, what not to do: jettison stocks and go all-in on safety.
Yes, uncertainty reigns over both the economy and markets. But the best way to confront uncertain times is with humility and a portfolio that’s diversified enough to perform reasonably well in a variety of scenarios.” Consider this real-world example from the Bogleheads community.
A member with a $2.5M portfolio was considering a 60/40 or 50/50 allocation with only a 3% withdrawal rate ($75K from $2.5M). The community consensus? “At 2.5 mil you would have won the game in a variety of ways…for 40k expenses a year, you would only need 2% withdrawal…there is no risk for you anymore.”
Asset allocation strategies for those who’ve won the game
Once you’ve won the game, how should you adjust your portfolio? Several proven approaches exist:
1. The glide path approach: Gradually reduce risk over time: 85/15 → 75/25 → 60/40 → 50/50.
- Schwab’s age-based recommendations for 2025:
- Age 60-69: 60% stocks, 35% bonds, 5% cash (Moderate)
- Age 70-79: 40% stocks, 50% bonds, 10% cash (Moderately Conservative)
- Age 80+: 20% stocks, 50% bonds, 30% cash (Conservative)
3. Bernstein’s Liability Matching Portfolio (LMP): Set aside 20-25 years of essential expenses in fixed income investments, with remaining funds in growth assets.
- Kitces’ bond tent: “The optimal glidepath for asset allocation appears to be a V-shaped equity exposure, that starts out high in the early working years, gets lower as retirement approaches, and then rebuilds again through the first half of retirement.” This means building up bond allocations before retirement, then spending them down in early retirement.
5. Benz’s bucket strategy: Separate your money by time horizon – Bucket 1: 1-2 years’ expenses in cash; Bucket 2: 5-8 years’ expenses in bonds; Bucket 3: Long-term growth stocks for years 11+.
6. Individual bonds vs. bond funds: Many investors learned in 2022 that bond funds don’t provide the certainty of individual bonds held to maturity. Consider TIPS ladders or individual bonds for true risk reduction.
Vanguard’s historical analysis reveals that during periods similar to our current environment (1960-1980 and 1997-2020), optimal allocations ranged from 25-40% stocks with 60-75% bonds.
Their 10-year forecasts from June 2025 predict U.S. equities returning 3.3-5.3% annualized (down 0.5% from prior forecasts) while U.S. bonds should return 4.0-5.0% annualized—making bonds more attractive than in recent years.
Real-world examples are instructive:
- Larry Swedroe, the respected investment author, moved to 60/40 after selling his first business, then to 30/70 after his second exit.
- Multiple Bogleheads members who achieved early financial independence successfully used 70/30 or 75/25 through their 30s, then 60/40 in their early 40s.
- A 2022 bond market lesson from White Coat Investor showed that bond funds don’t provide the certainty of individual bonds held to maturity—leading many investors to shift to TIPS ladders.
How market conditions in 2025 affect your de-risking decision
Today’s financial landscape makes de-risking more attractive than it’s been in years:
The 10-year Treasury yield stands at approximately 4.33% (as of July 2025), trading in a 4.0-4.5% range. This makes bonds far more attractive than during the 2010-2020 zero-rate environment.
The Federal Reserve has begun cutting rates, with the current Fed Funds Rate at 4.00-4.25%, down from the 5.5% peak in 2024. Projections for year-end 2025 are 3.75-4.00%.
Inflation remains persistent at 2.90% (August 2025, up from 2.70% in July), still above the Fed’s 2% target. This inflation risk shouldn’t be overlooked – at 3% inflation over 30 years, purchasing power declines by 60% ($1M becomes just $412K).
Vanguard’s 2025 forecasts suggest bonds will return 4-5% annually over the next decade, making them competitive with stocks (3.3-5.3%) on a risk-adjusted basis. This makes the case for de-risking stronger than it’s been in years.
Stock valuations remain elevated, driving lower forward return expectations. Meanwhile, the traditional 60/40 diversification model has been challenged by shifting stock-bond correlations.
The Vanguard Investment Strategy Group’s January 2025 “Beyond the Landing” outlook emphasizes that bonds now offer “more attractive long-term returns relative to historical norms” with 4-5% expected annualized returns.
All these factors make 2025 an ideal time to consider de-risking if you’ve already won the game.
Practical implementation: Tools and resources for 2025
Safe Withdrawal Rate Testing:
- FIRECalc (https://www.firecalc.com/) – Tests strategies against 150+ years of historical data, the gold standard for stress-testing
- cFIREsim (https://cfiresim.com/) – 36+ million simulations run, highly customizable, a Bogleheads favorite
- Engaging Data “Rich, Broke or Dead?” (https://engaging-data.com/will-money-last-retire-early/) – Combines portfolio success with longevity probability
Portfolio Analysis:
- Portfolio Visualizer (https://www.portfoliovisualizer.com/) – Comprehensive backtesting, Monte Carlo simulation, and optimization. Free basic tier with 5.1M annual visits
- Empower Personal Dashboard (https://www.empower.com/tools) – Free net worth tracking, 401(k) fee analyzer, and retirement planner with 5,000-scenario Monte Carlo simulations
Brokerage Tools:
- Vanguard Retirement Tools – Risk tolerance questionnaire, asset allocation recommendations, and RMD calculators
- Fidelity Planning Center – Tax-smart withdrawal calculator and retirement income planner
- Schwab Planning Tools – 12-profile investor questionnaire and free robo-advisor option with auto-rebalancing
Rebalancing:
- Passiv (https://passiv.com/) – One-click rebalancing across multiple accounts
When should you consider paid tools? If you have complex tax situations requiring Roth conversion optimization, ACA subsidy management, or IRMAA planning. Tools like Pralana, MaxiFi, and ProjectionLab ($99-149/year) can be worth the investment.
The most important step is to actually use these tools. Input your specific numbers and see how different asset allocations might perform. Test what happens if markets crash right after you retire. Run multiple scenarios.
Remember, the point isn’t to find the “perfect” allocation – it’s to find one good enough to secure your already-won financial independence while letting you sleep at night.
