**The SECURE 2.0 Act of 2022 changes the required minimum distribution (RMD) age to 73 for individuals who turn age 72 on or after January 1, 2023. The new law also provides that the RMD age will change again to 75 in 2033.
Asset Allocation Models:
Within Stocks: 60% U.S. Large-Cap, 25% Developed International, 10% U.S. Small-Cap, 5% Emerging Markets
Within Bonds: 70% U.S. Investment Grade, 10% High Yield, 10% International, 10% Emerging Markets
Within Cash: 100% Money Market Securities, Certificates of Deposit, Bank Accounts, Short-Term Bonds
These allocations are age-based only and do not take risk tolerance into account. Our asset allocation models are designed to meet the needs of a hypothetical investor with an assumed retirement age of 65 and a withdrawal horizon of 30 years. The model asset allocations are based on analysis that seeks to balance long-term return potential with anticipated short-term volatility. The model reflects our view of appropriate levels of trade-off between potential return and short-term volatility for investors of certain ages or time frames. The longer the time frame for investing, the higher the allocation is to stocks (and the higher the volatility) versus bonds or cash. While the asset allocation models have been designed with reasonable assumptions and methods, the tool provides models based on the needs of hypothetical investors only and has certain limitations: The models do not take into account individual circ*mstances or preferences, and the model displayed for your investment goal and/or age may not align with your accumulation time frame, withdrawal horizon, or view of the appropriate levels of trade-off between potential return and short-term volatility. Investing consistent with a model allocation does not protect against losses or guarantee future results. Please be sure to take other assets, income, and investments into consideration in reviewing results that do not incorporate that information. Other T. Rowe Price educational tools or advice services use different assumptions and methods and may yield different outcomes.
Important Information
All investments are subject to market risk, including the possible loss of principal. Diversification cannot assure a profit or protect against loss in a declining market.
This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide recommendations concerning investments, investment strategies, or account types; it is not individualized to the needs of any specific investor and is not intended to suggest that any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making.
Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.
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202302-2740259
As a seasoned financial expert with an extensive background in investment strategies, retirement planning, and regulatory changes, I am well-versed in the intricacies of the financial landscape. My knowledge extends to recent legislative developments, such as the SECURE 2.0 Act of 2022, which significantly impacts retirement planning.
The SECURE 2.0 Act introduces a pivotal change to the required minimum distribution (RMD) age, elevating it to 73 for individuals who reach the age of 72 on or after January 1, 2023. Furthermore, the legislation outlines a subsequent adjustment, pushing the RMD age to 75 in the year 2033. This shift in the RMD age has profound implications for retirement income planning and necessitates a thorough understanding of its implications for investors.
Now, let's delve into the asset allocation models presented in the article. The allocation breakdown encompasses stocks, bonds, and cash, reflecting a thoughtful approach to balancing long-term return potential with short-term volatility. The asset allocation models are age-based, assuming a hypothetical investor with a retirement age of 65 and a withdrawal horizon of 30 years.
Here's a detailed breakdown of the asset allocation models:
Stocks:
- 60% U.S. Large-Cap
- 25% Developed International
- 10% U.S. Small-Cap
- 5% Emerging Markets
Bonds:
- 70% U.S. Investment Grade
- 10% High Yield
- 10% International
- 10% Emerging Markets
Cash:
- 100% Money Market Securities, Certificates of Deposit, Bank Accounts, Short-Term Bonds
It's crucial to note that these allocations are age-based and do not account for individual risk tolerance. The models aim to strike a balance between potential returns and short-term volatility, with a higher allocation to stocks for longer investment time frames.
However, the article emphasizes that these models have limitations. They do not consider individual circ*mstances or preferences, and the displayed model may not align with an investor's specific accumulation time frame or withdrawal horizon. Additionally, investing according to a model allocation does not guarantee protection against losses or ensure future results.
The disclosure also underscores that diversification cannot guarantee profits or safeguard against losses in a declining market. It provides a disclaimer that the material is for general and educational purposes only and does not offer legal, tax, or investment advice.
In conclusion, the asset allocation models presented here are designed to guide investors within a certain age and time frame, but individual considerations and circ*mstances should be taken into account for personalized financial planning. This nuanced understanding reflects the complexity of financial decision-making and underscores the need for investors to approach their portfolios with careful consideration of their unique situations.
