Going all-cash at 60 feels safe and usually isn't — a 30-year retirement needs growth to outrun inflation. The real question is how much market exposure you can hold without ever being forced to sell into a crash. That's what this works out.
Today's dollars, after withdrawals and inflation. The conservative line is the one people think is safe.
What your suggested mix would have done through three actual bear markets, if one landed in your first year of retirement. Falls shown are the US share market — most developed markets fell by broadly similar amounts in these episodes.
The share of your portfolio in shares is the only part shocked here; bonds and cash are held flat. That's deliberately pessimistic — in both 2000–02 and 2007–09 high-quality bonds actually rose while shares fell, which is precisely the job they're there to do.
How much of your money should still be exposed to the share market once you've stopped working?
There are two ways to run out of money in retirement. The obvious one is a market crash. The less obvious one — and over thirty years, the more likely one — is inflation quietly halving what your money buys while you sit safely in cash.
Shares are the main defence against the second problem and the main source of the first. So the question isn't "how much risk can I stomach" but "how much market exposure can I hold without ever being forced to sell at a bad moment". Those are different questions with different answers.
Elena has $850,000 and spends $66,000 a year. Her pension covers $26,000 of that, so her portfolio funds the other $40,000 — about 4.7% a year.
Her instinct is to move almost everything to cash and bonds. But she's planning for 27 more years, and at 2.5% inflation her money halves in purchasing power over that time. A portfolio that can't beat inflation has just chosen a slow, certain loss over a fast, uncertain one.
The calculator suggests around 57% shares — driven by her long horizon and the fact that her pension covers a decent chunk of the essentials. Just as importantly, it sets aside about three years of spending in cash. That buffer is what lets her hold the shares through a bad stretch: a crash becomes something she reads about rather than something she has to sell into.
The three crashes shown are real: the dot-com bust took the US share market down 49%, the 2008 crisis 57%, and the 2020 COVID crash 34%. The table applies those falls to your share allocation only, holding bonds and cash flat — which is deliberately pessimistic, since good-quality bonds actually rose during two of the three.
The number to focus on isn't the size of the fall. It's the line underneath about whether your bonds and cash would cover your spending until markets recovered. The dot-com decline took 31 months just to reach the bottom. If your buffer runs out before then, you'd be selling shares at the worst possible moment — and that's the thing worth engineering out of your plan.
General information only — not financial advice, and not a recommendation to buy or sell anything. This is a rule-of-thumb model, not a portfolio construction tool: it ignores your tax position, existing holdings, property, business interests, currency exposure and everything else that a real allocation decision depends on. Historical crash figures are peak-to-trough S&P 500 declines and are shown to illustrate scale, not to predict the next one.