At it's very basic, how to allocate your portfolio requires two different inputs. One is your risk tolerance and the other is your required return. If you’ve retired with a sizable investment account and your income requirement is low you then your allocation will be pretty conservative. If on the other hand you don’t have a large nest egg or need to pull a lot from you account, you might need a portfolio that is more aggressive. Trying to determine your specific allocation will require a financial plan. Knowing your annual spending budget and your much guaranteed income (social security, pension, annuity) you have will indicate how much your portfolio needs to produce. After you can answer those questions, determining an appropriate asset allocation is fairly straight forward.
This is a good question in that it implies you understand you can be too aggressive or too conservative. Unfortunately, there is no simple answer.
We have to look at life expectancy so we have a properly assumed time frame. We have to look at your income needs along with inflation. What are your goals along with your needs? Prepare a portfolio anlysis for your current portfolio. Then we look at the three parts to risk: Need, ability, and willingness to take risk.
From there you can run market simulations based on varing allocations and income goals. Have discussions around the evidence and what works best in your situation.
This gives you the foundation for your plan. Implement, monitor, and adjust. It's not complicated but would suggest you visit with a reputable financial planner to map out a plan.
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