Why 60/40 Failed
The 40% bond allocation was supposed to provide income and safety. But in 2022, bonds crashed with stocks. And even with higher rates today, an aggregate bond fund (AGG) only pays ~4-5%. That doesn't cut it for retirement income.
The Modern "Income 60/40"
We propose replacing the "40% Bonds" with "40% Alternative Income."
The Stock Side (60%)
Keep this in broad market growth (VOO/VTI) or Dividend Growth (SCHD). You still need appreciation.
The "New Bond" Side (40%)
Instead of AGG, split this between JEPI, SPYI, and BDCs (MAIN).
The Math
Old Way (40% Bonds): $400k in Bonds = $18,000/year income.
New Way (40% Alt Income): $400k in SPYI/JEPI/MAIN = $40,000/year income.
You essentially double your income from the safe(r) side of your portfolio, reducing the need to sell your growth stocks during a downturn.