| At a recent investment conference, an attendee asked a question I've heard countless times before... "Once I reach retirement, how much money should I have in stocks?" The answer depends, in part, on your age, your health, your monthly overhead, and the size of your portfolio. So let me touch on these briefly and then provide a valuable, real-world solution. It's called retirement rebalancing. Americans today are living longer than ever. If you retire at 65 in reasonably good health, for example, you could be looking at up to three full decades in retirement. Given a 20- or 30-year time horizon, you need a serious slug of equities to generate a long-term return that comfortably exceeds the rate of inflation. Because while the level of inflation has declined considerably over the last 18 months, it may rise sharply again in the future, especially a future measured in decades. (Recall the hyperinflationary late '70s and early '80s.) Yet retirees also face the potential threat of having too much money in stocks. After all, when you're young and contributing to your investment portfolio, a bear market gives you wonderful buying opportunities. But when you're out of the work force and depending on your investments to supplement your monthly pension or Social Security payments, cashing in stocks during a serious bear market - like the one we experienced during the financial crisis - will result in a significantly smaller portfolio when the market finally rebounds. How do you avoid this risk? With retirement rebalancing. Here's how it works. Instead of thinking about what percentage of your portfolio is in stocks, calculate how much money you need in low-risk bonds and cash to fund your monthly overhead. Let's say, for example, that you need $5,000 a month - or $60,000 a year - to cover the difference between any public or private pensions and your monthly overhead. Then set aside four years' worth of living expenses or, in this case, $240,000. Here's why... | 
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