Although I am not yet a financial planner (I am studying to be the one right now). There is not Ideal % of net worth that should be retirement asset. It’s based on need, what is your post retirement income need?
This one way to look at the progress at the retirement goal.
Your investment balance( that includes retirement account) should be the percentage of your gross pay at various ages.
|INVESTMENT ASSETS TO GROSS PAY BENCHMARKS TO ACHIEVE RETIREMENT GOAL|
|Benchmark for Investment Assets as a Ratio of Gross Pay by Age|
So, if you are 45-45, your investment accounts should be 1.6 to 1.8 times your annual salary. That was you will progress towards your retirement goals.
This ratio assumes that your retirement account is earning a market return and you started saving/investing at age 25.
If you are on this track, and you have extra cash flow, it would be advisable to invest in the risky asset for more return since you are covered for retirement.
@Glen Mauldin - I'm not sure that there is a specific answer or even a rule of thumb for this question. It all depends on your strategy.
If you are trying to become financially independent and do not have access to your retirement accounts for 20+ years, it probably makes sense to have less of your net worth tied up in your retirement accounts.
If you are approaching the retirement age, it would make sense if you had a more significant portion of your wealth in retirement funds as you will be able to draw down on this in the next couple of years.
I shoot for a 50-50 split, but obviously there are caps on contributions to your 401k and IRA which will limit its growth potential and likely skew your networth towards R.E. if you can get creative [unless of course you are buying property in a SDIRA.
I appreciate the input and realize there is no magic number. I was preparing a personal financial statement and didn't fully realize just how much my wife and I had in our retirement accounts (first world problem I know). It was just over 50% of our total net worth and when you subtract equity in our primary residence the retirement percentage jumped to about 60%.
@Danny Rodriguez most of it is in IRA accounts primarily rollovers from prior employer 401K plans. Not self-directed at this time but I do plan on converting a portion of the funds to self-directed to do some note investing.
I guess my biggest concern about having too much in IRAs is the MRD issue whether we actually need it or not...once again, a first world problem.