The Warren Buffett Retirement Investment Plan

Will the 90/10 strategy work for you?

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Warren Buffett advises a 90/10 retirement strategy
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It’s not hard to find people who are ready to hand out money advice, but if Warren Buffett were to offer you some retirement advice, would you listen? With a net worth of more than $100 billion, his advice might hold more weight than most, but consider whether it would work for you.

Key Takeaways

  • Warren Buffett advises investors to keep 90% of retirement savings in a low-cost S&P 500 index fund and 10% in bonds.
  • Government bonds offer safety but low-interest rates, while index funds offer a chance to grow investments.
  • Critics say that Buffett’s strategy is too risky for investors who are close to retirement and don’t have time to wait out a recession.

Buffett’s 90/10 Strategy

In a 2014 letter to his shareholders, Buffett said, "My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund (I suggest Vanguard‘s). I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, or individuals—who employ high-fee managers."

Let’s break this down. First, an index fund is a mutual fund or exchange-traded fund that follows the performance of an index. In this case, Buffett suggests an index fund that tracks the performance of the S&P 500, which is an index of the 500 largest publicly-traded companies in the U.S. When the S&P 500 rises, so does the index fund. Buffett suggests investing 90% of your retirement funds into a stock-based index fund.

Buffett suggests investing the other 10% in short-term government bonds. These finance government projects. They're relatively low-risk and pay low-interest rates, compared to other investments. Bonds offer safety and consistency of income, as some offer periodic interest payments. If the overall financial markets hit a rough patch, bond funds often won’t suffer as much as stock funds.

The chart below visualizes Buffet's strategy.

Avoiding Fund Fees

Buffett also advises investors to avoid high-fee managers. When you're investing, fees can add up fast. Consider a 25-year-old who has a retirement account with a $25,000 balance. They add $10,000 each year, earn a 7% rate of return, and plan to retire in 40 years. If they pay 1% in fees, it will cost them nearly $600,000 over 40 years.

Investing in lower-cost funds like Buffett outlines could save this person more than $200,000 in fees, allowing them to retire nearly $340,000 richer.

Criticisms of Buffett's Retirement Advice

Buffett’s retirement plan won’t receive glowing recommendations from some of the financial advising community. Conventional wisdom says to diversify using a mix of stock, bond, and international funds. Retirement portfolios are often filled with a mix of funds—more than two—to avoid the risk of one area of the market underperforming.

Many financial advisors would also take issue with Buffett’s weighting. They would argue that, especially for clients later in life, his strategy places too much weight on risky stock-based funds where one recession could wipe out retirement savings for years to come.

One well-known rule of thumb says to invest a percentage of your portfolio in bond funds equal to your age. If you’re 50 years old, invest 50% into bonds or bond funds. Financial advisors generally agree that this advice is too conservative and overly simplistic, but they would say that Buffett’s advice is too risky.

Finally, they would likely argue that when you’re worth over $100 billion, your investment strategy is different from that of someone who has a few hundred thousand dollars in total savings at the most.

Is Buffett's Strategy Right for You?

You can’t control what the investment markets will do in the future, but you can control the fees you pay. Higher fees don't necessarily equal better returns, so when you’re choosing funds for your 401(k) or another retirement fund, consider index funds with low fees. If you’re using a financial advisor, ask them about their fees. If the total fees are much more than 1%, you might be paying too much. Like anything else, evaluate what you’re receiving for the fees you’re paying.

In general, the more complex your financial situation, the more it makes sense to pay higher fees. Early in life, when you have a relatively low balance, robo-advisors may be worth considering.

Don’t fall for the idea that you can beat the market. Research shows that over time, your performance will largely mirror the performance of the overall market. Paying high fees for investment professionals trying to beat the market probably won’t pay off.

Buffett’s retirement advice has always been about simplicity. It’s best to find a financial advisor you trust and to create a plan tailored for you, but Buffett’s retirement plan could also work if you have the risk tolerance.


Warren Buffet's letter to shareholders indicating the 90/10 portfolio was in 2014. If you had followed Buffet's advice, $1,000 invested in that way on January 2, 2014, would have grown to $1,748 (before fees) by January 2, 2021.

Frequently Asked Questions (FAQs)

What is Warren Buffet's retirement investment advice?

Buffet has stated that a long-term portfolio allocated 90% to an S&P 500 index fund and 10% to a diversified short-term bond fund is appropriate for most savers.

Where can you get personal retirement advice?

Many financial institutions, such as brokerages and banks, have financial advisors with whom customers can consult about retirement planning. These services may or may not come with a fee, depending on the institution. You can also visit your employer's HR department to discuss retirement benefits offered through your job. Third-party financial advisors operate businesses focused solely on advice, but unlike some other options, these advisors will almost certainly charge a fee.

How much does a fiduciary financial advisor typically charge for retirement advice?

A fiduciary is legally obligated to act solely in your best interests at all times. You can't depend on sales commissions and other third-party payments that subsidize the cost of financial advice.

The exact cost varies by situation and region. For example, in Pinal County, Arizona, the suggested maximum fee schedule for fiduciaries includes a $300 flat annual fee for estates of $100,000 or less and a management fee cap of 3%.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. CNBC. "How Warren Buffett Spends His Billions."

  2. Berkshire Hathaway. "To the Shareholders of Berkshire Hathaway Inc.," Page 20.


  4. The Superior Court of Pinal County. "Fiduciary Fee Guidelines," Page 1.

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