Culture: Where to park your retirement money?

Like most people my age, we wonder what shape Social Security will be in by the time we retire.

My guess is that it will still be around when I hit the golden years (as a 1963 child, I'm considered by some to be in the very tail end of the Baby Boom) but for people younger than me, it is possible that by then it will have to be seriously modified to be sustained.

So what to do?

Certainly, as much as possible, I'd advise self-financing your retirement.

If you work is offering a 401k or 403b plan, then by all means sign up and start parking some money in it.

If your work place doesn't offer such things, look into an IRA either a traditional one or a Roth. I'm still learning which one to use under which circumstances. The Roth IRA uses currently taxed dollars which then are tax-free when you draw upon it in retirement. The Traditional IRA uses current untaxed dollars which will be taxed (theoretically at a lower tax rate) when you draw it out in retirement.

If you are a finanical expert reading this blog, have I got the general idea right about the IRAs?

But whatever vehicle you use (401k, 403b, IRA, Roth) you have to decide your asset allocation.

The general concept is that the farther away your retirement is, the greater percentage of your assets should be in aggressive (and risky) items like stocks.

For instance, my current allocation in my 403b is as follows:
35% S&P 500 stock index fund
20% Small cap growth fund
20% International fund
15% Bond fund
10% Money market fund

I decided to compare my allocation with the "experts."

I went to Vanguard Mutual Funds and looked up their Target Retirement Fund 2030.

They are more aggressive than my allocation:
Vanguard Total Stock Market Index Fund - 70.9%
Vanguard Total Bond Market Index Fund - 11.4%
Vanguard European Stock Index Fund - 10.5%
Vanguard Pacific Stock Index Fund - 5.0%
Vanguard Emerging Markets Stock Index Fund - 2.2%

The people over at American Century have something called Livestrong 2035.

Their allocation is also more aggressive than mine but not as aggressive as Vanguard:
78.45% Stocks (15% international)
21.05% Bonds
0.5% Money Market

In summary, Vanguard has 88% in stock, American Century has 78% in stock and I have 75% in stock.

What would you do?