Research date: November 5, 2026
Can a retirement portfolio really hold 90% in shares and only 10% in bonds? That may sound risky, especially for someone who has stopped working and needs savings to last for many years. Yet this is close to the investment mix Warren Buffett described in a well-known section of Berkshire Hathaway’s 2013 shareholder letter.
There is an important detail that many short online summaries leave out. Buffett was describing instructions he had written for a trustee who would manage money left for his wife after his death. He was not saying that every retiree should put 90% of their savings into shares. He was also not giving a complete plan for monthly retirement income.
This guide explains what Buffett actually wrote, how the 90/10 strategy works, why he preferred low-cost index funds, what the risks are, and how it compares with a 60/40 portfolio. It also checks Berkshire Hathaway’s latest available cash information and Buffett’s current role as of November 5, 2026.
Quick answer: What is Warren Buffett’s 90/10 strategy?
The 90/10 mix described in Buffett’s 2013 letter has two parts:
- 90% in a very low-cost S&P 500 index fund. This gives the portfolio exposure to a broad group of large US companies.
- 10% in short-term US government bonds. This provides a smaller, more stable part of the mix.
Buffett wrote that he believed this approach could produce better long-term results than many high-fee investment arrangements. But he was describing a specific trust arrangement. It is not a promise of returns, a safe withdrawal rule or a plan that fits every person.
1. What did Warren Buffett actually write in 2013?
In Berkshire Hathaway’s 2013 annual shareholder letter, Buffett explained that his will included instructions for a trustee who would receive cash for the benefit of his wife. He wrote that the trustee should place 90% of that cash in a very low-cost S&P 500 index fund and 10% in short-term government bonds. He also mentioned Vanguard as an example of a provider of a low-cost S&P 500 fund.
This detail matters. Buffett was not saying that every retiree should follow the same allocation. He was describing how he wanted a particular trust to invest money after his death. The plan reflected his view that a low-cost index fund can be a strong long-term choice for many investors who do not want to pick individual stocks.
He also warned about the costs of frequent trading and high-fee investment services. Fees may look small when viewed for one year, but they reduce the money that remains invested over time.
You can read his original words in the Berkshire Hathaway 2013 shareholder letter.
2. How does the 90/10 allocation work?
| Investment | Share of the mix | Main purpose |
|---|---|---|
| Low-cost S&P 500 index fund | 90% | Long-term growth through shares in many large US companies. |
| Short-term US government bonds | 10% | A smaller part that is generally less volatile than shares and has shorter maturities. |
Imagine a person has $100,000 to invest. A simple 90/10 split would look like this:
- $90,000 in a low-cost S&P 500 index fund.
- $10,000 in short-term US government bonds.
This example shows only how the money is divided. It does not tell the person how much to withdraw each month, how much cash to keep in a bank account, or how to pay for health care, housing and taxes.
The mix will also change as markets move. If shares rise faster than bonds, the stock portion can become more than 90%. If shares fall, it can become less. An investor who wants to keep a set mix may rebalance from time to time. Rebalancing means buying or selling investments to bring the portfolio closer to its planned percentages.
3. What is an S&P 500 index fund?
The S&P 500 is a stock-market index that follows a group of about 500 large public companies in the United States. The companies come from many parts of the economy, including technology, health care, banks, consumer products and industry.
An index fund tries to follow the movement of a market index. Instead of asking a fund manager to pick a small number of companies, the fund holds many of the shares in the index or uses a method designed to track it.
This can make investing simpler. An investor can get exposure to many large US companies through one fund. But an S&P 500 fund is still a stock investment. Its value can fall when the market falls. It does not protect an investor from a crash.
Buffett’s key point was about keeping costs low and avoiding the idea that every investor needs an expensive manager or frequent trading. Low fees can help because more of the investment return stays with the investor. However, a low fee does not remove market risk.
4. Why keep 10% in short-term government bonds?
Short-term US government bonds are debt securities issued by the US government. They have a shorter time until they mature than long-term bonds. When a bond matures, the investor receives the amount due under its terms.
Short-term government bonds usually have less price movement than shares. They can therefore make the portfolio less dependent on the stock market. But they are not the same as a bank deposit, and their value and return can still be affected by interest rates, inflation and the way the investor buys or sells them.
The 10% part may give a portfolio some stability. Yet it may not be enough cash for a retiree who has high monthly costs or who needs to withdraw money during a long stock-market downturn. A person should plan for near-term spending separately.
5. Is the 90/10 mix a complete retirement income plan?
No. It is an investment allocation, not a full retirement income plan. It does not answer several important questions:
- How much money should you withdraw each month?
- How many years might your savings need to last?
- How much should you keep in a bank account for bills and emergencies?
- How will you pay for health care, housing and unexpected costs?
- What tax will apply when you sell investments or withdraw money?
- What will you do if the stock market falls soon after you retire?
These questions matter because a person who is still earning a salary may be able to wait through a market fall. A retiree who needs to sell investments to pay bills may not have that choice.
Before using any asset mix, work out your likely spending, reliable income, expected withdrawals, taxes and emergency needs. A financial plan should cover both investments and day-to-day cash needs.
6. The biggest risk: the stock market can fall
A portfolio with 90% in shares will be strongly affected by stock-market changes. The S&P 500 has had years with strong gains, but it has also had large declines. A low-cost index fund follows the index; it does not stop the index from falling.
For example, if the $90,000 stock portion in the earlier example fell by 30%, its value would drop to $63,000 before any later recovery. The $10,000 bond portion may help reduce the total fall, but it cannot prevent a large loss.
Some investors can accept this level of movement because they have a long time horizon and other sources of income. Others may find it too difficult to hold during a market crash. The right allocation must be one that a person can live with during bad markets, not only one that looks good in a spreadsheet.
7. What is sequence-of-returns risk?
Sequence-of-returns risk is the risk that poor investment returns happen early in retirement while a person is also taking money out of the portfolio.
Imagine two people retire with the same savings. Both experience the same average investment return over a long period. But one person faces a large market fall in the first few years and keeps withdrawing money for living costs. That person may have to sell more shares at low prices. Fewer shares remain when the market later recovers.
The second person may face the same weak years later, after the portfolio has had more time to grow. The final results can be very different even if the average return looks similar.
A cash or short-term bond reserve may reduce the need to sell shares during a downturn. But the 10% part of the 90/10 mix may not cover a long fall or a high withdrawal rate. Retirees should test a plan under several market conditions.
8. How does the 90/10 strategy compare with a 60/40 portfolio?
A 60/40 portfolio usually means 60% in shares and 40% in bonds. It has less stock-market exposure and more bonds than the 90/10 mix.
| Feature | 90/10 mix | 60/40 mix |
|---|---|---|
| Stock exposure | Very high | Lower than 90/10 |
| Bond exposure | Small | Much larger |
| Potential growth | More dependent on share-market returns | More balanced between shares and bonds |
| Market swings | Can be larger | May be smaller, but losses are still possible |
| Possible fit | People with a long time horizon and high risk tolerance | People who want a more balanced allocation |
Neither mix is best for everyone. A 60/40 portfolio can also lose money, and bonds do not always rise when shares fall. A 90/10 portfolio may be too risky for someone who needs regular withdrawals and cannot accept large losses.
9. What does Berkshire Hathaway’s cash position tell us?
Berkshire Hathaway’s own balance sheet is not the same as Buffett’s 90/10 plan for his wife’s trust. Berkshire is a large company with insurance, energy, rail, manufacturing and other businesses. Its cash needs are different from those of a retired household.
In its Form 10-Q for the quarter ended June 30, 2026, Berkshire reported that its insurance and other businesses held about $359.2 billion in cash, cash equivalents and US Treasury bills, after accounting for unsettled purchases. This is company liquidity, not a personal retirement portfolio.
Berkshire also announced on November 4, 2026 that its third-quarter earnings release and Form 10-Q would be posted on November 7, 2026, at about 7:00 AM Central Time. As of this article’s research date, November 5, that third-quarter report had not yet been released. New figures should be added only after the report is available.
10. Warren Buffett’s role at Berkshire Hathaway in 2026
Warren Buffett’s role changed in September 2026. Berkshire Hathaway announced on September 18 that Buffett had become Chairman Emeritus and would remain a member of the board of directors. The board elected Howard G. Buffett as Chairman of the Board.
This is important when reading older articles that call Warren Buffett the current chairman. Those pages may not reflect the September 2026 change. Buffett’s 2013 investment letter remains useful for understanding his view on low-cost investing, but the company’s leadership information should be read using the latest official announcement.
11. How can someone use the idea when planning for retirement?
The 90/10 mix can be a starting point for a discussion, but it should not replace a personal plan. Before choosing an allocation, consider these steps:
- List your regular costs. Include housing, food, health care, insurance, transport, taxes and family support.
- List reliable income. Include pensions, Social Security and other payments that you expect to receive.
- Work out the gap. Estimate how much money you may need to take from savings each year.
- Keep near-term money available. Set aside cash or suitable short-term holdings for bills and emergencies.
- Choose a risk level. Decide how much of your long-term savings can be exposed to stock-market losses.
- Check fees and taxes. Compare fund expenses, account costs and the tax rules for withdrawals.
- Write down a withdrawal plan. Decide how much you may take out and when you will review the amount.
- Set a review date. Review the plan when spending, health, income or family needs change.
Some retirees may need a larger cash or bond reserve. Others may have pensions or other income that allow them to hold more shares. The correct choice depends on the whole household, not only age.
12. Common mistakes when reading Buffett’s advice
- Calling it a rule for every retiree: Buffett described a specific trust arrangement. He did not publish a universal allocation for all households.
- Thinking it guarantees monthly income: The 90/10 mix does not set a safe withdrawal rate or promise a fixed payment.
- Assuming an index fund cannot fall: An S&P 500 fund can lose value when the share market declines.
- Confusing Berkshire’s cash with the 10% bond portion: Berkshire’s corporate cash holdings are not the same as the trust allocation Buffett described.
- Ignoring personal needs: Health costs, taxes, debt, family needs and income sources all affect the right plan.
- Focusing only on fees: Low costs matter, but the fund must also match the investor’s risk level and goals.
Frequently asked questions
What is Warren Buffett’s 90/10 rule?
It is a 90% low-cost S&P 500 index fund and 10% short-term US government bonds allocation that Buffett described in his 2013 letter as instructions for a trustee managing cash for his wife’s benefit.
Did Warren Buffett recommend the 90/10 mix to every retiree?
No. He described a specific trust arrangement. It should not be treated as a rule for every retiree or as a complete retirement plan.
Is 90% in stocks too risky for retirees?
It can be too risky for some retirees. A large stock-market fall can reduce the portfolio’s value, and withdrawals during a downturn can make recovery harder. The right mix depends on income, spending, time horizon and risk tolerance.
What goes into the 10% part?
Buffett referred to short-term government bonds. These are not the same as a long-term bond fund or a regular savings account. Investors should understand the product before buying it.
Did Buffett name VOO or SPY in the 2013 letter?
He referred to a very low-cost S&P 500 index fund and suggested Vanguard. He did not name VOO or SPY in that instruction.
Does the 90/10 mix protect against a market crash?
No. With 90% in shares, the portfolio can still fall sharply when the stock market falls. The 10% bond portion may reduce the effect, but it cannot remove the risk.
Is a 60/40 portfolio safer than 90/10?
A 60/40 portfolio has less stock exposure and more bonds, so it may have smaller swings in some market conditions. It can still lose money, and it is not guaranteed to be safer in every period.
Is Warren Buffett still Chairman of Berkshire Hathaway?
As of November 5, 2026, Berkshire’s September 18 announcement named Buffett Chairman Emeritus and said he would remain on the board. Howard G. Buffett was elected Chairman of the Board.
Should I copy Buffett’s portfolio?
Not without considering your own finances. The 90/10 idea may be useful to study, but your retirement plan should reflect your spending, income, taxes, health needs and ability to accept losses.
Conclusion: understand the idea before using it
Warren Buffett’s 90/10 strategy is simple: most of the money goes into a low-cost S&P 500 index fund, while a smaller part goes into short-term US government bonds. His 2013 letter described this mix for a specific trust. It was not a complete retirement income plan for every person.
The strategy has a high share allocation, so it can experience large market falls. It does not set monthly withdrawals, pay taxes or decide how much cash a retiree needs for bills. Those parts require a separate plan.
The main lesson is to keep costs low, understand risk and choose an allocation you can follow through both good and bad markets. Read Buffett’s original letter, check current financial information and speak with a qualified adviser before making decisions about your retirement savings.
Sources and important dates
- Berkshire Hathaway 2013 shareholder letter
- Berkshire Hathaway Form 10-Q for June 30, 2026
- Berkshire announcement: Buffett becomes Chairman Emeritus, September 18, 2026
- Berkshire notice: Third-quarter 2026 results release planned for November 7
- US TreasuryDirect: Treasury bills
Disclaimer
This article is for education and general information. It is not personal financial, tax or retirement advice. The 90/10 allocation may not fit your needs. Stock funds and bonds can lose value, and investment returns are not guaranteed. Speak with a qualified financial planner or tax professional before making decisions about retirement savings.
