What stock-to-bond ratio should I have in retirement?
Most retirement research supports a 50–70% stock allocation in early retirement, not the old rule of 100 minus your age. Kitces and Pfau found that a rising equity glide path — starting at 50% stocks and increasing over time — outperforms static or declining equity allocations for retirees facing sequence-of-returns risk.
Formula
Starting Stock % = 110 minus Age (as a rough baseline); adjust down 10–20 points if you lack spending flexibility, up 10–20 points if you can cut spending in down years
Example
A 60-year-old retiring with $1,500,000 and no pension might start at 50% stocks ($750,000) and 50% bonds ($750,000). By age 70, with Social Security covering baseline expenses, they shift to 65% stocks to restore long-term growth. This rising glide path reduces catastrophic failure risk by roughly 10–15 percentage points vs. starting at 80% stocks.
How it works in detail
The conventional wisdom of 100 minus your age (e.g., hold 35% stocks at age 65) has been largely refuted by modern retirement research. Wade Pfau and Michael Kitces showed in a 2014 paper that retirees who start with a lower stock allocation and gradually increase it — a 'rising equity glide path' — have better portfolio survival rates than those who start heavy in stocks and dial back. The reasoning is sequence-of-returns risk: a major market drop in the first five years of retirement is catastrophic because you're selling shares at depressed prices to fund living expenses. By holding more bonds early, you draw from the stable asset first, giving equities time to recover. Then as the danger window passes, you shift back toward growth. For early retirees with 40+ year horizons, Pfau's research suggests starting at 40–50% stocks, then rising toward 60–70% by years 10–15. For traditional retirees (30-year horizon), starting at 50–60% stocks is well-supported by the Trinity Study data. A pure 100% stock portfolio maximizes median outcomes but dramatically increases the probability of catastrophic failure in bad-sequence scenarios. Match your allocation to your spending flexibility, not just your age.
Related Questions
What is the right asset allocation (stocks vs bonds) by age?
A common starting rule: hold your age in bonds (30 years old = 30% bonds, 70% stocks). But modern research suggests more aggressive: 110 minus your age in stocks. A 35-year-old with 30+ years to retirement should hold 75–90% stocks. Reduce to 50–60% stocks by retirement age.
What is a glide path in retirement?
A retirement glide path is the planned shift from higher-risk (stocks) to lower-risk (bonds/cash) investments as you age, typically moving 1–2% out of equities per year. Target-date funds automate this, usually landing at 40–60% stocks at retirement and continuing to de-risk for 20–30 years afterward.
How much of my portfolio should be in bonds when I retire?
Most retirement research supports holding 30%–50% bonds in early retirement to buffer sequence-of-returns risk, with a common starting point of 40% bonds at age 65. However, early retirees (40s–50s) often hold 20%–30% bonds given longer growth horizons. The right allocation depends on your withdrawal rate, spending flexibility, and other income sources.
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