Asset allocation should evolve as you age, but the question of how — and how fast — is full of outdated rules of thumb. "100 minus age in equity" was reasonable when retirement meant 10–15 years and conservative meant FDs at 4%. In 2026, with retirements lasting 25–35 years and bonds yielding less than they once did, the math has shifted.
Here's a 2026-aware framework, with three concrete templates by life stage.
What changed in 2026
- Life expectancy assumes longer retirement — a 65-year-old today is reasonably planning for living to 90+, which means a 25–30 year retirement. Equity is necessary for so long a horizon.
- Bond yields have settled to 4.0–5.0% — better than the 2020 floor, but still below historical 5–6%.
- Glide path research is mainstream — Wade Pfau's work on the "rising equity glide path" through retirement suggests that LOWER equity allocation in early retirement, gradually rising again, can reduce sequence-of-returns risk.
Three popular rules — pros and cons
100-minus-age (classic)
At age 30: 70% equity / 30% bonds. At age 60: 40% equity / 60% bonds.
Pro: simple. Con: too conservative for modern life expectancy. Most advisors now recommend 110- or 120-minus-age.
110-minus-age (modern updated)
At age 30: 80% equity. At age 60: 50% equity.
Pro: accounts for longer retirement. Con: still mechanical.
Bogleheads three-fund (target-based)
- 60% Total US Stock + 30% International Stock + 10% Bonds (aggressive, young)
- 50% / 25% / 25% (moderate, middle-age)
- 30% / 15% / 55% (conservative, near retirement)
Pro: captures asset diversification, not just stock-bond split. Con: requires more thought.
Practical templates by age
Age 25–35: aggressive accumulation
70–80% Equity (60% US / 20% International)
0–10% Bonds (or none)
5–10% Other (REITs, gold optional)
Rationale: 30+ year horizon, time for compound growth and recovery from drawdowns. Bonds add little when you're earning new contributions to fund opportunistic buying during dips.
Age 35–50: balanced accumulation
65–70% Equity (50% US / 20% International)
20–25% Bonds
5–10% Other
Rationale: peak earning years. Some bond allocation reduces volatility without significantly impacting expected return.
Age 50–65: pre-retirement
50–60% Equity (40% US / 15% International)
30–40% Bonds (mix of intermediate Treasury, TIPS, short-term)
5–10% Other (cash buffer if planning early retirement)
Rationale: protect what's been built. Sequence-of-returns risk peaks in the 5–10 years before retirement.
Age 65–75: early retirement
40–55% Equity
35–45% Bonds (laddered)
5–15% Cash / Money market (1–3 year spending buffer)
Rationale: drawdown phase begins. Cash buffer reduces forced selling during equity drawdowns.
Age 75+: late retirement
30–50% Equity
40–55% Bonds
5–15% Cash
Equity allocation depends on portfolio size relative to spending. If portfolio is multiples of annual spending, higher equity is fine.
Comparison: equity allocation by rule and age
| Age |
100-minus-age |
110-minus-age |
Modern target-date 2065 |
| 30 |
70% |
80% |
90% |
| 40 |
60% |
70% |
85% |
| 50 |
50% |
60% |
70% |
| 60 |
40% |
50% |
60% |
| 70 |
30% |
40% |
45% |
Most modern target-date funds run higher equity than the "100-minus-age" rule.
The rising-equity glide path (advanced)
Wade Pfau's research suggests that during retirement, an increasing equity allocation can reduce failure rates. Logic: the worst sequence-of-returns risk is concentrated in the first 10 years; if you start retirement with lower equity and gradually rise (e.g., 40% → 60% over 20 years), you mitigate the early-drawdown risk while still capturing equity growth in later years.
This is contrary to the typical "target-date glide path" which decreases equity through retirement. Implementing it requires more active management.
What most people get wrong
- Default-allocating into employer's target-date fund without checking the glide path. Some are too conservative for young investors.
- Treating "international" as 0%. US-only is concentrated. 20% international is the safer middle ground.
- Holding more cash than needed. A 6-month emergency fund is not part of asset allocation; it's separate. Don't double-count.
- Rebalancing to allocation but not updating the target as they age. A 35-year-old with a 70/30 allocation set at age 28 hasn't aged their portfolio.
FAQ
Should I include my home equity in asset allocation?
Generally no. Home equity is illiquid and serves a consumption purpose. Calculate allocation on liquid investable assets only.
What about pension or social security?
Treat expected pension/SS as a "bond equivalent" — it lets you hold higher equity in your liquid portfolio because you have predictable income elsewhere.
How often should I update my allocation?
Every 5 years, or after major life events (marriage, kids, job change, inheritance, etc.). Annual fine-tuning is usually unnecessary.
Where to go next
For related guides see Portfolio rebalancing guide for 2026, How to invest in stocks for beginners in 2026, and Retirement bucket strategy for 2026.