Investing
Asset Allocation by Age: The Updated Rules for a Longer Retirement
The old '100 minus your age' rule was designed for 65-year-old retirees who lived to 75. Updated for 2026 longevity and rate environments, the rule should now be closer to 120 minus your age.
6 min read
Quick answer
The traditional '100 minus your age' stock allocation rule — 60% stocks at age 40 — was calibrated for shorter retirements. Updated for 30–40 year retirement horizons and better bond alternatives, most financial planners now recommend '110 or 120 minus your age' as a starting point: 80% stocks at 40, gradually reducing to 50–60% at 65. At 2026 interest rate levels, bonds offer meaningfully better yields than 2020–2021, restoring their role as both an inflation hedge and income source in retirement portfolios.
Written by
Morgan Lee
WorkAINow financial planning editor
Reviewed and updated
May 2026 • 6 min read
Corrections
hello@workainow.comWhy the old rule is obsolete
The '100 minus your age' rule — allocate that percentage to stocks, the rest to bonds — was designed in an era when average retirement lasted 10–15 years. A 65-year-old in 1970 had a life expectancy that made a heavily bond-weighted portfolio sensible. Today, a healthy 65-year-old has a substantial probability of living past 85 or 90 — a retirement lasting 20–30 years.
A 30-year retirement requires growth. A portfolio that is 35% stocks and 65% bonds at age 65 (per the original rule) may not grow enough to outpace inflation over three decades, leaving a retiree potentially depleted in their late 80s. The risk of running out of money has become as important as the risk of portfolio volatility.
Additionally, the near-zero interest rate environment of 2010–2021 eliminated much of the bond allocation's income-producing function. Holding large bond allocations at 1–2% yields meant accepting inflation losses with little compensation. In 2026, with short-term Treasury yields at 4–5%, bonds are a meaningfully different asset class than they were five years ago.
The updated framework: 120 minus your age
A more appropriate starting point for modern asset allocation is '120 minus your age' — reflecting extended lifespans and the improved bond environment. At age 30, this suggests 90% stocks, 10% bonds. At 50, roughly 70% stocks, 30% bonds. At 65, approximately 55% stocks, 45% bonds. At 75, 45% stocks, 55% bonds.
These are starting points, not prescriptions. The right allocation depends heavily on: your risk tolerance (can you watch a 30% portfolio decline without selling?), your income sources in retirement (Social Security and pensions reduce the dependence on portfolio withdrawals), your specific FIRE or retirement timeline, and whether you have a short-term cash reserve that prevents forced selling during downturns.
Target date funds — available in most 401(k) plans — automate the glide path by gradually shifting from stocks to bonds as the target retirement year approaches. For passive investors who want simplicity, a target date fund near their expected retirement year provides professionally managed allocation without active decisions.
Bonds in 2026: what changed
In 2020–2021, the 10-year Treasury yield fell below 1%. At those levels, holding bonds provided stability but minimal return — barely enough to offset inflation. The argument for large bond allocations became difficult to make.
In 2026, the yield picture is different. Short-to-intermediate Treasury bonds yield approximately 4–5%. A 10-year Treasury purchased in 2026 at 4.5% locks in that return for a decade — meaningfully above the long-run inflation estimate of 2–3%. This restores bonds' role as a genuine income-producing asset within a retirement portfolio.
For retirees and near-retirees, the 2026 bond environment means the defensive portion of the portfolio is actually defensive again — providing income while equity volatility plays out. The case for maintaining meaningful bond exposure in portfolios at or near retirement is stronger in 2026 than it was at any point in the previous decade.