The Rule That Is Slowly Bankrupting Retirees
When the '100 minus age' rule was coined in 1960, life expectancy was 70 years — a 65-year-old needed 5 years of retirement income. A 65-year-old couple today has a 50% probability that at least one will live to 92. Vanguard research shows a 60/40 portfolio underperforms 80/20 by 1.2% annually over 30 years, compounding to approximately 43% less wealth. The rule is not just outdated — it is dangerous.
The Evidence-Based Glide Path
Your 20s (90-100% equities): A $10,000 investment at 25 becomes $217,000 at 65 at 8% annualized. The same $10,000 at 35 becomes $100,000 — 54% less. Bonds in your 20s add drag, not protection. Morningstar 2023: investors in 90%+ equity target-date funds outperformed age-blended peers by 1.8% annually over the prior decade.
Your 30s (80-90% equities): The allocation shift is minimal. Priority at this stage: max 401(k), IRA, and HSA. The return on tax-advantaged space exceeds any allocation optimization available to you.
Your 40s (70-80% equities): Sequence-of-returns risk begins to matter. A 40% drawdown in your mid-40s reduces your compounding window. Updated formula: 110 minus age as equity percentage. At 45: 65% equities.
Your 50s (60% shifting to 50% equities): The glide path accelerates. 2025 IRS catch-up limits: $8,000 IRA, $31,000 401(k) for age 50+. Stress-test: if markets drop 35% the year before you retire, can you absorb it? If not, your equity allocation is too high.
At Retirement — The Bucket Strategy: Bucket 1 (2 years cash/money market), Bucket 2 (5 years bonds and CDs), Bucket 3 (remainder in equities). Morningstar 2021: the bucket strategy reduces portfolio failure rates 12% vs. static 60/40 withdrawal over 30-year retirements.
WealthWise OS investment calculator models your full portfolio glide path by decade and projects wealth outcomes at every allocation. Run your model at wealthwiseos.com.