What Is a Glide Path?
A glide path is a plan for how your asset allocation shifts over time — typically moving from aggressive (mostly stocks) when young to conservative (more bonds) as you approach and enter retirement.
Think of it like an airplane landing: you start at high altitude (high risk, high potential return) and gradually descend to ground level (lower risk, capital preservation) as you approach your destination (retirement).
Why Your Allocation Should Change
When You're Young (20s–30s)
- Time horizon: 30–40 years — you can ride out multiple market crashes
- Human capital is high — your future earning potential is your biggest asset
- Recommended: 80–100% stocks — maximize growth when time is your ally
In Your Peak Earning Years (40s–50s)
- Time horizon: 15–25 years — still long, but crashes take longer to recover
- Savings rate matters most — you're in your highest-contribution years
- Recommended: 60–80% stocks — begin shifting toward stability
Approaching Retirement (55–65)
- Time horizon: 5–10 years — a 40% crash right before retirement is devastating
- Sequence-of-returns risk — early losses compound negatively when you're withdrawing
- Recommended: 40–60% stocks — protect what you've built
In Retirement (65+)
- Time horizon: 20–30 years — you still need growth to outpace inflation!
- Income needs — bonds provide more predictable income
- Recommended: 30–50% stocks — don't go too conservative; inflation is the silent killer
Common Rules of Thumb
The "110 Minus Age" Rule
Stock allocation = 110 − your age
- Age 30 → 80% stocks
- Age 50 → 60% stocks
- Age 70 → 40% stocks
This is a simple starting point but doesn't account for personal risk tolerance or financial situation.
Target-Date Funds
These mutual funds automatically adjust your allocation along a predetermined glide path. If you plan to retire around 2060, a "Target 2060" fund starts aggressive and gets more conservative as 2060 approaches.
Pros: Set-it-and-forget-it simplicity Cons: One-size-fits-all, may not match your specific needs
"To" vs "Through" Retirement Glide Paths
This is an important distinction:
- "To" retirement: Reaches its most conservative allocation at retirement and stays there
- "Through" retirement: Continues to adjust for 10–15 years after retirement
Most target-date fund providers (Vanguard, Fidelity) use "through" glide paths, recognizing that retirement can last 30+ years and you still need growth.
Building Your Own Glide Path
If you prefer DIY over target-date funds:
- Determine your starting allocation based on age and risk tolerance
- Set your retirement allocation — typically 40–50% stocks at retirement age
- Calculate the annual shift — if you're 30 with 90% stocks targeting 50% at age 65, that's roughly a 1.1% shift per year
- Rebalance annually — sell what's overweight, buy what's underweight
- Use tax-advantaged accounts for rebalancing to avoid capital gains taxes
Don't Let Fear Drive Your Allocation
The biggest risk for young investors isn't a market crash — it's being too conservative. A 25-year-old with 50% bonds is leaving massive returns on the table. Over 40 years, the difference between 90% stocks and 50% stocks can be hundreds of thousands of dollars.
Conversely, a 62-year-old with 100% stocks is taking unnecessary risk when they need that money in 3 years.
Key Takeaway
Your ideal portfolio isn't static — it should evolve as you age. Start aggressive when time is on your side, gradually shift toward bonds as retirement approaches, but never go fully conservative. A well-planned glide path balances growth with protection throughout your entire financial life.