What’s the Best Asset Allocation for My Age?

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Saving for retirement is more sophisticated than stuffing money beneath the mattress. Just like you, your investment portfolio is a living, growing entity. As you age, the assets in your portfolio and the balance of cash, stocks, and bonds should change as well.

The prevailing wisdom used to be that the number 100 minus your age was how much of your portfolio should reside in stocks. For instance, at age 50, 50 percent of your investments should be in stocks. At 65, it should drop to 35 percent. The idea was that dynamic investments like stocks should do the hard work of building wealth while you’re younger so that, as you age, you have more certainty.

What changed? Simply put, we started living longer. With more years of retirement to save up for, stocks need to work harder and longer to provide for those extended golden years. Cross out 100 and think higher—perhaps as high as 120. As investment strategies have gotten more specific, there’s more to asset allocation now than a little napkin math. Take some time to explore some of the avenues for retirement investment and determine the best asset allocation for your age.

Risk Tolerance

Before planning the trajectory of your portfolio, consider your risk tolerance—your ability or willingness to risk money in the market. Some people may be naturally risk-averse or, due to circumstances, would not be able to weather a hit to their portfolio if worse came to worst. If you cannot stomach high levels of risk, don’t feel ashamed to reduce your commitment to stocks and increase your commitment to bonds. The lower ceiling and higher floor will be reassuring—the last thing you want is to panic and sell low.

Thirties and Forties

It’s best to start building up early. By this new “rule of 120,” you should have as much as 80 percent of your retirement in stocks, with only a small portion of your portfolio devoted to low-risk investments. Now is the time to invest freely and diversely, with stocks across numerous industries. A mutual fund is an excellent way to diversify effortlessly.


As you age and lose some taste for the risk of stocks, cash can be a smart addition to your retirement portfolio. The IRS has updated contribution limits for 2021, which affect how much money you can place in your IRA or 401(k). By your fifties, cash and bonds should make up between 50 and 70 percent of your portfolio, depending on your risk tolerance.


As you near retirement, you’ll want to reduce risk. Your sixties are the time to begin winding down your stocks and replacing them with safer bets, such as bonds and securities. Treasury bills and fixed-income securities provide lower returns on investment, but they come with much less risk than stocks. By age 65, your portfolio should be well-diversified, with no more than 55 percent of your retirement assets in the stock market. However, throughout your investment journey, don’t hesitate to consult with advisors to find not only the best asset allocation for your age but also the best for you personally.

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