The Rising Equity Glidepath: Why You Should Buy More Stocks at Age 80
The Rising Equity Glidepath: Why You Should Buy More Stocks at Age 80
EXECUTIVE SUMMARY
- The Conventional Wisdom: “Own your age in bonds.” As you get older, you should become more conservative (reduce stocks, increase bonds) to preserve capital. This is called a “Declining Equity Glidepath.”
- The Research Failure: This advice ignores Sequence of Returns Risk. The most dangerous time for a retiree is the first 10 years (The Fragile Decade). Being heavy in stocks before retirement is good, but being heavy in stocks at the moment of retirement is risky.
- The Solution: The Rising Equity Glidepath. You start retirement conservatively (e.g., 30% Stocks) to survive the early years, then systematically increase your stock allocation (to 60% or 70%) as you age. This combats inflation and longevity risk better than bonds.
Wall Street tells you to de-risk as you age. The math says the opposite. Once you survive the first decade of retirement without a crash depleting your portfolio, your biggest enemy shifts from “Market Risk” to “Inflation Risk.” Bonds cannot fight inflation; only stocks can. According to Team BMT Analysis, a rising glidepath is the most scientifically robust way to navigate the “Red Zone” of retirement. Source: Kitces.com / Wade Pfau Research
Scenario: You retire at 65 with $2M.
- Phase 1 (The Shield): At Age 65, you drop to 30% Stocks / 70% Bonds.
Why? If the market crashes -50% the day you retire, your portfolio only drops -15%. You avoid the “Sequence of Returns” death spiral. - Phase 2 (The Rise): Every month, you sell bonds to buy stocks (or just spend the bonds).
Trajectory: By Age 85, you are back to 60% Stocks / 40% Bonds.
Why? You need growth to pay for a nursing home at 90. Your “time horizon” is effectively shorter, so the volatility matters less once the early danger zone is passed.
BMT Verdict: The “100 minus Age” rule for stock allocation is obsolete. It creates a portfolio that is safest when you die (100% bonds) but riskiest when you retire (high stocks). The Rising Glidepath aligns risk capacity with risk reality. It is counter-intuitive, but it is correct.
Monte Carlo Success Probability
| Strategy | Portfolio Survival Rate (30 Years) | Median Terminal Wealth |
|---|---|---|
| Static 60/40 Portfolio | 85 | 1500000 |
| Declining Glidepath (60% -> 30%) | 78 | 1100000 |
| Rising Glidepath (30% -> 60%) | 95 | 2100000 |
*Chart Note: The Rising Glidepath wins on both counts: Safety (Success Rate) and Legacy (Terminal Wealth). By reducing risk when the portfolio is most vulnerable (at the start), you secure the endgame.
“But isn’t it scary to hold 70% stocks at age 85?” No. By age 85, your time horizon is short, but your legacy’s time horizon is long. More importantly, if you have survived to 85 without running out of money, you have “won” the game. You can afford the volatility. The risk was running out of money at 75, which the low-stock start prevented.
CRITICAL SCENARIO: The “Valuation” Context
When does this matter most?
| Market Condition at Retirement | Strategy Impact |
|---|---|
| Low Valuations (PE < 15) | Neutral. If stocks are cheap, holding high stocks (Static 60/40) is fine. A crash is unlikely. |
| High Valuations (PE > 25) | Critical. If you retire during a bubble (like 2000 or 2024), a Declining Glidepath destroys you. A Rising Glidepath (starting low equity) saves you from the inevitable correction. |
Execution Protocol
5 years before retirement, stop reinvesting dividends into stocks. Direct all new contributions to Bonds/Cash.
Goal: Reach retirement day with a 40/60 or 30/70 allocation (Stock/Bond). This is your shield.
In retirement, pay your bills by selling Bonds (or spending the cash). Do not touch the Stocks.
Math: As you deplete the bonds, the percentage of your portfolio in stocks naturally rises. This is a “Passive Rising Glidepath.”
If stocks boom and you hit your target (e.g., 60%) too early, rebalance back down. But generally, let the equity drift upward to capture the long-term risk premium.
This strategy requires ignoring standard “Risk Tolerance Questionnaires” that tell old people to sell stocks. It requires adherence to mathematical safety over emotional comfort.
WEALTH STRATEGY DIRECTIVE
- Do This: View your asset allocation as a U-shape over your lifetime. High stocks in accumulation, low stocks at retirement date, high stocks in late retirement.
- Avoid This: Buying a “Target Date Retirement Fund” for your post-retirement accounts. These funds mechanically sell stocks as you age, which is the exact opposite of what the research suggests for portfolio survival.
Frequently Asked Questions
What if I live to 105?
That is exactly why you need a Rising Glidepath. Bonds lose value to inflation over 40 years. Stocks maintain purchasing power. The longer you live, the more stocks you need, not less.
Is this market timing?
No. It is “Risk Management.” You are managing the specific risk of a market crash occurring while you are withdrawing money (Sequence Risk). You are minimizing exposure during the most fragile window.
Does this work with SPIA?
Yes. An immediate annuity (SPIA) acts like a super-bond. If you have a SPIA covering your expenses, the rest of your portfolio can be 100% stocks immediately, skipping the glidepath entirely.