Hold more in shares when you are young, less as you approach retirement. That is life-stage investing in one line, and the idea is sound. The problem is that the version you find in most articles is far more cautious than what the pension industry does with its own money, and it fixates on the lever that matters least. Most people never change their allocation at all. Far fewer collect the money their employer and their tax system are already holding out for them.
Inside this article:
TL;DR
Treat these as a guide rather than a target. Investments are risks and you should take professional advice before investing.
- 20s and 30s: 80-90% in shares, very little in bonds, cash reserved for an emergency fund. Contribute at least enough to collect every unit of employer money on offer. Most likely to be wrong: how much you put in.
- 40s and 50s: ease from 80-90% toward 70-75%, phasing bonds in from around 40. Raise your contribution with every pay rise and take the larger allowances that open in your fifties. Most likely to be wrong: nobody has looked at any of it in ten years.
- From 55: between 50% and 65% in shares, with two or three years of planned spending held in cash and short-dated bonds. Most likely to be wrong: cutting growth too hard, too soon.
One principle sits above all of it. Employer matching and government contributions are among the most valuable guaranteed sources of additional retirement capital available to many savers. Then find out whether your money sits in something that adjusts itself as you age or something you chose once and forgot about, because that changes what you do next. Professionals are still arguing about the rest.
1. What is Life-Stage Investing
This is a question about your earnings, not your nerves.
Life-stage investing adjusts how much risk your portfolio carries as you get older. Most explanations put that down to falling risk tolerance, as though we all grow twitchier with age. That is not really what is going on.
The proper argument was set out by Roger Ibbotson, Moshe Milevsky and colleagues in Lifetime Financial Advice [3]. It turns on human capital, meaning the value of all the income you have not earned yet.
- At 25 your future earnings are by far the largest asset you own. In the authors’ worked example they account for 94% of total wealth, and they behave much like a bond, arriving steadily month after month
- Because that stable asset dominates, their model puts the whole of the much smaller financial portfolio into shares
- By 60 most of that human capital has been converted into savings and spent. With less ballast underneath you, the portfolio has to supply it
There is a consequence here that almost nobody mentions. If your income is unstable, commission-based or tied to one volatile industry, your human capital is not remotely bond-like, and you probably belong a step more conservative than your age alone suggests. A 35-year-old contractor and a 35-year-old public servant are not the same case.
Allocation is the third lever, not the first
Two things come before it, and neither is an investment return. They are transfers, and they are free.
The employer contribution. Look at where the money in a pension actually comes from. In the United Kingdom, of every 100 units going into a workplace pension for an eligible saver in 2025, 27 came from the employee, 61 from the employer and 12 from tax relief [2]. Just over a quarter of the pot was the saver’s own money. The rest was other people’s, available on condition of showing up and not opting out.
That pattern repeats across systems, under different names and different rules:
| Where | What somebody else adds |
|---|---|
| Australia | Superannuation Guarantee of 12% of ordinary earnings, paid by the employer, since July 2025 [4] |
| Singapore | CPF employer contribution of 17% for workers aged 55 and under [4] |
| United Kingdom | Automatic enrolment minimum of 8% total, of which the employer pays at least 3% [2] |
| New Zealand | Compulsory employer contribution of 3.5% from April 2026, plus a government top-up of 25 cents per dollar you contribute, up to an annual cap [4] |
| Ireland | Auto-enrolment from January 2026: employer 1.5%, and the State adds one euro for every three the employee puts in [4] |
| Canada | Employers funded 55.9% of everything paid into registered pension plans in 2024 [5] |
The tax wrapper. Using an available tax-advantaged wrapper can reduce or defer taxation on investment returns, although the rules, limits and costs vary by country and account.
Still working out where to begin? Start with the beginner’s route into investing rather than with a percentage.
Key Takeaway: Your allocation should track how secure your income is, not just your age. Free money outranks both.
2. Early Career (20s and 30s)
Your contribution rate matters more than your allocation, and the free money matters more than either.
What has happened historically
The long-run case for shares is not a US story dressed up as a universal one. Across a global dataset covering 35 markets since 1900, equities were the best-performing asset class in all 21 countries with continuous records, and bonds beat cash everywhere except Portugal [1].
The world numbers, rather than any single country’s, are the ones to hold onto. Over the 125 years to the end of 2024, worldwide equities returned 5.2% a year in real terms against 1.7% for bonds and 0.5% for cash [1]. Stretch that gap across a forty-year working life and it becomes most of your eventual outcome.
That does not promise the next forty years will resemble the last hundred and twenty. It does suggest that sitting out, or being barely in, has cost people more historically than riding out a bad decade.
What the data says
The picture across workplace schemes is not one of young people taking too much risk. It is people leaving money on the table and never noticing.
- In the United Kingdom, 10% of eligible employees, around 2.5 million people, were not saving into a workplace pension at all in 2025, and opt-outs among new savers have risen to 11 to 12% [2]
- Participation splits sharply by employer size: 55% at employers with fewer than five staff, against 91% at employers with 50 to 249 [2]
- In Canada, only 37.6% of paid workers are covered by a registered pension plan of any kind [5]
- In New Zealand, the government top-up is worth 25 cents on every dollar contributed up to an annual cap, which is a 25% instant return before the money is invested in anything [4]
A default contribution rate is set low enough that nobody opts out. It was never designed to fund a retirement, but left alone it becomes your plan.
What the experts say
Nobody in the industry thinks a 25-year-old should be cautious. The median target-date fund holds 93% in shares for savers 45 years from retirement, up from 89% a decade ago [6]. Lifecycle defaults in the UK, Australia and New Zealand go by different names and different rules, but the shape is the same: heavily weighted to growth assets early, easing later.
They also assume you are properly spread across the world, which most people are not. Measured against each country’s weight in global equity markets, domestic holdings run at roughly 30 times index weight for Australian investors, 17 times for Canadians and 5 times for the British [7]. Australia is around 2% of global market capitalisation. Betting on one country’s next thirty years is a great deal of concentration to carry without having decided to.
What you can consider
- Find the threshold, not the default. If your employer matches up to 6% and you were enrolled at 4%, you are turning down a pay rise. Take two colleagues on identical salaries: one contributes at the default, one at the threshold. Nothing about their investment skill differs. One of them simply gets more money paid in, every month, for their whole career
- Raise the rate one point today, then again in six months. You will not feel either one
- Build the emergency fund first. Three to six months of expenses, in cash, dull and untouched. Investing while one large unexpected bill away from having to sell is not really investing
- Then leave the allocation alone. The 90% is probably right already
The money decisions that matter most in your twenties and thirties sit alongside this one.
Key Takeaway: In your twenties and thirties the default fund is probably right and the default contribution rate is not.
3. Mid-Career (40s and 50s)
This is when the glide path should start, and when almost nobody touches anything.
What has happened historically
Portfolios do not stay where you put them. A 60/40 portfolio left completely alone from December 1989 to December 2021 would have drifted to roughly 80% in shares [8]. Nobody sat down and decided to take that extra risk. It accumulated across three decades of rising markets and then showed up when the market next fell.
Doing nothing is not the neutral option people assume. It is a slow decision to become more aggressive at exactly the point when your capacity for risk is falling.
What the data says
Two costs show up in this decade, and both are quiet.
The first is behavioural. Morningstar measured the gap between what funds returned and what their investors actually earned across six countries, and every one of them showed a shortfall: 0.32 percentage points a year in the United Kingdom, 0.40 in Australia, 0.51 in Singapore, 0.53 in Hong Kong, 0.73 in Ireland and 0.82 in Luxembourg [9]. The money moved in and out at the wrong moments.
The second is cost. The asset-weighted average target-date fund charges 27 basis points a year, while the cheapest options run as low as 4 [6]. A gap of roughly a fifth of a percentage point sounds trivial and is not. It compounds against you every year, for decades, with no offsetting benefit.
Both are worth more attention than the allocation argument this article is nominally about.
What the experts say
The industry does start reducing risk around here, though from a much higher base than most published rules suggest. One widely used glide path holds 90% in shares into the late thirties before easing to 67.6% by 56 [10]. Still two-thirds in shares at an age when the popular rules would have you near half.
Providers also disagree with each other more than they let on. The gap in equity exposure between the most aggressive and the most conservative target-date series was still 34 percentage points in 2025 [6]. Same investor, same age, wildly different answers.
What you can consider
- Treat every pay rise as a fork. Lifestyle creep is the expensive bias of this decade. The rise lands, your spending absorbs it within weeks, and your contribution rate falls as a share of what you now earn. Set the increase up on the day the rise takes effect, before the money reaches your account
- Check what opens in your fifties. Most systems allow larger contributions or catch-up allowances from around 50, and unused allowance is free money you are choosing not to take
- Establish which camp you are in: a fund that adjusts for you, or funds you chose yourself. If the second, put one annual rebalancing date in the calendar and keep it
- Look up what you are paying. It takes ten minutes and it is the only lever here with a guaranteed effect
The habits that quietly build wealth in this decade matter more here than any percentage, and the wider plan for each life stage puts the portfolio in context.
Key Takeaway: Doing nothing is either the whole strategy or the whole problem, depending on what you are holding.
4. Pre-Retirement (55 and Over)
Reduce risk gradually, and less far than you have probably been told.
What has happened historically
This is where simple age-based rules become least useful. “100 minus your age” would put a 60-year-old at 40% in shares, which may be too conservative for a retirement that could last 25 years or more. Your allocation should reflect your income security, savings and time horizon, not age alone.
William Bengen’s analysis of US data found that a 4% inflation-adjusted withdrawal survived every 30-year period he tested, with 50–75% stocks producing strong historical results [11]. That is evidence, not a universal prescription: his study used US data and a specific withdrawal strategy.
The lesson is simple: retirement still needs growth. The right balance between shares and safer assets depends on how long your money needs to last and how much risk your circumstances can support.
What the data says
A portfolio at this stage has to last longer than the old rules assumed. In the United States, for example, someone reaching 65 in 1990 could expect around 17.8 more years, while someone reaching 65 in 2026 can expect around 20.6 [12]. Most developed countries have seen a similar lengthening.
Two decades of spending still needs growth behind it. At this stage inflation, not volatility, does the quiet damage.
What the experts say
Most providers land between 40% and 55% in shares at the retirement date, and one widely used series holds 50% at 65 before settling at a 30% floor seven years later [10]. Bengen’s historical work lands higher, at 50% to 75%. Almost every published rule of thumb sits below both, because it was written for a shorter retirement and a much higher bond yield.
What you can consider
The real danger here is sequence risk, a grand name for a simple problem. A bad market in the first years of drawing an income does lasting damage, because you are selling to live on while prices are down.
- Move gradually rather than making one large change on your retirement date
- Hold 24-36 month of planned spendings in cash or bonds. This one possible way to manage sequence risk by holding cash and short-duration bonds.
- Collect what is still on offer. Catch-up contributions, unused allowances and any employer contribution on a scheme you are still paying into stay live until the day you stop working. Old pots left with former employers are worth tracing for the same reason
- Work out your first three years of withdrawals before touching the allocation
Please note: the percentages here are general education, not personal advice, and pension rules differ substantially between countries. Decisions this close to retirement carry real consequences, and a fee-only adviser acting in your interest is worth paying for. The financial side of major life transitions is worth reading alongside this.
Key Takeaway: Retirement is a start date, not an end date. Most people need real growth well into their seventies.
5. What to Hold at Each Stage
A starting framework rather than a prescription. Income stability, existing pension provision and time horizon should all push you off these numbers. The core holding is the same throughout: a broad, low-cost global index fund.
| 20s and 30s | 40s and 50s | 55 and over | |
|---|---|---|---|
| Shares (indicative) | Around 90% | 90% easing toward 70% | Around 50% to 65% |
| Bonds | Minimal | Phased in from around 40 | Meaningful share, mostly shorter-dated |
| Cash | Emergency fund only | Emergency fund only | Emergency fund plus two to three years of withdrawals |
| Free money to collect | Every unit of employer contribution; the tax wrapper you already have | The same, escalating with every rise; allowances opening at 50 | Employer money while still working; catch-up allowances; trace old pots |
| Main risk | Contributing too little | Never adjusting anything | Cutting growth too far, too early |
| What moves the needle | Contribution rate and charges | Contribution rate and charges | Withdrawal plan |
If the holdings themselves are the unfamiliar part, what shares and bonds actually do is the place to start.
Key Takeaway: Find the column for your stage, compare it to what you actually hold, and change one thing this week.
6. Where the Experts Disagree
There is no single correct number, and anyone who tells you otherwise is guessing confidently.
Almost every guide prints an allocation table as though it were the output of a calculation. It is closer to a considered opinion, and the industry’s own numbers show it: the most aggressive and most conservative target-date series were still 34 percentage points apart on equity exposure in 2025 [6]. Three serious positions are in play.
- The standard view. Equity exposure should fall with age, because human capital does [3]. Nearly every lifecycle default in the world is built on this.
- It should rise instead. Wade Pfau and Michael Kitces found that under a 4% withdrawal rate over 30 years, a portfolio held steady at 60% in shares had a 93.2% success rate, while one starting at 30% and rising to 70% reached 95.1%, at a lower average equity exposure [13].
- It should never fall at all. Aizhan Anarkulova, Scott Cederburg and Michael O’Doherty ran the question across 39 developed countries from 1890 to 2023, precisely because single-country samples “suffer from both survivor bias and easy data bias”. Their answer: “approximately one-third domestic stocks and two-thirds international stocks at all ages, with virtually no fixed income allocation”, and target-date investors would need 63% more pre-retirement savings to match it [14].
Both challenges are contested, and neither is an argument for abandoning bonds. The all-equity result assumes someone who never panics, never cuts contributions in a difficult year, and holds two-thirds of their wealth overseas for seventy years without flinching. Very few people are that person. An allocation you can hold through a 40% fall will beat a theoretically optimal one you abandon in month four.
Key Takeaway: Choose from a sensible range rather than hunting a perfect number. The plan you can hold wins.
The Path Forward
The title of this piece promises to say what should not change, so here it is. Three things hold at every age: collect every unit of free money on offer, keep the contribution rate climbing, and stay invested when markets fall. Only the allocation moves, and it moves slowly. Small, consistent financial habits compound into lasting wealth, and the largest single jump in that compounding is one somebody else is already paying for.
- Collect the free money. Find the threshold at which your employer or government stops adding to your contributions, and get to it this week. It is the only guaranteed return you will ever be offered.
- Check the wrapper and the charges. Confirm your money sits in the most tax-efficient account available to you, and find out what you are paying each year.
- Raise the contribution rate by one point. Then again in six months, and every time you get a rise.
- Establish what you are actually in. A lifecycle default adjusts for you. Funds you picked yourself do not. If it is the second, set one annual rebalancing date.
- Only revisit the target when something real changes, meaning your income stability, your timeline, or your ability to sleep during a downturn. Not when the news changes.
This article is for financial education and awareness. Investments are risks, nothing is guaranteed and you should seek professional advice before considering making any long-term investments.
Frequently Asked Questions
What percentage of my portfolio should be in shares at my age?
As a starting point, around 90% in your twenties and thirties, easing toward 70% through your forties and fifties, and 50% to 65% from your late fifties. For comparison, the median target-date fund holds 93% in shares for savers 45 years from retirement, and widely used series hold roughly two-thirds at 56 and half at 65. Adjust downward if your income is unstable.
Is collecting the full employer contribution important?
Yes, and it is not close. It is a guaranteed, immediate return on money you were going to save anyway. Look at where pension money actually comes from: in the United Kingdom, of every 100 units paid into a workplace pension, only 27 came from the employee, with 61 from the employer and 12 from tax relief. No allocation decision produces anything comparable.
Is the "100 minus your age" rule still useful?
Only as a rough floor, and a low one. It was designed when retirements were shorter and bond yields were higher. It would put a 60-year-old at 40% in shares, below what most providers use and below the 50% to 75% range that William Bengen’s testing of every 30-year retirement window since 1926 supported. Versions using 110 or 120 minus your age sit closer to current practice.
Should I move everything into bonds when I retire?
No. Retirement can last twenty years or more, so the portfolio still needs growth to keep pace with inflation. A gradual reduction, combined with holding two or three years of planned spending in cash and short-dated bonds, deals with sequence risk far better than a wholesale switch. And 2022 was a reminder that bonds are not a guarantee against loss, since shares and bonds fell together that year.
Do lifecycle or target-date funds do this for me?
Yes, that is exactly what they are designed for, and most workplace savers are already in one without having chosen it. They go by different names in different countries, from target-date funds to lifestyling to MySuper lifecycle options. Do check which one you hold, what its glide path is and what it charges, because all three vary a great deal between providers.
Related Articles
Financial Planning Milestones: From Career to Retirement
The full financial plan for each life stage, beyond the portfolio.
The Long Game: Why Time Is Your Best Investment Strategy
Why staying invested beats adjusting your allocation.
The Psychology of Investing: Overcoming Emotional Biases
The behaviour that decides whether any allocation actually works.
How to Build an Emergency Fund: The Key to Financial Security
The cash that should stay cash.
Investment Accounts Explained: A User-Friendly Guide for Beginners
Which account to hold your allocation inside.
Further Reading
“The Psychology of Money” by Morgan Housel
A practical look at how emotions, habits, and behavior influence financial decisions.
“The Automatic Millionaire” by David Bach
A straightforward approach to building wealth through automated saving and investing.
“The Simple Path to Wealth” by J.L. Collins
A clear introduction to financial independence, index investing, and building long-term wealth.
“The Little Book of Common Sense Investing” by John C. Bogle
A simple guide to low-cost index fund investing and long-term wealth building.
“Die With Zero” by Bill Perkins
A different perspective on wealth, encouraging you to use your money to create meaningful experiences.
Important Disclaimer:
This content is provided for educational and informational purposes only and should not be considered financial, legal, or tax advice. It is intended to help build general financial knowledge and a framework for thinking about personal finance topics such as budgeting, saving, emergency funds, goal-setting, investing, and working toward financial independence or financial freedom.
Pension and retirement savings rules differ substantially between countries. Figures quoted from any one country’s system are included as illustration, not as guidance applicable to your own.
Everyone’s financial situation, goals, income, expenses, risk tolerance, and time horizon are unique, and the information presented may not be appropriate for your specific circumstances. Before making financial decisions, consider consulting a qualified professional for personalized guidance.
Examples and scenarios are for illustrative purposes only and may be based on assumptions or historical information. Actual outcomes will vary, and no financial strategy is guaranteed to be successful. Past performance does not guarantee future results. Market conditions, economic factors, and individual circumstances can significantly impact investment outcomes. What works for one person may not work for another.
This content should serve as a starting point for financial education, not a substitute for professional advice.
Helpful Resources:
NAPFA: Connects consumers with fee-only fiduciary financial advisors who must put client interests first
CFP Board: Directory of Certified Financial Planner professionals with strict ethics and education standards
Investor.gov: Education initiative from the SEC and FINRA offering free resources on investments
JumpStart: Nonprofit dedicated to financial education with curated resources and tools
Money Helper: Government-backed financial guidance and planning tools
Sources
Elroy Dimson, Paul Marsh and Mike Staunton, UBS Global Investment Returns Yearbook. World real annualised returns 1900 to 2024 of 5.2% for equities, 1.7% for bonds and 0.5% for bills, reported via Cambridge Judge Business School, 7 March 2025, and the UBS press release, 4 March 2025. Breadth, drawdown and diversification findings from the 2026 public summary edition, covering 35 markets over 126 years.
Department for Work and Pensions, Workplace pension participation and savings trends of employees: 2009 to 2025, published 30 July 2026. Contribution split of 27% employee, 61% employer and 12% tax relief; 10% of eligible employees not saving; opt-out rates; participation by employer size. Automatic enrolment minimums from GOV.UK.
Roger G. Ibbotson, Moshe A. Milevsky, Peng Chen and Kevin X. Zhu, Lifetime Financial Advice: Human Capital, Asset Allocation, and Insurance. CFA Institute Research Foundation, 2007.
Employer and government contribution rates, current at 2026: Australian Taxation Office (Superannuation Guarantee 12% from 1 July 2025); CPF Board, Singapore (17% employer for those aged 55 and under, from 1 January 2026); Inland Revenue, New Zealand (compulsory employer contribution 3.5% from 1 April 2026, rising to 4.0% in 2028; government contribution of 25 cents per dollar to a maximum of NZ$260.72 a year); Department of Social Protection, Ireland (My Future Fund, live 1 January 2026).
Statistics Canada, Pension plans in Canada, as of 1 January 2025, published 28 July 2026. Coverage of 37.6% of paid workers; employers funded 55.9% of the C$83.6bn paid into registered plans in 2024.
Morningstar, Target-Date Fund Landscape 2026, data as of 31 December 2025. Median equity exposure of 93% for investors 45 years from retirement, up from 89% a decade earlier; 34 percentage point gap between the most and least aggressive series; asset-weighted average expense ratio of 27 basis points, cheapest at 4.
Donaldson, Ahluwalia, Renzi-Ricci, Zhu and Aleksandrovich, Global equity investing: The benefits of diversification and sizing your allocation, Vanguard, April 2021, using IMF Coordinated Portfolio Investment Survey data as at 31 December 2019. Domestic equity holdings as a multiple of global index weight: Australia 30.0, Canada 16.7, United Kingdom 4.9, United States 1.4.
Vanguard, Rational Rebalancing: An Analytical Approach, October 2022, Figure 1. A 60/40 portfolio left unrebalanced from December 1989 to December 2021 drifted to approximately 80% equities.
Matias Mottola and colleagues, Mind the Gap 2023: A Report on Investor Returns Around the World, Morningstar. Five years to 30 June 2023 across six fund domiciles, every one showing a negative investor return gap.
Vanguard, Target Retirement Series specifications, data as of 31 December 2025, and the Target Retirement 2035 Fund fact sheet, 30 June 2026. Cited as an example of a widely used glide path: 90% equities at 25, 67.6% at 56, 50% at 65 and a 30% landing point seven years after the target date.
William P. Bengen, Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning, October 1994. US data from 1926. Recommends 50% to 75% equities; “stock allocations below 50 percent and above 75 percent are counterproductive.”
Social Security Administration, Unisex Life Expectancy at Birth and Age 65, Actuarial Note 2025.2, June 2025, Table 2, cohort basis, unisex. US figures; the 2026 value is a projection under the 2025 Trustees Report intermediate assumptions.
Wade Pfau and Michael Kitces, Reducing Retirement Risk with a Rising Equity Glide Path, Journal of Financial Planning, January 2014. Summarised by the author at Kitces.com. Modelled on a 4% withdrawal rate over 30 years, assuming 6.5% real returns for stocks and 2.4% for bonds.
Aizhan Anarkulova, Scott Cederburg and Michael S. O’Doherty, Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice. SSRN, revised 10 July 2025. Monthly real returns for 39 developed countries, 1890 to 2023.
