A common piece of investing advice says that the older you are, the less of your money should be in stocks.

That simple idea has shaped an entire generation of retirement products and still influences how many people invest today.

But real life is messier than a rule of thumb, and there is more than one sensible way to decide how much stock exposure to take at each stage of life.

Classic age rules

Traditional guidance focuses on reducing risk as retirement gets closer. Younger investors can usually handle more ups and downs because they have decades of earnings ahead; retirees have fewer recovery years, so steep losses hurt more. This thinking inspired target-date funds: ready-made portfolios that automatically shift from mostly stocks to more bonds as the fund’s “target year” approaches.

How target-date funds work

In a typical target-date series, someone planning to retire around a given year picks the fund with that year in its name. The manager then follows a preset glidepath: heavy stock exposure early on, gradually easing into more bonds and cash. Major providers often keep at least half the portfolio in equities even at retirement age, under the assumption that people may live several more decades and still need growth.

When standard glidepaths feel too risky

Market declines have shown that these default settings can feel harsh in practice. Investors who held funds aimed at near-term retirees during severe downturns sometimes saw double-digit losses just a few years before stopping work. If that level of volatility would cause sleepless nights, one workaround is to choose a fund with an earlier target year, which typically has a more conservative mix.

Sequence risk in retirement

Some researchers argue that the most dangerous moment for stock exposure is the first decade of retirement.

This concept, known as sequence-of-returns risk, highlights what happens if large market losses arrive just as someone starts withdrawing from savings. Drawing income while values are depressed can permanently shrink a portfolio, even if future returns are strong.

Glidepaths that rise later

To manage that risk, an alternative approach starts with relatively low stock exposure at retirement and then slowly increases it over time. Picture a “valley” in equity allocation: high during working years, lower around the retirement date, then gradually higher again later. This pattern aims to protect the nest egg when it is largest and most vulnerable, and to reintroduce growth once the early retirement danger zone has passed.

Extreme risk-on theories

Other academics have suggested nearly the opposite for young adults: taking far more risk than usual early in life by using tools like margin or options to leverage stock exposure. The theoretical appeal is simple. When someone is just starting out, the amount invested is tiny compared with future lifetime earnings, so short-term losses might matter less. In practice, though, leverage cuts both ways and can magnify mistakes, so most everyday investors wisely avoid this route.

The real insight for younger investors

Even without borrowing to invest, there is a useful lesson. Younger savers can usually withstand a higher percentage in equities because each contribution is backed by many years of future paychecks. As retirement approaches and the flow of new savings slows, the existing portfolio must carry more of the burden, so a gentler risk profile begins to make sense.

The simple balanced-fund route

For anyone overwhelmed by competing glidepaths, a straightforward option is to use a balanced fund that keeps a fixed mix of stocks and bonds, such as a 60/40 structure. This type of fund can provide solid long-term growth with fewer moving parts to monitor and often comes with low ongoing costs. The trade-off is that it does not automatically adjust with age, so at some point a more tailored plan may still be needed.

Owning your age in bonds

Another long-standing rule is the “birthday” approach: hold a percentage in bonds roughly equal to your age, with the rest in stocks. At 40, that might mean 40 percent bonds and 60 percent equities; at 70, the reverse.

Because it moves out of stocks more quickly than many target-date funds, this method tends to suit investors who are more cautious by nature.

Comparing these frameworks

Each approach reflects a different view of risk. Target-date funds and balanced funds prioritize simplicity: set it up once and make only occasional changes. Rising-equity glidepaths emphasize protecting early retirement while still seeking growth later. The age-in-bonds rule focuses on matching risk reduction closely with the investor’s stage of life, even if it sacrifices some potential return.

Factors that should guide you

Choosing a stock allocation is not just about age. Other important factors include job stability, the presence of a pension or other guaranteed income, your comfort with market swings, and whether you expect to adjust spending when markets are weak. Someone with flexible retirement plans and stable income can reasonably accept more volatility than someone with fixed expenses and little room to adapt.

Adjusting over time

Whatever framework you start with, it should not be frozen forever. Major life events—changing careers, health shifts, inheritance, or a partner stopping work—are natural times to revisit how much risk you are taking. A periodic review, perhaps once a year, helps keep the portfolio aligned with both your financial realities and your emotional tolerance.

Conclusion

There is no single perfect formula for how much to hold in stocks, only trade-offs that must fit your life, not someone else’s chart. Whether you lean on a target-date fund, a simple balanced strategy, or a custom glidepath, the key is understanding why you chose it and how it behaves in rough markets.