The 100-Minus-Age Heuristic
The 100-Minus-Age Heuristic
The "100-minus-age" rule suggests you hold a stock allocation equal to 100 minus your current age. At 30, hold 70% stocks; at 60, hold 40% stocks. This simple heuristic has guided generations of investors and remains useful, though modern longevity suggests variants like 110 or 120 minus age.
Key takeaways
- The 100-minus-age rule allocates (100 – age)% to stocks and the remainder to bonds
- It automatically adjusts your allocation downward as you age, reducing volatility near retirement
- The rule works well for most investors but assumes a retirement age around 65
- Given increasing lifespans, variants like 110-minus-age or 120-minus-age better match modern needs
- The rule is a starting point, not gospel; adjust based on income, goals, and risk tolerance
Origin and Logic
The 100-minus-age rule emerged in mid-20th century investing literature as a practical guideline for ordinary investors. The logic was straightforward: at age 25, you have 40+ years until retirement and can afford volatility, so hold 75% stocks. At age 55, you have 10 years until retirement, so hold 45% stocks. By age 65, you hold 35% stocks—mostly bonds in retirement.
The rule encodes a reasonable principle: as you approach and enter retirement, your time horizon shrinks, and you can less afford large volatility shocks. Having a mechanical rule removes emotion from allocation decisions and discourages investors from making desperate portfolio changes during market panic.
In practice, the rule worked well throughout much of the 20th century because life expectancy at retirement was shorter. A 65-year-old in 1960 had a life expectancy of roughly 14 years. The 100-minus-age rule at 65 (35% stocks) reflected this reality reasonably well.
Applying the Rule: Examples
A 35-year-old investor following the rule would hold 65% stocks and 35% bonds. Concretely, if they had $100,000 to invest:
- $65,000 in a total stock market index fund
- $35,000 in a bond fund
A 50-year-old would hold 50% stocks and 50% bonds.
A 70-year-old would hold 30% stocks and 70% bonds.
The simplicity is the appeal. You do not need financial modeling, market forecasts, or complex spreadsheets. You calculate 100 minus your age and act.
How the Rule Behaves Over Time
Consider an investor who adopts the 100-minus-age rule at age 25 and follows it until 85:
| Age | Stock % | Bond % | Character |
|---|---|---|---|
| 25 | 75% | 25% | Growth-focused; high volatility tolerance |
| 35 | 65% | 35% | Still growth-oriented |
| 45 | 55% | 45% | Transition zone |
| 55 | 45% | 55% | Bond-heavy; low volatility |
| 65 | 35% | 65% | Early retirement; safe |
| 75 | 25% | 75% | Very conservative |
| 85 | 15% | 85% | Maximum safety |
This smooth de-risking is psychologically valuable. It removes the emotional decision of "when should I move to bonds?" The rule does it automatically.
The Longevity Problem
The weakness of 100-minus-age became apparent as life expectancy increased. A 65-year-old retiring today has a life expectancy of roughly 20–25 years, not 14. A 70-year-old might have 17 years ahead. For someone retiring at 55 (increasingly common among high earners), the time horizon is 35+ years—longer than many working careers.
With this extended horizon, holding only 35–45% stocks at age 65 leaves you vulnerable to long-term inflation risk. A 35/65 portfolio growing at 4% annually will struggle to sustain a 4% withdrawal rate for 25 years, let alone 30. Meanwhile, the S&P 500 has returned 10%+, and a 60/40 portfolio has delivered 5–6% real returns over the long term.
A retiree in 1965 might have been comfortable with 35% stocks because they expected to need the portfolio for only 14 years. A retiree in 2025 with a 25-year horizon should probably hold more equities.
Variants: 110-Minus-Age and 120-Minus-Age
To adjust for longer lifespans, financial advisors began proposing variants:
110-minus-age means at age 65, you hold 45% stocks instead of 35%. At age 75, you hold 35% instead of 25%. This better reflects a 20–25 year retirement horizon.
120-minus-age pushes further: at age 65, you hold 55% stocks. This assumes a 25–30 year horizon and full equity participation for much of retirement.
Fidelity and other major providers have shifted to recommending higher equity allocations in retirement, with many suggesting 50/50 or 60/40 for early retirees (age 65–75).
Adjusting for Your Situation
The rule is a starting point, not a mandate. You should adjust based on:
Income and reserves: If you have a strong salary, pension, or Social Security, you can hold more equities because you have non-portfolio income to cover living expenses. If you are entirely dependent on portfolio withdrawals, you might be more conservative.
Time horizon: If you plan to work until 70 instead of 65, add five years to your effective age or use 110-minus-age instead of 100-minus-age. If you expect to inherit money in your 60s, you can stay more aggressive longer.
Risk tolerance: The rule assumes you have moderate risk tolerance. If you panic-sell in crashes or lose sleep in downturns, be more conservative—hold more bonds than the rule suggests. If you have weathered multiple crashes calmly and are confident in your ability to hold, you can be more aggressive.
Life expectancy: If you have a family history of long life (parents or grandparents living into their 90s or beyond), you're likely to spend 30–40 years in retirement. Use 120-minus-age or even hold 60/40 for most of your life.
Goals: If you simply want a safe withdrawal in retirement, 100-minus-age is adequate. If you want to leave a legacy or fund decades of travel, you need more growth; use a more aggressive variant.
The Rule in Context
The 100-minus-age rule is powerful not because it's perfect, but because it's simple and reasonable. A rule that you'll actually follow beats an optimal allocation that you abandon during a bear market.
In practice, many investors use the rule as a starting point and then adjust:
- A 40-year-old might think, "The rule says 60/40, but I have a strong income and expect to work until 70, so I'll use 70/30."
- A 55-year-old might think, "The rule says 45/55, but given my family's longevity, I'll use 60/40."
- A 75-year-old might think, "The rule says 25/75, but I'm healthy and want to leave money to my children, so I'll use 35/65."
These adjustments are improvements on mechanical rule-following, not deviations from wisdom.
Rebalancing with the Rule
One way to implement the rule is to rebalance annually on your birthday. Each year, recalculate your stock percentage based on your new age and rebalance to match.
This has a nice benefit: rebalancing forces you to sell appreciated stocks (after years of gains) and buy depressed bonds (after they've underperformed), which is exactly backward in terms of momentum but exactly right in terms of discipline.
Alternatively, you can rebalance less frequently—every two or three years—to reduce trading costs and tax friction. The benefit of annual rebalancing is small for most investors.
Decision flow
Next
The 100-minus-age rule provides a practical heuristic for most investors. But if you want a reference guide showing specific allocations for different ages, the next article provides a full table of target allocations by age, along with context on when to adjust.