Key takeaways
- Vanguard's glide path holds 90% equities at age 25 and 50% at age 65, where the 100-minus-age rule would hold 75% and 35%.
- T. Rowe Price runs 98% equities 40 years from retirement and still holds 30% thirty years after it, against 20% under the age rule.
- In the Ibbotson worked example a 25-year-old's human capital is worth about $800,000, some 94% of total wealth, against $50,000 of financial capital.
- In Estrada's US series an 80-20 lifecycle path produced $110.4 thousand mean terminal wealth, against $137.1 thousand for its mirror, a gap above 24%.
- Choosing a standard glide path implies risk aversion more than doubling, from 1.10 to between 2.25 and 2.55, over the final 25 working years.
Picture two people the same age at the same kitchen table, each holding a pension statement. One does the sum she was taught decades ago: take your age off 100, and that's the percentage you hold in shares. She's 65, so she writes down 35%. The other has never done the sum in her life. Her money went into her employer's default fund the day she joined and she's never touched it, and that fund holds 50% in shares.
Same age. Same money. Fifteen points apart. Which one of them is wrong?
That 15-point gap is the whole argument of this piece, and it runs the same way at every other large provider. Every target date fund glide path on the market sets equity allocation by age, and not one of them sets it where the rule does. Vanguard's target-date funds hold 50% equities at age 65. The rule says 35%. Where the glide path sets that weight is one question and what the weight does to the risk is another: the 2045-dated fund sat at 83.5% equities on 30 September 2025, which on 1928 to 2025 returns puts 99.3% of the variance inside target date funds in the equity sleeve.
The 100 minus age rule is simple. Subtract your age from 100 and hold that much in shares. At 30 that's 70% equities; at 70 it's 30%. You can do it in your head, in a queue, on a bad morning. No software, no capital market assumptions, no fee. It's also the one allocation rule that almost every large provider has quietly walked away from.
Nobody can name the author
So where did it come from? Trace the rule back and it dissolves. There's no founding paper, no regulator's guidance note, no textbook chapter that coins it. It circulated as advice-column folklore long before anyone modelled it, and the closest documented sibling is the older "own your age in bonds" formulation. We looked for a first published source and couldn't verify one, so treat any confident origin story with suspicion.
What can be dated is everything that came afterwards. Barclays Global Investors launched the first LifePath portfolios in 1993, which turned an age rule into a product. Interest exploded when the Pension Protection Act of 2006 made target-date funds a qualified default investment alternative in US retirement plans. Vanguard built its own glide path in 2003 and had adjusted it five times by 2020.
The first serious academic swipe by name came in 2007. Roger Ibbotson, Moshe Milevsky, Peng Chen and Kevin Zhu wrote in a CFA Institute Research Foundation monograph that "simplistic rules like '100 minus age should be invested in equities' have no room in a sophisticated, holistic framework of wealth management". Their objection wasn't that the rule is too conservative. It was that your age is the wrong input.
What the large providers hold instead of the 100 minus age rule
If your money sits in a default fund, this is what you own. Provider documents are specific, and they don't match the rule at any age. Vanguard's series specification sheet, dated 31 December 2025, gives three numbers: 90% equities at age 25, 50% at age 65, and 30% at the landing point seven years after the target date. Vanguard held a 38% share of the target-date market on that date, at an asset-weighted expense ratio of 0.07%.
T. Rowe Price publishes the whole curve. Its Retirement glide path runs 98% equities at 40 years from retirement, 95% at 20 years, 77% at 10 years, 55% at retirement, 48% ten years later and 30% thirty years later. Those figures come from the February 2020 paper that raised the front end from 90% to 98% and the back end from 20% to 30%. The change was phased in by the second quarter of 2022, and the fund's August 2025 summary prospectus still states a 55% neutral equity allocation at the target date.
Fidelity's September 2025 glide-path update prints a full allocation table. The 2070 vintage sits at 95.0% equities, split 57.0% US and 38.0% non-US. The 2025 vintage sits at 51.2%. The final Retirement portfolio holds 28.0% equities plus 2.0% commodities. One caveat belongs beside those figures, and it matters if you go hunting for them in your own account: that table is the revised allocation, illustrative as of 1 October 2025, and Fidelity expects the transition to finish only by the end of the first quarter of 2027. It isn't what the funds held on the day it was published.
| Age | 100 minus age | Vanguard | Fidelity | T. Rowe Price |
|---|---|---|---|---|
| 25 | 75% | 90% | 95.0% | 98% |
| 65 | 35% | 50% | 51.2% | 55% |
| 80 | 20% | 30% | 30.5% | 45% |
The Fidelity column assumes someone who retires at 65 and sits in the matching vintage, so a 25-year-old is in the 2070 fund and an 80-year-old is in the 2010 fund. Vanguard's specification sheet publishes only three points on its curve, which is why the mid-career rows are missing here.
Find your own row and the pattern is the same wherever you look. At 25 the rule says 75% and the providers say 90% to 98%. At 65 the rule says 35% and they say 50% to 55%. At 80 the rule says 20% and T. Rowe Price says 45%. The rule is more conservative everywhere, and most conservative exactly where your balance is largest.
Before you take the providers' side, though, notice that each one marks its own homework. Vanguard has assessed its glide path since 2016 with a proprietary life-cycle model, run at the highest available risk-aversion setting, and the committee reviewing the path in July 2020 approved the existing one with no changes. It reported an 81% probability of success at age 95 against a 70% internal threshold. That's a defensible process, but it isn't independent evidence that 50% at 65 is right.
The theory never pointed at your age
Here's the awkward part. The models that started modern portfolio choice had nothing to say about your birthday at all. In the late 1960s Samuelson and Merton showed that an investor with no labour income holds constant portfolio weights for life. Age drops out entirely. Ibbotson and his co-authors summarise the catch plainly: those models assume investors have no human capital, which isn't realistic, because most people work.
Put your salary back in and an age pattern reappears, but for a different reason. Bodie, Merton and Samuelson showed in a 1992 NBER paper that flexibility itself is worth something. In their words, "the ability to vary labor supply ex post induces the individual to assume greater risks in his investment portfolio ex ante". Say a bad decade arrives. A 30-year-old who can work two extra years to make it up is carrying insurance that a 70-year-old simply doesn't have.
The size of that effect is easy to miss, so walk through the example Ibbotson's group set out. Suppose you're 25, earning $50,000, saving 10% of it, and planning to stop at 65. Everything you'll earn between now and then, valued today, comes to about $800,000. That's 94% of your total wealth. The money in the account is $50,000. By 65 the numbers invert: human capital falls to $128,000, mostly future Social Security, while the portfolio peaks just above $1.2 million. Those levels rest on assumed returns of 9% for stocks, 5% for bonds and 3% inflation, plus a relative risk aversion coefficient of 5.5. Change the assumptions and the levels move, but the shape doesn't.
Now look at what that does to the argument. At 25, with 94% of your balance sheet sitting in a bond-like asset called your career, a 90% equity portfolio is a modest slice of the whole thing. That's the real case for a glide path, and it has nothing to do with frailty. The same logic governs how a house behaves inside a portfolio: what sits outside the brokerage account changes what belongs inside it.
Human capital isn't the same shape for everyone
Ibbotson's group make the sharper point with two hypothetical 35-year-olds. Same age, same expected income, same retirement date, and different correct portfolios, because their human capital carries different risk. Think of a tenured academic, whose earnings behave like a bond. Then think of an equity analyst, whose earnings behave like the market she covers. Which of the two can carry more equity inside the account?
Your age can't see any of that. It can't see a defined-benefit pension, which is bond-like wealth that raises the equity share a portfolio can carry. It can't see job security, business ownership, or what your partner earns. This is the same distinction as how risk tolerance scores differ from risk capacity. The rule collapses a balance-sheet question into a birthday.
The case against glide paths altogether
A separate literature argues that declining-equity paths are wrong in the other direction entirely. Javier Estrada tested them on the Dimson-Marsh-Staunton dataset covering 19 countries and two regions from 1900 to 2009, with an investor contributing $1,000 a year in real terms across a 40-year working life.
So imagine that saver is you. A thousand a year, every year, for forty years, and the only thing that varies is which way your equity share drifts. In the US series, an 80-20 lifecycle path, meaning 80% equities falling to 20%, left you with mean terminal wealth of $110.4 thousand. Run it in reverse, starting cautious and finishing aggressive, and the same contributions ended at $137.1 thousand, more than 24% higher. The extreme 100-0 path produced $102.5 thousand against $147.2 thousand for its mirror, a gap of almost 44%.
Those four figures are US-only. Averaged across all 19 countries the direction holds: contrarian, equity-driven and balanced strategies all delivered higher mean and median terminal wealth than the lifecycle paths. Estrada also found the contrarian paths had more limited downside, not less. Testing bond allocation by age on US returns from 1928 to 2025, against a fixed weight matched to the glide path's own average, separates what the shape of the path costs from what the level of equity costs.
Two caveats belong next to those numbers, and neither is small. The 71 forty-year windows overlap heavily, so they aren't 71 independent observations. And the study stops in 2009 and measures your wealth on the retirement date only, which says nothing about the decades of spending that follow, the phase where the order of returns matters most near retirement. Estrada says so himself: lifecycle paths can be justified when risk aversion is high, when a subsistence level of wealth must be hit, or when human capital is in the model.
Poterba, Rauh, Venti and Wise reached a milder version of the same conclusion in 2006. Their simulation found the wealth distribution from typical lifecycle rules looks much like a fixed allocation set at the lifecycle path's average equity share. At modest risk aversion an all-stock rule beat every conservative alternative. They were explicit that the ranking is fragile, though. It depends on the expected equity return, on risk aversion, and on wealth held outside the plan. Their inputs came from 1926 to 2002 US data: 9.0% real equity returns with a 20.7% standard deviation. Cut the equity return by 300 basis points and the conservative strategies climb the table.
So why doesn't everyone build the sophisticated version?
Because precision is worthless if nobody uses it, and a rule you can do in your head has one advantage no model can match. It exists. That's the honest case against everything above.
Estrada made that argument against his own earlier work in 2020. He asked how risk-averse you'd have to be for a standard glide path to be the utility-maximising choice, and found the coefficient would need to more than double across your final 25 working years, from 1.10 to a range of 2.25 to 2.55. Framed as a gamble, such a person would pay 131% more to avoid the same bet at retirement than 25 years earlier. His conclusion wasn't that providers are wrong. It was that they're selling what investors want, and that measured risk aversion does rise with age.
The cost objection is weaker than it used to be. Vanguard's asset-weighted target-date expense ratio was 0.07% at the end of 2025, so the sophisticated alternative costs you about seven basis points. Behaviour supports the products too. Vanguard's How America Saves 2026 reports that 96% of plans offered target-date funds and 69% of participants sat in a professionally managed allocation, while 60% held a single target-date or balanced fund at the end of 2024. Defaults do what exhortation doesn't, which is the whole point of what badly timed switches cost investors.
So where does the rule leave you? In mid-career it isn't absurd. At 45 it gives 55% equities, roughly a balanced fund, and Estrada found balanced strategies beat lifecycle ones on his data. The failure is at the ends. At 25 it under-allocates by 15 to 23 percentage points against provider paths, during the years when human capital is 94% of your balance sheet. At 80 it gives 20% equities against T. Rowe Price's 45%, with a possible 20-year spending horizon still ahead of you.
What would change the conclusion
Four things would change the conclusion here, and three of them are live.
A lower equity risk premium is the first. Every result favouring aggressive paths leans on 1900 to 2009 or 1926 to 2002 return history. Poterba's team showed the ranking flips when equity returns are cut by 300 basis points, and nobody knows which regime your next 40 years belong to.
Equity-like human capital is the second. Say you're paid on commission, or you founded the firm, or your bonus tracks your employer's share price. You're already carrying equity risk off the balance sheet. For you a lower financial equity share is defensible at any age, and the 100 minus age rule might even be too aggressive at 35.
A guaranteed income floor is the third. A defined-benefit pension, or a state pension that covers your essential spending, is bond-like wealth, and it lifts the equity share a portfolio can sustain. Age is silent on whether that floor exists. Pricing the income the floor has to buy is what liability matching does, and it produces a bond holding in pounds rather than a percentage.
Provider drift is the fourth. Fidelity's revised path isn't fully in place until early 2027, and T. Rowe Price moved its back end from 20% to 30% inside two years. If the industry glides back down toward the rule, the gap closes. Nothing in the current documents points that way, but these paths are reviewed annually and they do move.
One thing wouldn't change it. Say your portfolio falls 40% the year you turn 60. How long would you sit with that before you sold? If the answer is "not long", the paper-optimal allocation is beside the point, and Estrada's risk-aversion result puts a number on exactly that trade.