Vanguard's target-date funds hold 50% equities at age 65. The old rule of thumb says 35%. That 15-point gap is the whole argument, and it runs the same way at every other large provider.
The rule itself is simple. Subtract your age from 100 and hold that much in shares. At 30 that's 70% equities; at 70 it's 30%. 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
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 age is the wrong input.
What the large providers actually hold
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: 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.
The pattern is consistent anyway. 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 the balance is largest.
Worth flagging: each provider 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 age
The models that started modern portfolio choice said something awkward. In the late 1960s Samuelson and Merton showed that an investor with no labour income should hold 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 labour income 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". A 30-year-old who can work two extra years after a bad decade holds insurance that a 70-year-old doesn't.
The size of the effect is easy to miss. In the Ibbotson worked example, a 25-year-old earning $50,000, saving 10% and retiring at 65 has human capital worth about $800,000. That's 94% of total wealth. Financial capital 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.
That's the real argument for a glide path, and it isn't about frailty. A young worker already holds an enormous bond-like asset off the balance sheet, so a 90% equity portfolio is a modest slice of total wealth. 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. A tenured academic's earnings behave like a bond. An equity analyst's earnings behave like the market they cover.
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 a partner's income. 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. 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.
The results favoured the mirror image. In the US series, an 80-20 lifecycle path, meaning 80% equities falling to 20%, produced mean terminal wealth of $110.4 thousand. Reversing it produced $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.
Two caveats belong next to those numbers. The 71 forty-year windows overlap heavily, so they aren't 71 independent observations. And the study stops in 2009 and measures wealth at 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.
The strongest objection: a crude rule beats no rule
Here's the honest case against everything above. Precision is worthless if nobody uses it, and a rule you can do in your head on a bad morning has one advantage no model matches. It exists.
Estrada made that argument against his own earlier work in 2020. He asked how risk-averse an investor would 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 the 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 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 land? 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 the balance sheet. At 80 it gives 20% equities against T. Rowe Price's 45%, with a possible 20-year spending horizon still ahead.
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 the next 40 years belong to.
Equity-like human capital is the second. A commission-paid salesperson, a founder, or anyone whose pay tracks their employer's share price already carries equity risk off the balance sheet. For them a lower financial equity share is defensible at any age, and 100 minus age might even be too aggressive at 35.
A guaranteed income floor is the third. A defined-benefit pension or a state pension that covers essential spending is bond-like wealth, and it lifts the equity share a portfolio can sustain. Age is silent on whether that floor exists.
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. If someone can't sit through a 40% drawdown at 60, the paper-optimal allocation is beside the point, and Estrada's risk-aversion result puts a number on exactly that trade.