Most retirement advice says the same thing: get safer as you age. Sell stocks, buy bonds, protect what you’ve built. But a body of research on the rising equity glide path found something that surprised even the researchers who study it. Historical research suggests that portfolios which start conservative and gradually add more stock exposure through retirement may experience fewer failures, and smaller shortfalls, than portfolios built the traditional way.
What Is a Rising Equity Glide Path?
A glide path is simply the plan for how your mix of stocks and bonds changes over time. Most people are familiar with the version used in target-date retirement funds. Those funds hold more stock when you are young and shift toward bonds as you approach retirement. That is a declining glide path, because stock exposure declines over time.
A rising equity glide path flips this around, but only after retirement begins. It starts conservative on the day you retire, holding a smaller share in stocks, and increases the stock share year by year as retirement continues.
For example, a retiree might start retirement with 30 percent in stocks and 70 percent in bonds. Instead of staying there or getting more conservative, the plan calls for slowly raising the stock allocation, perhaps by one or two percentage points a year, until it reaches a considerably higher stock allocation later in retirement.
Why Conventional Wisdom Says Get More Conservative
The traditional argument makes intuitive sense. As you get older, you have less time for your portfolio to recover from a market downturn. A 65-year-old who loses 30 percent of their portfolio has decades to make it back. An 85-year-old does not have that luxury. So the standard advice is to steadily shift out of stocks and into bonds as the years pass, protecting what is left.
Some advisors already use a variation of this idea through what’s known as a bond tent: increasing bond exposure just before retirement and then gradually reducing it afterward.
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The Research Behind the Rising Equity Glide Path
In 2013 and 2014, retirement researchers Wade Pfau and Michael Kitces published a study that tested this assumption directly. They ran simulations comparing rising, flat, and declining stock allocations across different retirement scenarios.
In retirement research, a “failure” generally means a portfolio that runs out of money before the end of the retirement period being tested. Pfau and Kitces found that rising equity glide paths, where the portfolio starts conservative and becomes more aggressive as retirement progresses, had the potential to reduce both how often a portfolio failed and how badly it fell short when it did, compared with keeping a fixed allocation or reducing stock exposure over time.
In their testing, glide paths that started with relatively conservative stock allocations and gradually increased stock exposure often produced stronger outcomes than static or declining allocations, particularly near a 4 percent withdrawal rate.
Pfau and Kitces described their own result as counterintuitive. It goes against decades of standard financial planning guidance. But when you look at why retirement plans actually fail, the logic holds up.
Why Sequence of Returns Risk Makes This Work
The reason comes down to something called sequence of returns risk. This is the risk that comes from the order in which investment gains and losses happen, not just the average return over time.
Here is why the order matters so much. When you are withdrawing money from a portfolio every year, a market decline early in retirement does more damage than the same decline later on. That is because you are selling investments at reduced prices to cover your spending, which permanently shrinks the amount of money left to recover when the market turns around.
Say Frank retires with $800,000 and plans to withdraw $32,000 in his first year, adjusted for inflation after that. If the market drops 20 percent in his first two years of retirement, he is forced to sell shares at depressed prices just to pay his bills. Even after the market recovers, his portfolio never fully catches up, because those early withdrawals locked in the losses.
Now compare that to a market decline that happens in year 25 of Frank’s retirement instead of year one. He is also withdrawing from a portfolio that has potentially had decades to grow. Even if a market decline occurs later, there is typically less time for withdrawals to compound the damage than there was in the fragile first years of retirement.
This is the insight behind the rising equity glide path. The years right after retirement are the most dangerous ones for a market decline, so it makes sense to hold less in stocks then. As those early years pass without disaster, the risk of a damaging sequence of returns fades, and taking on more stock exposure becomes reasonable again, and potentially beneficial, since stocks have historically outperformed bonds over long periods.
There is a second reason the strategy can help. If a market downturn does happen early in retirement, a rising glide path calls for buying more stock while prices are lower, since the plan gradually shifts money into stocks regardless of what the market just did. Pfau and Kitces found that this can let a retiree participate more fully in the eventual recovery, and can leave more for heirs when a downturn happens.
A Hypothetical Comparison: Two Retirees, Two Strategies
Consider two hypothetical retirees, Carol and Denise, who both retire at 65 with $700,000 saved and plan to withdraw $28,000 in year one, adjusted for inflation afterward. This is a simplified, illustrative example, not a projection for any real portfolio.
Carol follows the traditional approach. She starts retirement with 60 percent in stocks and reduces that by about one percentage point a year, reaching roughly 30 percent stocks by her mid-80s.
Denise follows a rising equity glide path. She starts retirement more conservatively, with 30 percent in stocks, and increases that by about one percentage point a year, reaching roughly 60 percent stocks by her mid-80s.
If the market performs reasonably well throughout their retirements, both strategies tend to hold up fine. The meaningful difference shows up in the scenarios that matter most: a weak stock market in the first several years of retirement. In that situation, Carol’s higher starting stock allocation means she is selling more shares at reduced prices early on. Denise’s lower starting allocation limits that damage, and her plan to gradually add stocks later means she is buying in at those same reduced prices instead of being forced to sell.
This is illustrative math meant to show the mechanism, not a guarantee of outcomes for any individual. Actual results depend on your specific portfolio, spending needs, and the market conditions you happen to retire into, which cannot be known in advance.
Who This Strategy Fits, and Who It Doesn’t
A rising equity glide path is not automatically right for everyone. It tends to make the most sense for retirees who:
- Are withdrawing at a moderate rate, generally close to the traditional 4 percent starting point, rather than a much higher rate
- Have some flexibility to adjust spending if the first few years of retirement go poorly
- Are comfortable holding more stock later in life than conventional advice usually recommends
It may not be a good fit for retirees who would feel too uneasy holding a larger stock allocation in their 80s, regardless of what the math says. Pfau and Kitces themselves noted this as a real limitation. A strategy that looks optimal in a simulation is not helpful if it keeps you up at night. Comfort with the plan matters as much as the numbers behind it.
Some researchers have suggested that lower expected future returns may call for even more conservative starting allocations, though there is no consensus on a single optimal glide path.
How to Test This for Your Own Retirement
The math behind a rising equity glide path is more involved than the traditional 4 percent rule, and it does not lend itself well to quick mental estimates or a simple online calculator. Testing it properly means running your actual savings, spending needs, and other income sources through a series of scenarios, comparing a rising glide path against a flat or declining one, and seeing how each holds up if the market has a rough start.
This is the kind of question that benefits from detailed retirement planning software rather than guesswork, since small differences in your starting allocation or your rate of increase can meaningfully change the results. It is also worth reviewing with a financial professional who can walk through the trade-offs with your full financial picture in view, not just your portfolio in isolation.
The Bottom Line
The instinct to get safer as you age is understandable, but the research on sequence of returns risk suggests the opposite approach may serve some retirees better. Starting retirement more conservatively and gradually increasing stock exposure over time can reduce the odds of running out of money and soften the damage when markets do not cooperate early on. It will not be the right fit for every retiree, and it takes more planning than picking a single percentage and sticking with it. But for retirees willing to test it against their own numbers, a rising equity glide path is worth a serious look.
This article is for educational purposes only and is not personalized financial, tax, or investment advice. Investment decisions should take into account your full financial picture, risk tolerance, and goals. Consult a qualified financial professional before changing your retirement withdrawal or asset allocation strategy.
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