Allocation glide path

An allocation glide path is a planned change in the mix of investments over time. In retirement planning, it commonly describes how the equity target moves before and after retirement.

Why change the allocation?

The household’s ability to take investment risk can change as retirement approaches. Employment income and future contributions may shrink, while withdrawals make early losses more consequential.

A glide path creates a gradual transition instead of assuming the portfolio changes all at once on the retirement date. The starting year, ending year, retirement equity target, and later target together define that transition.

Lower equity is not automatically safer

Reducing equity can lower short-term volatility, but it may also lower expected long-term growth. A retirement can last decades, so inflation and longevity still matter after work ends.

The appropriate path depends on reliable income, spending flexibility, portfolio size, time horizon, risk tolerance, and the consequences of a poor outcome. There is no single equity percentage or glide path that is right for every plan.

How to review it

Look at the full path rather than only the retirement-year target. Compare how it affects projected returns, downside outcomes, withdrawals, and ending balances. Make sure account-specific allocations and actual holdings can reasonably support the plan’s target.

A glide path is an assumption about portfolio policy, not an automatic trading program. Real accounts may need periodic rebalancing to remain near the intended allocation.