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Asset Allocation by Age: How the Stock and Bond Mix Usually Changes

Updated

Asset allocation is how your investments are split between stocks, bonds and cash. Many investors hold more stocks when retirement is far away and shift toward bonds as it approaches. This page covers the common age-based rules of thumb, the long-run trade-off between stocks and a balanced mix, the ready-made mixes in all-in-one ETFs, and rebalancing. It is part of the retirement planning hub; the building blocks are in the ETFs and index funds hub.

Age-based rules of thumb

The best-known rules set the stock share by subtracting your age from a fixed number; the rest goes to bonds. They are starting points, not official guidance:

Age100 minus age110 minus age120 minus age
2575% stocks85%95%
4060%70%80%
5545%55%65%
7030%40%50%

The 110 and 120 versions hold more stocks at every age, reflecting longer retirements. Someone with a defined benefit pension or other guaranteed income can often carry more stock risk, because the pension already behaves like a large bond holding; someone who would sell in a downturn, or needs the money soon, usually holds less.

The trade-off: growth vs swings

Over long periods stocks have grown faster than a mix with bonds, but with deeper falls along the way. Using US data from 1928 to 2025 (Damodaran, NYU Stern):

PortfolioAverage annual return (compounded)
S&P 500, dividends reinvested10.0%
60% S&P 500 / 40% US 10-year Treasury bonds, rebalanced yearly8.34%

The cost of the higher return is volatility: the S&P 500 fell 56.8% from its October 2007 peak to its March 2009 low, and 33.9% in early 2020. A fall like that just before or early in retirement, while withdrawals are being made, is the main reason people add bonds as they age (sequence-of-returns risk). Past returns don’t predict future ones.

Ready-made mixes: all-in-one ETFs

All-in-one ETFs hold a fixed target mix and rebalance automatically:

iSharesVanguardTarget stock shareMER (iShares / Vanguard)
XEQTVEQT100%0.19% / 0.22%
XGROVGRO80%0.19% / 0.22%
XBALVBAL60%0.18% / 0.22%
XCNSVCNS40%0.18% / 0.22%

Source: iShares and Vanguard product pages (see best all-in-one ETFs).

Moving from one to the next as retirement approaches is a simple way to follow an age-based path. Building the mix from separate ETFs (Canadian, US and international stocks, and a bond fund) can cost less in fees but means rebalancing yourself; robo-advisor vs ETF portfolio and the MER calculator compare the costs.

Rebalancing

Over time the mix drifts as stocks and bonds move differently. Rebalancing brings it back to target, which means selling some of what rose and buying what fell. Common approaches:

  • On a schedule, for example once a year.
  • When the mix drifts past a set band (for example, an 80/20 target that has drifted to 88/12).
  • With new contributions, directed to whichever part is below target, which avoids selling.

Looking at all your accounts together (RRSP, TFSA and non-registered) gives a truer picture than rebalancing each account separately.

Sources

The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 12, 2026. How we check facts.