The 100-Minus-Age Rule: Should You Still Use It?

The 100-minus-age rule is the oldest, simplest asset allocation shortcut in personal finance. It is also from an era when people retired at 65 and died at 72. Modern life expectancies make it too conservative for most investors. Here is when it works, when it does not, and what to use instead.

How the rule works

Subtract your age from 100. The answer is your stock percentage. The rest is bonds (or bonds + cash).

Age	Stocks %	Bonds %
25	75%	25%
35	65%	35%
45	55%	45%
55	45%	55%
65	35%	65%
75	25%	75%

The intuition: as you get older, you have less time to recover from a stock market crash, so you should hold less in stocks. Simple, intuitive, and easy to remember.

Why it is outdated

The 100-minus-age rule was popularized in an era when:

• People retired at 65
• Average life expectancy at 65 was 13-15 more years
• Bond yields were 6-8%
• Defined benefit pensions were common

Today:

• People retire from 60 to 70 depending on circumstances
• Average life expectancy at 65 is 18-22 more years
• Bond yields are 3-5% (historically low)
• Pensions are rare in the private sector

A 65-year-old today might need their portfolio to last 30+ years. The original rule's 35% stocks does not generate enough growth to outpace inflation for that long.

The modern alternatives: 110 and 120 minus age

Age	100-rule stocks	110-rule stocks	120-rule stocks
25	75%	85%	95%
35	65%	75%	85%
45	55%	65%	75%
55	45%	55%	65%
65	35%	45%	55%
75	25%	35%	45%

The "120 minus age" version is significantly more aggressive than the original. A 65-year-old goes from 35% stocks (original) to 55% stocks (120 minus age). Over 30 years of retirement, that extra stock exposure can be the difference between running out of money and leaving an inheritance.

What the rule ignores

Even the modern 120-minus-age version ignores critical factors:

• Risk tolerance. Some 30-year-olds panic at 10% drops; others are fine with 40%. The rule treats them identically.
• Other income. A retiree with a $60K pension does not need their portfolio to be conservative — the pension already provides the safety net.
• Total wealth. Someone with $5M needs less from their portfolio than someone with $500K. They can afford more risk because they need less return to live well.
• Time to next major use. Money you need in 5 years should be more conservative than money you need in 30 years, regardless of your age.
• Tax situation. Bonds in taxable accounts vs tax-advantaged accounts changes the math.

When the rule works as a starting point

If you have:

• No idea where to start
• No professional advisor
• No strong opinion about your risk tolerance
• Average everything (income, savings, expenses)

...then the 110 or 120 minus age rule is fine as a default. It is not optimal but it will not disaster either. Many people would be better off with this simple rule than with the complicated allocations they actually have.

When to ignore the rule

• If you have a guaranteed pension or large Social Security expected, you can be more aggressive than the rule suggests
• If you have a low risk tolerance, you should be more conservative regardless of age
• If your portfolio is meant for a specific short-term goal (house down payment, college), allocate based on the goal timeline, not your age
• If you have decades of work and high savings rate, you can afford more aggression
• If you have already won the game (enough to retire forever), you can shift to capital preservation regardless of age

The bottom line

The 100-minus-age rule is a useful shortcut for people who would otherwise have no allocation at all. The 110 and 120 versions are better for modern retirement needs. But none of them replace thinking carefully about your specific situation.

Use the portfolio visualizer to chart your current allocation. Compare it to what 110 minus age would suggest. If they are close, you are probably fine. If they are very different, ask why — and make sure you have a real reason, not just inertia.