 There is roughly a 50% chance that at least one partner in a married couple will live into their 90s.¹ And the 90+ population is projected to grow rapidly as medical advancements continue to push life expectancy further into the 21st century. Simply put, we are living longer than ever, yet we continue to invest as if life ends at 65. From the autopilot glidepaths of Target Date Funds that begin cutting growth decades too early, to retirees who stay "defensive" five years into a thirty-year retirement, the typical investor has traded the temporary discomfort of market volatility for the permanent risk of outliving their money. While a number of factors contribute to seniors’ affection for low-risk assets (the 24-hour news cycle, structural pessimism², etc.), the advice industry itself has normalized excessive conservatism as the default. My view is more straightforward: unless you are in the Retirement Risk Window (the critical five-year window immediately surrounding your work exit date), over-allocation to safety has likely harmed long-term outcomes more than it has protected them. The 75% Rule: Why the Odds Are in Your Favor Let's start with one number: 75%. Since 1928, the U.S. stock market has finished positive in approximately 75% of calendar years. Though, the real power of equity investing reveals itself over time: 1-year horizon: ~75% chance of positive returns 5- year horizon: ~88% chance of positive returns 10-year horizon: ~94% chance of positive returns 20-year horizon: 100% — historically, no 20-year period has ever produced a negative return in the U.S. stock market Read that last line again. Every 20-year period in modern U.S. market history has produced a positive return. When a retiree automatically shifts their portfolio toward the default of bonds and cash "to be safe," they are, in effect, betting against probabilities that have overwhelmingly favored equities. That's just a contrarian trade with poor odds. Time remains the ultimate equalizer. Investing in your 20s, 30s, 40s, and early 50s: Rethinking Target Date Funds Target Date Funds (TDFs) have become the default, and most dominant, option in millions of 401(k) plans. The pitch is simple: set it, forget it, and let the fund automatically shift from stocks to bonds as you age. It's sensible and easy, but there is a structural flaw in practice. Think about when a TDF has you most exposed to stocks: your 20s and 30s, when your portfolio might be worth $5,000 to $50,000. And when does it shift you to conservative bonds? In your 50s and 60s, when your portfolio may be worth $500,000 to $1,000,000. You were most aggressive when you had the least to grow, and most conservative when you are at your asset peak. Robert Arnott, Katrina Sherrerd, and Lillian Wu laid this out in their landmark 2013 paper "The Glidepath Illusion," calling it the Wealth-Weighted Return Problem.³ Running simulations across 141 years of market data (1871 to 2011) they found that the classic glidepath produced lower ending retirement wealth than a simple static 50/50 portfolio, even in unfavorable environments. An inverse glidepath, starting conservative and growing more aggressive over time, outperformed in most historical periods. The reason is simple: returns matter most when the portfolio is large. The traditional glidepath does just the opposite. Warren Buffett is an extreme but illustrative example. Approximately 95% of his personal wealth was accumulated after age 65, with his net worth jumping from roughly $12 billion in 1995 to over $140 billion in 2025.⁴ That's what happens when you maintain a strong risk profile! The Smart Way to Be Aggressive at Retirement By now you might be thinking: but what about a market crash right when I retire? Sequence-of-return risk (the danger of a major downturn in the early years of retirement) is very real and can devastate an exposed portfolio.⁵ A 30% drop in year one of retirement is far more damaging than the same drop in year ten, because you're withdrawing funds from a smaller base before the market recovers. The solution, however, is all in the timing. The Wind-down In the five to seven years before retirement, gradually shift your portfolio toward a portfolio with substantially less volatility. This can be accomplished in several ways:
The Exit On day one of retirement, your portfolio should carry its lowest risk/volatility profile. Make the defensive positioning intentional and temporary. The Rise Once you've cleared the first five to seven years of retirement (the true danger zone), the logic flips. Gradually increase your equity exposure back to a more natural state as you age instead of decreasing it. Why increase stocks as you age? Because the math changes in your favor over time, in either direction: If early returns are good: Your portfolio has grown enough to absorb future volatility. You've built a cushion. The danger window has passed, and you need growth to sustain a 30-year retirement. If early returns are bad: market valuations have compressed and future expected returns are higher. Either way, systematically increasing exposure after the Retirement Risk Window improves long-term probabilities. Here's a chart to help illustrate what I'm talking about:  Why Five Years Is Probably Enough Markets move faster than they used to. The bear markets of the past decade have been sharp but quick to recover.
Make no mistake, a structural meltdown like the 2008 financial can absolutely happen again. That recovery took approximately five and a half years. But would a 2008-style event take five years to resolve in today's environment? With the speed of information flow, algorithmic markets, and the Fed's demonstrated willingness to intervene, there's a credible case that even severe dislocations heal faster now than they once did. If you can hold your nerve and stay the course, the data suggests doing so all the way until roughly five years before retirement. That five-year window gives you enough runway to weather even a 2008-style event before you begin drawing down. Let the 88% historical odds work in your favor for as long as mathematically reasonable. The Counterargument: The Emotional Aspect I want to be clear about this: staying aggressively allocated when markets are in a free fall is incredibly difficult strategy to execute. Money is one of our greatest emotional vulnerabilities, and losses hurt roughly twice as much as equivalent gains feel good. Watching a portfolio drop 30% is genuinely painful, even when the math tells us to hold strong. If market volatility meaningfully affects your sleep, your decision-making, or your well-being, then your allocation is too aggressive, regardless of what historical probabilities suggest. A mathematically optimal strategy that you cannot emotionally execute is not optimal at all. Additionally, if your spending needs are modest relative to your assets or if you have effectively “already won the game,” preserving capital is the superior option to maintaining an aggressive allocation. Account growth becomes optional when sustainability is no longer in question. This article is not an argument for maximum risk, but rather an argument against unnecessary conservatism when time horizon and financial risk capacity still support growth. Sometimes, discomfort is the price of admission for long-term investment outcomes. Avoiding volatility altogether does not eliminate risk, it just shifts that risk from short-term fluctuation to long-term insufficiency. Conclusion: Recalibrating Your Fear In the internet age, we are drowning in information designed to scare us. That emotional noise has worked its way into millions of portfolios in the form of excessive caution, idle cash, and bond allocations that struggle to outrun inflation. For the vast majority of investors who aren't at or immediately near retirement, the risk of being too conservative outweighs the risk of a multi-year bear market. With inflation running at 3%, a portfolio returning too little is a portfolio slowly bleeding out. The stock market rewards discipline and patience, while penalizing the fearful. The math has always been on the side of staying aggressive, the only question is whether you're willing to trust it. More Reading: The Windfall Effect: Turning Tax Refunds and Cash Rewards into Savings The FIRE Tradeoff: The Risk of Running Out of Life Before You Run Out of Money Budgeting Sucks. Do It Anyway. References: ¹Society of Actuaries, via Fox 59 / NerdWallet (2023) ²Center for Retirement Research at Boston College. How Do Retirees Invest Their Assets?, 2024. ³Arnott, Robert D., Sherrerd, Katrina F., and Wu, Lillian. "The Glidepath Illusion… and Potential Solutions." The Journal of Retirement, Vol. 1, No. 2, Fall 2013. Research Affiliates. ⁴Forbes. Warren Buffett Net Worth History. ⁵Pfau, Wade D., and Kitces, Michael E. Reducing Retirement Risk with a Rising Equity Glidepath. SSRN, 2013. ⁶JPMorgan Asset Management. Guide to the Markets, Bear Market Recovery Analysis.
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