Three classic stock/bond allocation rules.
110-age rule
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100-age rule
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120-age (aggressive)
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Suggested: 110-age
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Your breakdown
Updates live as you type| Rule | Stocks | Bonds |
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Why your age sets the dial
The split between stocks and bonds is the single biggest driver of how a portfolio behaves, far more than which individual funds you pick. Stocks deliver higher long-run returns but lurch up and down; bonds return less but steady the ride and give you something to spend or rebalance from when stocks fall. The classic age-based rules answer one question: how much short-term turbulence should someone your age accept in exchange for growth? The younger you are, the longer you have to recover from a downturn, so the rules tilt you toward stocks early and shift you toward bonds as your spending horizon shortens.
This calculator is built for someone setting a target allocation for a long-term account, a 401(k), an IRA, or a taxable brokerage, who wants a sensible starting point rather than a precise forecast. These are heuristics, not laws. Your real allocation should also reflect how much volatility you can stomach without selling at the bottom, which is the behavior that actually destroys returns.
The three rules, side by side
Each rule subtracts your age from a fixed number to get your stock percentage; bonds take the rest. The 100 minus age rule is the traditional version and the most conservative. The 110 minus age rule, which this tool recommends, reflects longer modern lifespans and the reality that a 30-year retirement needs growth well past the first day. The 120 minus age rule is the aggressive end, suited to investors with steady income and a high tolerance for swings. The gap between them is widest when you are young and narrows steadily, so a 25-year-old sees a 20-point spread while a 60-year-old sees the rules nearly converge.
A 40-year-old's $200,000 split
Run the default: age 40 with a $200,000 portfolio. Under the recommended 110 minus age rule, the stock share is 110 minus 40, which is 70 percent, leaving 30 percent in bonds. On $200,000 that is $140,000 in stocks and $60,000 in bonds. The traditional 100 minus age rule would hold 60 percent stocks, and the aggressive 120 minus age rule would hold 80 percent. The table shows all three so you can see how much the choice of rule moves your dollar allocation.
Rebalancing and the cash you actually hold
Picking a target is the easy part. The discipline is rebalancing back to it. After a strong stock year your portfolio drifts above target on equities, which quietly raises your risk just when valuations are high. Selling the winners back down to your target and topping up bonds is uncomfortable precisely because it works. A practical tip: rebalance once a year on a fixed date, or whenever any sleeve drifts more than five percentage points from target, and do it inside tax-sheltered accounts first so the trades trigger no capital gains.
Two edge cases these rules ignore. First, they say nothing about your emergency fund. Cash you may need within a year does not belong in this stock-bond split at all; keep it separate so a market drop never forces you to sell. Second, a single target-date fund already runs this glide path for you automatically, rebalancing and de-risking as the date approaches, which is why it is the default in most workplace plans. If you hold one, you do not need to manage the allocation by hand, and layering your own bond fund on top can unintentionally double up.
Should I count my home equity or pension as part of the bond side?
Many planners do treat a stable pension or Social Security as a bond-like income stream, which can justify holding more stocks in your investable accounts since your guaranteed income already cushions the downside. Home equity is murkier because it is illiquid and you still need somewhere to live, so most people leave it out of the allocation entirely. The rules here apply to your investable portfolio, not your whole net worth.
Where should the bonds actually sit, in a taxable or tax-sheltered account?
As a general rule, hold bonds inside tax-deferred accounts like a traditional 401(k) or IRA, because their interest is taxed as ordinary income every year. Keep stock index funds, which throw off lightly taxed qualified dividends and let gains compound untaxed until you sell, in taxable accounts. This asset-location habit does not change your overall allocation, only which account each piece lives in, and it can meaningfully reduce the tax drag on the same portfolio.