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Own Your Age? Revisiting The Rule of Thumb

There’s an old rule of thumb that says the percentage of fixed income in your portfolio should be equivalent to your age – i.e., a 60-year-old should have 60% of his or her portfolio in fixed income, and the remainder in stocks.

While this rule is simple and relevant, there are some things to consider.

1. Canadians are living longer than ever. 

Today, Canadian women who have reached the age of 65 can expect to live an average of 22 more years. For men, it’s 19 more years (to age 87 and 84 respectively). Compare that to 1920-1922, when women who had lived to age 65 could expect to only live an additional 13.5 years, and men an additional 13 years (to age 78.5 and 78, respectively). While the rule of thumb was invented decades ago, the probability that an individual will have to live off their savings for a longer period of time has increased substantially over the past 100 years.

2. Equities offer superior returns over long periods of time.

Our research shows that over 30-year periods, an investor who withdraws funds from his portfolio annually greatly increases the risk of depleting his capital as he decreases the percentage he holds in stocks. To quote Warren Buffett, “If I were going to own a 30-year government bond or own equities for 30 years, I think equities will considerably outperform that 30-year bond.” 

3. In a worst-case scenario analysis, portfolios with more equities perform better in the long term.

This same research shows that even during the worst 30-year periods (in terms of post-inflation returns since 1914), portfolios with more equities were more likely to have kept an individual in withdrawal mode from running out of money. This is especially true in periods of relatively high inflation, such as the 1970s.

In short, the old “own-your-age” rule of thumb for asset allocation can be used as a starting point for thinking about your investments at the start of, or during, your retirement. However, regardless of age, we rarely recommend our retired clients have more than half of their portfolio in fixed income – unless their withdrawals are lower relative to the total value of their portfolio.

Do not hesitate to contact us for more information or more details about our research.


  • Maxime Dubé, M.Sc., CFA
    Maxime holds a Masters degree in Finance from the Université de Sherbrooke and is a CFA charterholder since 2019. He joined the Claret team in 2016 as a junior investment research analyst and was promoted to portfolio manager in 2019.

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