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Should we rush to bonds once we retire?

This rule of thumb can certainly serve as a starting point for thinking about your investments as you approach retirement.

There’s an old, popular rule of thumb that says that the fixed income component of our portfolios should represent our age, in percentage. So, for instance, a 60-year-old should have 60% of his or her portfolio in fixed income and the rest in equities.

Although this rule is simple and relevant, there are a few points to consider:

1. We are living longer

  • Today, in Canada, women who have reached the age of 65 can expect to live another 22 years, and men, another 19 years. In the 1920s, once someone reached the age of 65¹, the average life expectancy was 13 years for both men and women. The likelihood that an investor will need to draw from his or her portfolio for a longer period of time has therefore considerably increased.

2. Stocks outperform over the long-term

  • Our research shows that over a long timeframe, an investor who withdraws funds from his portfolio every year greatly increases the risk of depleting his capital as he reduces the percentage he holds in shares.

3. Analyzing worst-case scenarios

  • This same research shows that even in the three worst 30-year periods since 1914, those portfolios more heavily biased to shares would have allowed individuals needing to draw funds not to run out of money.


In short, this rule of thumb can certainly serve as a starting point for thinking about your investments as you approach retirement. You should know, however, that, regardless of their age, we rarely recommend that our retired clients hold more than half their portfolio in fixed income, unless their withdrawals are relatively small in relation to the overall value of their portfolio.

Please feel free to contact us if you have any questions or if you’d like more information about our research.

The Claret team

“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.” Warren Buffett
Listen to Buffett’s 2018 interview

¹Statistics Canada


  • Claret
    Claret Asset Management specializes in offering portfolio management services to high net worth clients. We are completely independent and free of conflicts of interest. Claret was founded in 1996 with the objective of answering the growing needs of private investors.

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