Glide Path
A schedule that shifts a portfolio from equities toward bonds as the spending date approaches.
A glide path moves the equity share down on a predetermined schedule as a target date approaches. Target-date funds implement one automatically, which is why they are the default in most workplace retirement plans.
What changes with age is not risk appetite but recovery time. A decline at 25 is absorbed by thirty years of subsequent contributions and returns. The same decline at 62 lands when withdrawals are about to begin, so the portfolio has to sell into it rather than wait it out.
Glide paths differ substantially between providers, and two funds sharing a target year can hold equity allocations twenty points apart at the same age. The design question is whether the path is meant to reach the retirement date or to continue through it, and the two answers produce very different portfolios at 65.
Worked through
Stock Allocation Over Time
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