The “100 Minus Your Age” Rule: Does It Still Work in 2025?
For decades, financial advisors have recommended a simple investment formula: 100 Minus Your Age Rule. 100 minus your age = the percentage of your portfolio that should be in stocks.
Sounds easy, right? But in 2025, the 100 Minus Your Age Rule is dangerously outdated. With longer life expectancies, modern market trends, and ultra-low interest rates, this approach could leave you with too little growth—and not enough retirement security.
Let’s break down why the 100-minus-your-age rule no longer works and explore better, more modern strategies to build wealth and retire comfortably.
Where Did the 100 Minus Your Age Rule Come From?
This rule was designed to help investors balance risk and safety as they age. The logic was simple:
- Younger investors have more time to recover from market downturns, so they should hold more stocks.
- Older investors need stability, so they should hold more bonds.
For example, if you’re 30 years old, this rule suggests you should have 70% stocks and 30% bonds. If you’re 60 years old, it suggests 40% stocks and 60% bonds.
But there’s a huge problem with this thinking in 2025.
Why the 100 Minus Your Age Rule Is Outdated in 2025
1️⃣ We’re Living Longer Than Ever
In the 1950s, life expectancy was around 68 years. Today? It’s pushing 80+ years—and many retirees live into their 90s.
🔹 If you retire at 65, you might have 30+ years left to live. That means you still need long-term growth—not just “safe” investments that barely keep up with inflation.
2️⃣ Bonds Aren’t What They Used to Be
Back in the day, bonds paid 5-6% interest. Today? Most bonds barely beat inflation.
🔹 Relying too heavily on bonds could mean losing money in real terms. You need some stock exposure to maintain purchasing power.
3️⃣ Inflation Is a Wealth Killer
The cost of living keeps rising—and it doesn’t stop just because you retire.
🔹 A portfolio that’s too conservative could leave you running out of money too soon. Stocks offer the best long-term hedge against inflation.
What to Do Instead: A Smarter Portfolio Strategy
Instead of blindly following 100 minus your age, consider one of these modern approaches:
🔥 The 120 Minus Your Age Rule
- This updated formula assumes we’re living longer and need more stock exposure.
- Formula: 120 – Your Age = % in stocks
- Example: If you’re 60, this rule suggests 60% stocks, 40% bonds—a more growth-friendly allocation.
🔥 The “Bucket Strategy” (The Best Approach)
- Short-Term Bucket (1-3 years): Cash, high-interest savings, short-term bonds.
- Medium-Term Bucket (3-10 years): Balanced mutual funds, dividend stocks.
- Long-Term Bucket (10+ years): Growth stocks, ETFs, and equity-heavy funds.
- This strategy protects your short-term needs while still growing your money long term.
🔥 The “Risk Capacity” Approach
- Instead of a simple formula, base your stock/bond split on: ✅ Your actual retirement timeline ✅ Your ability to handle market downturns ✅ Your total income sources (pensions, social security, etc.)
- This gives a customized allocation instead of a one-size-fits-all rule.
Final Thoughts: The New Rules for 2025
The “100 Minus Your Age” rule served its purpose decades ago, but it no longer works in today’s economy. If you want real retirement security, you need a strategy that: ✅ Accounts for longer lifespans ✅ Protects against inflation ✅ Gives you enough growth to sustain 30+ years of retirement
🚀 Want a personalized portfolio strategy? Talk to a financial advisor and build a plan that actually works for YOU.
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