Asset allocation calculator

Set your stock and bond split with the age rule — then see the blended real return it implies, and the two cases where the rule should be overruled.

How the math works

The age rule sets your stock percentage at a base number minus your age. The rest goes to bonds. The base is 100, 110, or 120 — a higher base means a more stock-heavy, more aggressive path.

The original form was 100 − age. Longer lifespans made that too conservative for most people — a 60-year-old with 30 more years of spending ahead holding 60% bonds tends to lose to inflation — so 110 − age and 120 − age became the common modern variants.

The second number this calculator shows is the one the others skip: the blended real return of the split. That's just the weighted average of the two legs.

We default the legs to a 7.0% real return for stocks — the S&P 500's long-run inflation-adjusted average — and 2.0% for bonds, the long-run real return on the 10-year Treasury. Both are long-run benchmarks, not forecasts, and both are yours to change.

Worked example

Take a 25-year-old starting to invest $500 a month in a low-cost total-market fund. Under 110 − age, the split is 85% stocks, 15% bonds. Under 120 − age, it's 95% stocks, 5% bonds.

Now price the difference. The 85/15 split blends to 0.85 × 7.0 + 0.15 × 2.0 = 6.25% real. The 95/5 split blends to 0.95 × 7.0 + 0.05 × 2.0 = 6.75% real. Half a point of expected return, every year, for four decades.

That half-point is the entire argument between the 110 and 120 rules, and it's invisible on a calculator that only prints percentages. The reason for holding the extra bonds isn't the return — it's that the bond-heavier split falls less in a crash, which matters far more to a 60-year-old than to a 25-year-old. At 25, the drawdown you can wait out is worth more than the stability you don't need yet.

When this calculator is wrong

The age rule is a starting point, not an answer. It's a one-variable model of a decision that has at least three variables. Here's where it breaks:

• It ignores Social Security and pensions, which act like bonds. A guaranteed, inflation-adjusted income stream behaves like a large bond holding you don't see on your brokerage statement. Social Security replaces about 40% of pre-retirement earnings for a medium earner. If a big slice of your retirement spending is already covered by that floor, you can hold more stock in the portfolio than 110 − age suggests, because the portfolio isn't carrying all the risk.
• It assumes your risk tolerance matches your age. The rule gives a 40-year-old 70% stocks whether or not that person sold everything in the last downturn. The allocation you can hold through a 7.0%-real market that just dropped 30% beats the one you bail out of at the bottom. If you know you'll panic, a lower base is the honest input.
• It only knows two asset classes. No cash, no real estate, no account for the sequence of returns near retirement. A bad run of years right after you stop contributing hurts far more than the same run in your 30s — the Trinity Study's 4% rule held up historically only for portfolios of 50%+ stocks, which is a floor the age rule can push you below in your 70s.

What to do with the result

Pick the base that matches your guaranteed-income floor, not your mood. If Social Security or a pension will cover most of your essential spending, use 120 − age and let the portfolio carry more stock. If the portfolio is the whole plan, 110 − age is the safer default. Then stress-test the stock number against the last real crash: picture the stock dollars this calculator shows falling by a third overnight. If that figure would make you sell, drop the base by 10 and use the allocation you'll actually hold. The best allocation on paper loses to a worse one you don't abandon.

Common questions

Is the rule 100, 110, or 120 minus age?

All three are in use. 100 − age is the original and the most conservative; 120 − age is the most aggressive. The 110 and 120 variants became common because people now live and spend for decades after 65, and the 100 rule can leave a retiree too bond-heavy to keep up with inflation. Use the base that matches how much of your spending is covered by guaranteed income.

What return should I assume for stocks and bonds?

This calculator defaults to a 7.0% real return for stocks and 2.0% for bonds — the long-run inflation-adjusted averages for the S&P 500 and the 10-year Treasury. These are benchmarks, not predictions. Real future returns will differ, and bond returns in particular track the starting yield closely, so adjust the inputs if you have a reason to.

Does the age rule include my emergency fund?

No. The split applies to long-horizon investing money. Cash you might need inside three years — an emergency fund, a near-term down payment — sits outside this calculation entirely. Counting it as "bonds" overstates how conservative your actual investment portfolio is.

Should I rebalance every year to match the rule?

The rule drifts about one point more conservative each birthday, which is too small to chase. Most investors rebalance once a year or when a leg drifts more than five points off target, and reset the age-based number at the same time. Trading more often than that mostly generates taxable events and fees, not better outcomes.