Designing your own glide path: de-risking on your schedule, not a fund company's

A glide path is simply a rule for how your stock/bond split changes over time. Target-date funds made the concept famous — start around 90% stocks, drift to 40-50% by retirement — but their path is a mass-market compromise designed for a hypothetical average investor. Your situation is not average: your savings rate, pension, retirement date flexibility, and stomach for losses all differ from the default. Building a custom glide path takes an hour and a spreadsheet, and it's one of the highest-leverage design decisions in a portfolio.

Why the default path might be wrong for you

• If you have a pension or expect large Social Security relative to spending, you can afford more stock risk later than the default — your fixed income floor is already built.
• If your retirement date is rigid (health, industry, mandatory retirement), you need to de-risk earlier — you can't 'just work two more years' after a crash.
• If you're saving aggressively late (catching up in your 50s), contributions still dwarf market moves, and de-risking too early mutes the compounding you're counting on.
• If most of your money is in the last decade before retirement — true for almost everyone — the default path may hold too much stock exactly when a crash hurts most.

The three-number framework

A glide path is fully described by three numbers: the starting equity percentage, the ending equity percentage, and the shape of the transition between them. Start high (80-100% equities) while your portfolio is small relative to future contributions. End wherever your retirement income plan needs you to be — typically 40-60% equities for a 30-year retirement funded mostly by the portfolio, higher if pensions cover your floor, lower if you plan to buy an annuity. The shape is where customization earns its keep.

The linear path de-risks a little every year — simple, boring, fine. The late-and-steep path stays aggressive until roughly ten years out, then descends quickly; it suits high savers whose contributions dominate early and who want maximum compounding time. The bond tent goes further: it de-risks into retirement, then re-risks afterward, holding the most bonds in the five years on either side of the retirement date. That window is where sequence-of-returns risk is deadliest — a crash there, while you're selling shares to eat, does damage no recovery fully repairs. Once you're several years past retirement and the portfolio has survived, rising equity again fights the bigger long-run enemy: inflation.

Calendar-based vs. trigger-based de-risking

Most people should de-risk on a calendar: every year on your birthday, shift 1-2% from stocks to bonds until you hit the target. It's automatic and immune to market opinions. The alternative is trigger-based de-risking — shifting after the portfolio hits milestones ('when I reach $1M, I move to 65/35'). Triggers have a real appeal: they de-risk when you've won, not when a date arrives. The risk is that markets don't cooperate with milestones, and a portfolio stuck below the trigger leaves you aggressive far too long. A hybrid works well: calendar-based shifts as the default, plus a rule that hitting your retirement number early accelerates the schedule.

Building yours: a working procedure

1. 1
   Set the endpoint

   Decide your at-retirement allocation from your income plan: how much of your spending is covered by Social Security and pensions? The bigger that floor, the more equity you can carry at 65.

2. 2
   Set the start

   If retirement is 15+ years away and you're still contributing heavily, 80-90% equities is defensible. Your honest crash behavior in 2020 or 2022 is better evidence than any risk questionnaire.

3. 3
   Choose the shape

   Rigid retirement date or portfolio-dependent retirement: favor the bond tent. Flexible date and strong savings rate: late-and-steep is fine. Unsure: linear never embarrasses anyone.

4. 4
   Write the schedule

   Literally a table: age in one column, target stock % in the next. Put the annual shift on your calendar next to rebalancing.

5. 5
   Revisit on life events only

   New pension, inheritance, health change, divorce — these justify redrawing the path. Market headlines do not.

What this costs and what it's worth

A custom glide path costs nothing but attention — you're holding the same cheap index funds a target-date fund holds, minus its wrapper fee (often 0.10-0.30% above the underlying funds' cost, which on $750,000 is $750-$2,250 every year). What you give up is the automation: nobody shifts the allocation for you, so the schedule has to live on a calendar, not in your intentions. If you know you won't execute an annual rebalance, the target-date fund's mediocre-but-automatic path beats your optimal-but-ignored one.

The bottom line

A glide path is a pre-commitment device: it makes de-risking a schedule instead of a judgment call, which means it actually happens. The default target-date path is a reasonable answer to an average question — but if your floor income, retirement-date flexibility, or savings pattern is unusual, an hour of design gives you a path that protects the years that can actually ruin you. Pick the endpoint from your income plan, the shape from your flexibility, execute with contributions where you can, and then let the calendar — not the news — turn the dial.