Your Portfolio Should Be 80% Stocks At This Age, According To The 120-Minus-Age Rule

A gradual shift in portfolio strategy is essential as you age. Regardless of the goals you're seeking to achieve with your long-term savings portfolio, rolling some of your investments out of higher-risk vehicles as you near your targets is the smart play. For instance, your portfolio should be largely focused on stability over growth by the time you turn 60. One prominent model for managing this shift is the 100-minus-age rule, which suggests subtracting your age from 100 to derive the exposure you should maintain in the stock market. But more recently, experts have adopted the 120-minus-age rule, with which you subtract your age from 120 instead to maintain a slightly higher distribution of assets in stocks. So, if you're 40, you'll want to have 80% of your savings invested in stocks.

Retaining a higher distribution of stocks to value-preserving tools like bonds leaves you more susceptible to swings in the market. So, shifting away from this model a bit more aggressively when you reach retirement age may be wise. But this framework also delivers a longer timeline of greater growth potential. It's often recommended to have three times your annual salary saved by 40, but those between 35 and 44 have a median savings figure of $45,000 and an average of $141,520, according to the Federal Reserve. Both figures lie below the target of someone making the median American salary, which the Bureau of Labor Statistics reports was over $62,600 in 2025.

The 120-minus-age approach delivers a notably higher distribution of growth options throughout the entirety of a portfolio's journey. A large portion of Americans start working in their late teens or early 20s, which corresponds with a roughly 100% stock allocation by this rule's standards. Adhering to this strategy also imparts a key lesson in rebalancing, a central component in ending each year financially strong. Starting with an essentially pure stock allocation in your 20s and gradually shifting toward more stable assets as you progress allows you to limit slow-growing, defensive assets while giving you plenty of time to recover from potentially riskier investments should they go awry.

Workers tend to start earning peak salary figures at some point between their late 40s and early 50s. Many savers hitting this hump will want to naturally start shifting their focus into greater security to protect what they've already built, which almost perfectly aligns with the model the 120-minus-age rule encourages: Investors who adhere to this rule throughout their career will spend roughly two decades pursuing growth in their portfolio, followed by two more characterized by a gradual taper into a defensive posture. This approach can help stave off the threat of inflation that seniors face while also addressing the financial ramifications of a gradually increasing life expectancy that pushes savings needs ever higher.

The realities of the market bear this approach out, too: GoBankingRates reports investors deploying this framework have yielded annual returns almost 1% higher than those relying on the 100-minus-age method.