Stocks vs Bonds Allocation Calculator

What the Rule of Thumb Does

The starting point here is the 110-minus-age rule: the stock percentage is 110 less the age entered, with bonds taking the rest. At 35 that gives 75% stocks. It is a rule of thumb rather than a model of anything: its content is a starting level, set by the constant, and a decline of one percentage point a year. This calculator takes that base and moves it twice, once for a stated risk tolerance and once for the number of years left before the money is needed.

How the Three Inputs Combine

The model is additive, so each lever moves the answer by a fixed amount and none of them interact. A year of age takes one percentage point off the stock share. A point of risk tolerance adds five. A year of horizon adds half a point. In other words a single point on the risk scale is worth five years of age or ten years of horizon, which makes risk tolerance much the strongest of the three across its own range.

Measured across the full input ranges before any bound applies, risk tolerance spans 45 percentage points from end to end and the horizon spans 25. Age spans 72 points between 18 and 90, stopping there for the reason given below. The bounds compress all three in practice: at the sample figures the realised spans are 40 points for risk tolerance, 22.5 for the horizon and 65 for age.

Worked Example

The sample figures used on this page are age 35, risk tolerance 7 out of 10, and 25 years to retirement. The age base is 110 minus 35, or 75%. Risk tolerance of 7 sits two points above the midpoint of 5, adding 10 percentage points. The horizon adjustment is centred on 25 years, so at exactly 25 it contributes nothing. That gives 85% stocks and 15% bonds, and an implied retirement age of 60.

Where the Bounds Bind

The stock share is held between 10% and 95%, and the age base is separately held between 20% and 95% before the adjustments apply. Those bounds are not cosmetic. Across the full declared input ranges the 10% to 95% bound on the final share binds on 13.5% of all combinations and the age base clamp on 12.1%, with the two overlapping on about 3%, so one or the other applies to 22.6% of them. Inside that region the inputs stop changing the answer at all.

Two examples show the size of it. At the highest risk tolerance with a 40-year horizon, every age from 18 to 47 returns exactly 95% stocks, so thirty consecutive ages produce one answer. At the sample risk and horizon figures, every age up to 25 returns 95%. At the other end, the age base stops moving at 90, so ages 91 and 100 give the same allocation at any risk tolerance and horizon. The Share Before the Final Bound row reports what the arithmetic produced before the 10% to 95% bound was applied, so a result sitting on that bound can be told apart from one that is not; the age base clamp happens earlier, before the adjustments, and is not visible in that row.

Age and Horizon Are Entered Separately

The two are independent inputs here, which means combinations that do not describe one person are accepted: age 60 with 40 years to retirement implies retiring at 100. The Implied Retirement Age row adds the two together so that pairing is visible. It also matters for reading the levers above. Age on its own removes one percentage point a year, but for someone whose retirement date is fixed, ageing a year also removes a year of horizon, and the two together come to one and a half points rather than one.

What the Model Does Not Capture

This is a two-asset split and nothing more. It carries no return assumption, no volatility assumption and no forecast, so it cannot say what either allocation would do. It takes no account of fees, tax, inflation, the order in which returns arrive, existing holdings, income stability, or any other asset class.

Risk tolerance is also treated as a number on a linear scale, which is a modelling convenience rather than a measurement. Two people entering 7 are not stating the same thing, and the five-point-per-step weighting is a choice built into the rule, not a finding.