How Much Should a 50 Year Old Have in Bonds?


Investment portfolios are commonly allocated between stocks and bonds since the two asset classes have historically been non-correlated for almost every bear market. In other words, when the US stock market has declined significantly, Treasury bonds have increased in value.

The previous rule for how much to allocate to bonds vs stocks was to subtract your age from 100 to get the amount to allocate to stocks with the balance going into bonds for a simple portfolio. Now, the rule is 110 less your age in stocks with the rest in bonds. Using this rule, a 50 year old would have 60% in stocks and 40% in bonds.

Why Did the 100 Minus Your Age Rule Change?

In more recent years, this 100 minus your age rule of thumb for stock and bond allocation has been updated for several reasons. Keep reading to see if any of these factors might affect you, as well as other factors to consider for the percentage to allocate to bonds vs stocks for a 50-year old.

Life Expectancy

First, we are living longer. While we may not be planning to live to 110, individuals are, in fact, living longer based on most research. Longer life spans suggest that investors allocate more investment savings into stocks since stocks are considered to build wealth while bonds are held for stability and income, at least historically.

Anticipated Retirement Income

Retirees used to be able to rely on bond income to live in retirement. With interest rates so low, bond income is no longer a viable option for retirement income.

Will Bonds Go Up or Down?

Bonds were in a 40-year bull (rising) market from the early 1980s until 2020. This makes sense because bonds go up when interest rates go down; interest rates were in a long-term decline during that same time frame.

In fact, bonds experienced a decline in value in 2022 due to rising interest rates.

Even though bonds are purchased primarily for portfolio stability now, most 50-year old’s cannot afford a potentially depleting asset that makes up 40% or more of their portfolio as they near retirement.

Offsetting this risk is the fact that bonds have historically brought stability to portfolios, as addressed more ahead.

The 110 minus your age rule is a rule of thumb that may be losing some of its value with a move toward investment alternatives over traditional asset allocations determined by investors themselves, at least this is the case with more proactive investors.

Target Retirement Funds

Most investment companies now issue target retirement funds. These funds remove the responsibility of investors needing to choose an asset allocation between stocks and bonds.

Instead, investors put money into funds that invest in stocks, bonds, and potentially other assets based on an investor’s projected retirement dates.

So, How Much Should a 50 Year Old Have in Bonds?

The amount a 50-year old should have in bonds depends on several factors. I encourage investors to evaluate these factors rather than rely on rules of thumb, such as 110 minus age for a stock and bond allocation.

Overall Stock and Bond Markets

Some of the best financial advice I ever heard was from billionaire investor Stanley Druckenmiller; he said to invest 18 months out.

In other words, ask what is likely to be happening in the next 18 months instead of relying on historical investment data only in making investment decisions. Of course, Druckenmiller is not the type of investor that would really on a fixed asset allocation template between stocks and bonds; he is, instead, what I would call a tactical investor who selects assets based on opportunities, not fixed allocations.

As an investor well over 50 years old, I rely heavily on historical long-term investment data to choose an investment strategy with an acceptable amount allocated to bonds.

But I also heavily consider what is likely to happen in the future based on the current economic environment.

Not doing so would be like going to buy a house and not even looking at the neighborhood.

This is counterintuitive but if bonds or stocks have been up for a long time to the point of overvaluation, they’re more likely to go down within the next few years, if not 18 months.

It’s smart to consider this when deciding how much to put in bonds and stocks at any age.

Stock and Bond Asset Allocation Templates

Rules such as age minus 110 and standard asset allocation templates make investing easier for everyone.

They tell us how much to put in stocks and bonds at any given age without regard to anything else.

Such asset allocation templates are used to establish the percentages to put in stocks and bonds for the majority of buy and hold investment portfolios.

What I’ve learned from over 40 years of investing, however, is that they don’t work as well as investing based on facts and opportunities that present themselves due to ever changing financial markets. Asset allocation templates and standard rules are vague suggestions at best in a world where everyone wants a rule of thumb to keep investing easy.

Are Bonds Still Worth It?

Bonds are bought for income. We don’t have to be economists to see that interest rates are not high enough to sustain us in retirement as they once did. For a 50-year old investor starting to tweak their investment portfolio for retirement, this is a big deal.

Since bonds increase in value when interest rates fall, and they pay little interest, their only purpose in a portfolio is the fact that bonds have historically almost always gone up when stocks go down.

This is the saving grace of bonds and an important one. A 50-year old investor certainly needs an asset that offsets inevitable stock market declines since a 50 year old investor is probably scaling back risk. This is, of course, assuming bonds will always rise when stocks go down. (They almost always have as you can read in my post What Goes Up When Stocks Go Down.)

What Is a Good Asset Allocation for a 50 Year Old Then?

The amount one 50-year old should have in bonds vs stocks can be completely different from the amount another 50-year old should have in bonds vs stocks.

For example, a 50-year old with 4 dependent children, $100,000 in savings, and income that barely pays the bills needs more portfolio stability than a 50-year old investor with $1,000,000 in savings, a large salary, and no dependents. In addition to the larger, or macro factors, like economic and market factors, there are personal factors such as these.

There are many such financial factors that vary among investors that affect allocation between stocks and bonds. For example, the following factors also affect how much a 50-year old should have in bonds:

  • Dependents
  • Net Worth
  • Financial Obligations
  • Debt
  • Income
  • Other Assets

Again, we all love easy answers, but a good stock vs bond asset allocation for one 50-year old may be quite different from another 50-year old.

That’s because circumstances are different for every investor.

The Percentage of Bonds a 50 year Old Should Have

As you have seen, the rule of thumb is that you should use a formula of 110 minus your age to determine the percentage of bonds vs stocks to have in your portfolio.

Investors that take the time to fine tune their stock and bond allocation based on larger economic factors, however, as well as their own financial situation will likely invest better and with much more confidence.


The information on this website is for education only and is not to be construed as personal financial advice.