Glide Path

A glide path is a predetermined plan for how a portfolio's asset allocation shifts over time, usually becoming more conservative as an investor approaches and enters retirement. It is the engine inside target-date funds: a fund dated for 2055 holds mostly stocks today and automatically dials down equity exposure over the coming decades, so investors do not have to manage the transition themselves.

The rationale is that risk capacity changes with your time horizon. A young accumulator has decades of future contributions and time to recover from drawdowns, so a stock-heavy mix makes sense. As retirement nears, a deep loss becomes far more dangerous because there is less time and no new income to repair it — and, crucially, because withdrawals introduce sequence-of-returns risk. Gliding toward more bonds reduces the odds of a catastrophic loss at the worst possible moment.

Glide paths come in different shapes. The traditional declining path lowers equities steadily through retirement. A more recent idea is the rising-equity or bond-tent glide path: hold the least stock right around the retirement date — when sequence risk peaks — then gradually increase equity exposure again through retirement, which has performed well in some historical simulations. There is no universally correct shape, only trade-offs between growth and safety.

A glide path is really a scheduled, long-term form of rebalancing: instead of returning to a fixed target, you are deliberately moving the target itself over time. Whether you implement it through a target-date fund or by manually adjusting a lazy portfolio, the key is to decide the plan in advance, so the shifts happen by rule rather than by emotion during volatile markets.