The Case for Rising Stock Exposure as You Move Through Retirement

AI leaders urged a slowdown, chips slid and oil climbed. Stocks eased ahead of Wednesday's Fed.

The quick scan: Monday was a jittery, risk-off start to a Fed week. A weekend call from the heads of the biggest AI labs to slow the pace of development knocked semiconductors and data-centre names, dragging the Nasdaq to the back of the pack. Oil pushed higher on fresh Middle East supply worries, and the 10-year Treasury yield brushed 5% for the first time since 2023 before easing. All three major indexes closed lower, though well off their intraday lows. Today's article, on letting stock exposure rise through retirement, is about exactly this kind of noisy, uncomfortable stretch.

S&P 500: -0.48% to 7,619.95 – slipped for the day but recovered from a steeper morning drop as buyers stepped back in near the close
Dow Jones: -0.29% to 52,421.28 – down about 152 points, the most resilient of the three as money rotated out of chips and into steadier corners
NASDAQ: -0.56% to 26,186.41 – the weakest major index, pulled down by semiconductors and AI-linked names after the industry's own leaders called for a slower pace.

What's driving it: Two forces met on Monday. The first was a rare public warning from the leaders of the largest AI companies, who argued the pace of model development had run ahead of safety. Coming from the very people building the technology, it rattled the AI trade that has powered this market, and semiconductors, optical and power names bore the brunt. The second was the setup into Wednesday's Federal Reserve decision. After Friday's firm inflation reading, traders now price roughly an 85 to 90% chance of a rate hike, which would be the first since 2023. Oil added to the unease, with Brent settling near $106 after fresh attacks disrupted Middle East supply routes, and the 10-year Treasury yield touched 5% before slipping back. This was a market bracing for a busy week, not reacting to a single shock.

Bottom line: A down day before a Fed meeting is precisely the kind of moment today's article is about. When the news is loud and the instinct is to retreat, the research on a rising equity path is a reminder that the plan matters more than the mood. Nothing was decided on Monday, and Wednesday's rate call may move things further. For L-Plate Retirees, the sensible response to a jittery session is usually the boring one: know your plan, and let the week play out before judging it.

What If You Should Own More Stocks in Late Retirement, Not Fewer?

The scoop: Picture the standard retirement advice, the kind printed in every glossy brochure: as you get older, move out of shares and into bonds. Play it safe. Take the risk off the table. It feels like common sense, and for decades it has been the default setting in most retirement plans.

Now here is the question two researchers decided to test properly: what if that advice has the shape of the path backwards? What if the safer route through a long retirement is to start cautious and let your equity exposure quietly rise as the years pass?

That is the counterintuitive idea two researchers put to the test. Retirement researcher Wade Pfau and financial planner Michael Kitces laid out the case in the Journal of Financial Planning, and planners have argued over it ever since. It is peer-reviewed work from one well-regarded research pair, not a stack of independent studies, so hold it as a serious hypothesis rather than settled law. But the hypothesis is a striking one.

The rule almost everyone follows

The conventional approach is called a declining glidepath. The logic is intuitive: the closer you are to needing the money, the less you can afford a crash, so you steadily trim shares and add bonds. Some rules of thumb even set your bond percentage to your age. Retire at 65 with a 60/40 split and, on this view, you drift more conservative every year after.

Nobody would call that reckless. It is the cautious, sensible-sounding choice, which is exactly why it went unquestioned for so long.

What the researchers tried instead

Pfau and Kitces modelled the opposite path. Instead of starting at 60% equities and falling, they started low and rose, for example beginning retirement around 30% in shares and climbing toward 70% over the following decades.

Using long-run historical returns and a standard withdrawal assumption, the rising path came out ahead in their model. Starting at 30% equities and ending at 70% produced a higher modelled success rate than holding a fixed 60/40 mix throughout, and it did so while holding a lower average equity weight across the whole retirement.

On the historical numbers, the cautious-then-rising portfolio succeeded about 95% of the time against roughly 93% for the fixed 60/40. It showed up where it counts, in the unlucky outcomes rather than the averages: in the worst stretches their model tested, the rising path kept paying out for a full 30 years where the fixed mix fell short of 28. When you are living off the money, it is those bad-case years that decide how the story ends.

These are model scenarios built on historical data, not guarantees, and a success rate is a probability in a simulation, not a promise about your retirement.

Why starting cautious and then rising helps

The mechanism is the interesting part. The most dangerous moment for a retirement portfolio is early, when the pot is at its biggest and you have just started drawing on it. A steep fall in those first years, while you are also making withdrawals, does damage that later good years struggle to undo.

A rising glidepath meets that danger by keeping equity exposure lowest exactly when the portfolio is largest and most vulnerable. If markets do stumble early, you are drip-feeding money into shares while they are cheap and letting your exposure grow as that early danger fades. If markets are kind, you simply had a comfortable, conservative start and end up richer anyway.

There is a homely way to picture it. Two retirees both hit a rough patch of markets in their first few years. The one on the conventional path is heaviest in shares just as prices tumble, taking the deepest hit on the largest version of the portfolio. The one on the rising path holds fewer shares through that early storm, keeps buying a little more while prices are low, and carries a growing stake into the recovery.

What happens when returns are stingy

Pfau and Kitces did not stop at rosy assumptions. They re-ran the exercise using more pessimistic return estimates, the kind that assume the future is thinner than the past. Under those harsher inputs the best path was more cautious overall, something closer to starting near 10% in shares and rising to around 50%, rather than climbing all the way to 70%.

But the shape of the finding survived. Even in the stingy world, the rising path outlasted a static mix in the worst outcomes, stretching close to a fifth further in their model before the money ran short. The exact percentages moved; the direction of travel, cautious then rising, did not.

A rule you could actually run

None of this requires a spreadsheet full of forecasts. In the research it works as a plain rebalancing rule: pick a starting equity weight, pick a ceiling, and nudge the target up by a small amount, perhaps a percentage point, each year until you reach it. No market calls, no predicting the next crash.

Keep some perspective, too. In their historical data a static 60/40 never actually ran out of money, so this is not a story about a broken portfolio you must flee. It is a story about the shape of the path, and about a small design choice that quietly improved the worst cases.

The hard part is not the arithmetic. It is the temperament. A rising glidepath asks you to add to shares in the very years the headlines are grim and every instinct says retreat. That is the same discipline good investing has always demanded, wearing a slightly backwards outfit. The plan is simple. Sticking to it, as ever, is the whole game.

Actionable takeaways for L-Plate Retirees:

• The shape of the path is a decision, not an afterthought. Most retirement advice fixes on how much you hold in shares and treats the direction of change as automatic: down, always down. Pfau and Kitces show the direction itself is a lever. Choosing to start low and rise, rather than start high and fall, changed the modelled outcomes even when the average share weight was lower. Decide the path on purpose.

• Protect the early years, because that is when a fall hurts most. Your portfolio is largest and most fragile in the first stretch of retirement, when a bad run collides with your withdrawals. Keeping equity exposure at its lowest precisely then is the whole point of the rising path. Whatever mix you choose, defend the opening years of retirement.

• Treat success rates as weather forecasts, not warranties. Every figure in this research is a model output built on historical data. A 95% success rate means the plan survived in 95 of 100 simulated histories, not that your retirement is 95% safe. Use the numbers to compare choices, never to feel certain.

• A good plan can be boringly mechanical. The rising glidepath needs no forecasts and no market timing. Set a starting weight, set a ceiling, and lift the target a little each year. If a strategy demands you predict the next crash to work, be suspicious. This one asks the opposite.

• The discipline is emotional, not mathematical. Rising into shares means buying more of them in the years the news is worst and every instinct says to hide. That is hard to do, and no spreadsheet makes it easier. Knowing in advance that the plan will feel wrong at exactly the wrong moments is half of being able to stick with it.

Your Turn:
If your own plan quietly trims shares every year as you age, was that a deliberate choice you made, or just the default that came with the account?
Think back to the last time markets fell hard: did you add, hold, or retreat, and what would it take for you to buy into the next scary stretch rather than flee it?
Pfau and Kitces found the sturdier path was also the more uncomfortable one to follow. Which matters more to you in retirement, a plan that tests well on paper or one you know you can actually stick with?

👉 Hit reply and share your thoughts – your answers could inspire fellow readers in future issues.

If this issue helped you see that the shape of your equity path, cautious then rising, can matter as much as the mix itself, consider supporting L-Plate Retiree on Ko-fi. Your support keeps these calm, evidence-led investing reads landing in your inbox.