How it works
A rising equity glidepath — the bond tent — inverts conventional wisdom at the worst moment of retirement planning: instead of holding a static mix forever, you DESCEND into retirement heavily protected, bottoming near 20–30% equities on retirement day, then let equity exposure CLIMB a couple of points per year through mid-retirement. Published research popularized by Kitces and Pfau found that historical failure rates often improved when the riskiest years — the first decade of withdrawals — met the least stock exposure, with growth rebuilt afterward once sequence danger faded. The shape explains its nickname: allocation rises into retirement, peaks in defensive posture, then relaxes. This builder renders the entire timeline from five numbers — today's mix, years remaining, the trough, the climb rate, and the eventual ceiling — and translates the trough into dollars, because a 30% equity floor on $500,000 means $350,000 of bonds and cash earmarked to spend through bear markets. Growth, rebalancing and taxes are ignored by design so the SHAPE stays legible; re-derive dollars annually as balances move.
Formula
Working years: equity glides linearly toward the trough | Retired years: equity += rise points/year, capped | Cushion = portfolio × (1 − trough%)
Tips
- The trough matters most — fund 1–2 spending years in cash above the bond sleeve.
- A 30% trough with a 2-point rise reaches mid-50s% equity around retired year 13.
- Start descending 5–10 years out; abrupt shifts near retirement invite mistimed trades.
- If early retirement coincides with a crash, the tent buys years of not selling stocks.
- Revisit the ceiling later — longevity may argue for more growth than the tent allows.
Frequently asked questions
- What is a rising equity glidepath?
- It is a retirement allocation that starts LOW in stocks — often 20–30% on retirement day — and rises steadily afterward, reaching 50–60%+ by mid-retirement. The design minimizes equity exposure exactly when sequence-of-returns damage bites hardest, then rebuilds growth for the long tail.
- Why hold fewer stocks at retirement than during working years?
- Because withdrawals turn temporary declines into permanent losses. A retiree selling shares through a 40% crash locks prices in; a saver simply keeps buying. Reducing stocks to ~30% while withdrawals begin historically cut failure odds versus static mixes in published sequence research.
- How fast should equity rise after retirement begins?
- Commonly one to four percentage points yearly. At two points from a 30% start, exposure passes 50% around retired year eleven. Faster climbs rebuild returns sooner but re-expose the portfolio to late sequence shocks; slower climbs sacrifice growth longer for safety.
- Is a bond tent better than a fixed 60/40 in retirement?
- Historical simulations favored the tent for withdrawal-phase survival because its low-equity trough covers the vulnerable first decade, while 60/40 carries full equity risk immediately. The tradeoff is complexity and lower expected returns early — there is no free lunch, just relocated risk.
- When should I start building the bond tent?
- Typically five to ten years before retirement, gliding down gradually rather than de-risking overnight. A ten-year descent from 70% to 30% equities moves about four points yearly — achievable through contributions and rebalancing without dramatic single-year sales or tax surprises.