Asset Allocation and Risk Management After 50: Is the 60/40 Rule Still Viable?

Damilola Esebame

on October 25, 2025

Damilola Esebame

on October 25, 2025

Written by Damilola Esebame

Edited by Omobolade Ajibade

Asset Allocation and Risk Management After 50: Is the 60/40 Rule Still Viable?

Key Takeaways

After 50, risk management becomes more important than aggressive growth; portfolios should prioritize income stability and capital preservation.
The 60/40 rule (60% stocks, 40% bonds) still provides a useful foundation but often needs adjusting to reflect market conditions and personal goals.
Shifting toward lower-volatility assets, shorter-duration bonds, and reliable income streams (like annuities or dividend funds) can protect against market swings.
Annuities and income funds can create a predictable cash flow and help reduce longevity risk, though they come with costs and limited liquidity.
Regular rebalancing and reassessing risk tolerance every 6–12 months helps ensure your portfolio remains aligned with your retirement timeline.
The classic 60/40 portfolio (60% equities, 40% bonds) has long been the go-to for balanced investors. But given today’s market dynamics, is that still the best starting point for someone in their 50s or beyond?

In this article, we will explore how the risk profile changes after 50, evaluate the relevance of the 60/40 rule in today’s environment, and then show how you can adjust your portfolio through lower-volatility tilts, income-producing vehicles like annuities and income funds, and provide a practical step-by-step checklist.

Why Age 50+ Changes the Game

When you’re in your 50s, your investment journey is no longer solely about growth; it’s about the longevity of your assets, income sustainability, and avoiding big drawdowns you may not have time to recover from.[1] While someone in their 30s might accept a large equity drawdown because there are decades to recover, someone who is 55 or 60 may not.

Your time horizon shortens (though you may still have 20-30 years ahead if you intend to work or live long), your fixed costs may increase (retirement, health care, legacy), and your tolerance for large dips typically falls. Recognising this shift means your portfolio design should prioritise risk management after 50 and predictable income, rather than pure growth.

The Securities and Exchange Commission (SEC) advises that, as you get closer to your investment goal, “you’ll likely need to hold less stock and more bonds and cash equivalents.” This is exactly the logic for an investor over 50: preserving capital is as important as seeking growth.

In addition, data from the Government Accountability Office (GAO) highlight that many households age 55 and older lack sufficient retirement savings or defined-benefit plans.[2] That underscores the need to build a portfolio that is resilient and income-focused.

The “60/40 Rule”: What It Is & How It’s Faring

The 60/40 portfolio has been a pillar of balanced investing: roughly 60% allocated to equities for growth, 40% to bonds for stability/income. The rationale: equities provide upside, bonds soften downside, and because stocks and bonds often move in opposite directions, they deliver smoother risk-adjusted returns.

Historically, that worked well: for decades, the stock–bond correlation was negative, meaning bonds often rallied when stocks fell. But today the story is more nuanced. A recent report by the CFA Institute noted that stock–bond correlations have been highly variable over time, and particularly in recent years, the cushion provided by bonds has been weaker.[3] For example, in 2022, both stocks and bonds sold off together, undermining the 60/40 dynamic.

Further, recent investor surveys suggest many believe the 60/40 rule might be outdated: according to the Charles Schwab Corporation 2025 Modern Wealth Survey, about 42% of respondents said the classic 60/40 portfolio is outdated. On the flip side, other research, such as from State Street Global Advisors (SSGA), suggests that as inflation concerns ease and correlations revert, the 60/40 strategy is regaining relevance.

For someone over 50, the takeaway is: yes, 60/40 remains a useful starting point, but it should not be accepted uncritically. Personal time-horizon, risk tolerance, income needs, and the current market regime must shape your version of it.

Adjusting for Lower Volatility & Income Needs

If you’re age 50+, your portfolio likely needs some adjustments from the classic 60/40 to reflect your stage and goals. Here are key considerations for risk management after 50:

Reduce equity exposure: You may scale back equities from 60% to perhaps 50% or even 40% depending on your comfort with risk and how soon you’ll need to draw on your assets. This limits exposure to large downside moves.
Increase fixed income / lower-volatility assets: Boost bonds or other income vehicles, and favour higher-quality, shorter-duration fixed income to reduce interest-rate risk. As the SEC says, asset allocation should change when the time horizon, risk tolerance, or financial goal changes.
Diversify sources of income: Dividend-paying stocks, multi-asset income funds, and other income-oriented strategies can help generate a cash flow stream while maintaining growth potential.
Rebalance regularly: Portfolios drift—over time, equity weights climb, bonds drop, raising risk. Rebalancing every 6-12 months or when allocations deviate significantly helps you stay aligned with your risk profile. The SEC recommends checking and rebalancing over that timeframe.
Segment your portfolio: Many older investors adopt a “bucket” strategy. For example:
- A shorter-term bucket (2-5 years) in safe/low-volatility assets to fund immediate needs.
- A mid-term bucket (5-10 years) in moderate risk assets.
- A longer-term bucket (10+ years) is still in growth-oriented assets.
Recognise the “income floor”: For someone over 50, having a portion of assets dedicated to covering essential living costs (regardless of market swings) provides peace of mind. Growth assets then become the upside layer.

All of this means your version of 60/40 might become something like 50/50, 40/60, or a hybrid that mixes in income vehicles or alternatives—but the key is aligning with your stage of life.

The Role of Annuities and Income Funds in Risk Management

When income and longevity become prominent concerns common for investors after 50, tools like annuities and income funds move from being optional to potentially strategic.

Annuities

These insurance-based contracts provide periodic payments, often for life, offering a hedge against longevity risk (outliving your assets). The GAO notes that annuities with guaranteed lifetime withdrawals can help older Americans ensure they do not outlive their assets, but they also carry risks (fees, complexity, insurer credit risk).[4] The SEC emphasizes that before investing in a variable annuity, you should understand fees, tax implications, and suitability.

For someone 50+, allocating a portion of the portfolio to a lifetime income product means that “fixed” or “semi-fixed” outflows are covered by something that is (largely) independent of market performance. This reduces stress for the remainder of the portfolio.

Income funds

These are mutual funds or ETFs that prioritise distributing income, such as bond funds, dividend equity funds, and multi-asset income funds. They don’t guarantee payments like annuities, but they still shift the mix toward income-production rather than pure growth. For a 50+ investor, they fit into the middle bucket of your segmentation strategy.

How to integrate:

First, define your essential expenses/living costs. Use annuities or high-certainty income funds to cover that “floor.”
Second, maintain growth assets (equities, growth-oriented funds) for upside and legacy.
Third, maintain flexibility: ensure some liquid assets for unexpected events (health, long-term care, family needs).

Caveats:

Annuities can reduce flexibility and carry higher fees—always read the fine print and ensure the insurer is strong.
Income funds still face risks: bond funds have interest-rate risk, dividend stocks have business risk.

Practical Steps & Checklist for Investors After 50

Here’s a checklist to take back to your portfolio board:

Review your time horizon and income needs: How many years do you expect to work or be supported by your portfolio? What are your fixed costs (housing, healthcare, legacy)?
Re-assess your risk tolerance: Accept that large portfolio drawdowns might hit harder when you’re past 50.
Re-assess your asset allocation: If you’re still at 60/40, consider whether 50/50 or 40/60 (equities: bonds) better fits your comfort and horizon.
Build an “income floor”: Decide what portion of your portfolio covers essential expenses. Investigate annuities or high-quality income funds for that portion.
Check bond quality and duration: Avoid overly long-duration exposure if you prioritise stability. Consider shorter-duration bonds or inflation-protected securities.
Rebalance regularly: At least annually (preferably every 6–12 months) or when your allocation drifts materially.
Stay flexible: Life changes (health, family, market) can require adjustments; schedule a review at least once per year.
Seek professional advice: Particularly for annuity decisions, global/international holdings, and your local tax/retirement context.
Monitor income vs. withdrawals: Track how much income you get vs how much you need to withdraw; ensure sustainable draw rates.

Conclusion

For investors age 50 + the strategic goal is shifting from “grow as much as possible” to “grow enough and preserve enough.” The 60/40 rule remains a worthy reference point, but today’s environment and your stage of life mean you’ll likely want a modified approach. The mix should better reflect your income needs, shorter horizon, and lower volatility tolerance.

By adjusting equity exposure, increasing income-oriented assets (like annuities and income funds), segmenting your portfolio into life buckets, and rebalancing regularly, you build a structure that is better aligned with your life goals. The classic 60/40 rule isn’t obsolete; it just needs to be adapted, personalised, and executed with discipline.

As you enter or approach retirement, ask yourself: “Does my portfolio generate enough income consistently? Can it survive a large drawdown? Am I sacrificing too much stability for growth I may not fully need?” Answering those will help you design a portfolio that works for this stage of your life.

FAQs

1. Why is risk management more important after 50?

At this stage, your time horizon is shorter, and recovering from large losses becomes harder. Prioritizing stability, income, and preservation helps secure your lifestyle and legacy goals. Growth remains important—but with lower volatility and controlled exposure.

2. Does the 60/40 rule still work for investors over 50?

The 60/40 rule remains a reliable baseline, but today’s interest rates and inflation may reduce its effectiveness. Many investors now prefer variations like 50/50 or 40/60 to balance income and stability. The right mix depends on personal risk tolerance and retirement income needs.

3. How often should I rebalance my portfolio after 50?

Rebalance at least once a year or whenever your asset mix shifts significantly due to market changes. This keeps risk levels consistent and prevents overexposure to volatile assets. According to Investor.gov, many professionals recommend rebalancing every 6–12 months.[5]

4. Are annuities a good idea for income after 50?

Annuities can guarantee a steady lifetime income and help reduce longevity risk. However, they often have fees and limited liquidity, so you should understand the terms before investing. The SEC recommends comparing products carefully and checking the insurer’s financial strength.[6]

5. How can I reduce volatility in my investments after 50?

Shift toward high-quality bonds, dividend-paying stocks, and income-focused funds while keeping a smaller portion in equities for growth. Short-duration bonds or Treasury securities can cushion downturns. Reassessing your portfolio’s balance yearly helps manage market swings while maintaining returns.