Retirement Planning Guide
Balancing your portfolio for the retirement you want
Your asset allocation—or the mix of investments in your portfolio—is an essential part of planning for the retirement you want. We’ll help you understand the importance of updating your allocation as you get closer to retirement.
Your allocation should ultimately reflect your goals for retirement
A portfolio refers to the assets you’re invested in, while the allocation refers to the mix of asset classes comprising your portfolio. Understanding your allocation can help you feel more confident about how you’re investing toward your retirement.
Stocks
Stocks are typically the main driver of your portfolio’s growth. They have the potential to generate greater returns compared with other asset classes—like bonds or cash—but they also carry more potential for risk.
Bonds
Generally recognized as more stable than some other asset classes, bonds can offer a regular stream of income that helps to balance the riskiness of stocks, especially as you move closer to your retirement.
Cash
Because cash tends to be a portfolio’s most stable asset class, it’s often a good idea to increase your allocation of cash as you near retirement.
How is your portfolio allocated?
Understanding how your different investments work together is a key factor when it comes to making smart decisions about retirement investing. It’s critical that your asset allocation is aligned with your time to retirement, your risk tolerance, and—most importantly—your retirement goals.
Adjusting your asset allocation
Unsure if your asset allocation is working for you? Our Portfolio Optimizer can help you determine whether your allocation is helping you stay on track or needs to be refined to hit your investment goals.
Holding the right mix of assets is essential for achieving long-term investing success. These include stocks, bonds, and cash, and each one can play a different yet important role in your portfolio. Stocks are generally the main driver of growth, while bonds can balance the risk of stocks and provide income. Cash offers liquidity, which becomes increasingly important as you near and enter retirement.
How much you choose to allocate to each asset type will depend on your time horizon, risk tolerance, and investment goals. The more time your portfolio has to grow and recover from short-term market movements the more you might allocate to a riskier asset class like stocks. But as your timeline to ride out market volatility shortens, you might include more bonds and cash.
If it's been a while since you took a close look at your portfolio, reviewing your current asset allocation using T. Rowe Price's Portfolio Optimizer can be a great place to start. Available to T. Rowe Price clients, this digital tool can help you compare your current portfolio to a target asset allocation of your choice that aligns with your personal risk tolerance, all in less than two minutes.
By providing foundational information on potential asset allocations for your situation, the Portfolio Optimizer can help you make more informed decisions about how your money is invested.
Visit troweprice.com/assetallocationplanning to ensure your mix of investments aligns with your goals.
Need some help balancing your portfolio?
Whether you want a little support or a lot, we’re here to help you prepare for the retirement you’ve envisioned.
Not sure which type of support is right for you?
1:1 advisor relationship
Rebalance your portfolio with help from one of our advisors
In addition to a balanced, tailored portfolio strategy developed by CFP® professionals, your dedicated advisor will provide you with strategies, resources, and expert advice to help guide your investing choices.
- Annual reviews with your advisor
- Competitive advisory fee of 0.5%1
- For clients with $250,000 or more in household assets
Digital advising
Get a recommendation for an expert-managed retirement portfolio
Based on your risk tolerance and time horizon, we’ll recommend a model portfolio made up of approximately 8 to 15 funds. Our experts regularly monitor and rebalance the asset allocation to ensure it stays within range of the portfolio’s target allocation.
- Annual digital check-ins with the opportunity to update your portfolio
- No additional advisory fees
- For clients with $50,000 in retirement assets
Shifting your allocation over time can help you manage risk
As you get closer to retirement, it’s often a good idea to lower your portfolio’s exposure to risk by increasing its share of bonds and cash. With a smaller share of stocks in your portfolio, your retirement nest egg is less exposed if markets are lagging as your retirement date gets closer.
This graph showcases general guidelines for allocations based on our research.
Model asset allocations by age
Diversification cannot assure a profit or protect against loss in a declining market. These allocations are age-based only and do not take risk tolerance into account. Our asset allocation models are designed to meet the needs of a hypothetical investor with an assumed retirement age of 65 and a withdrawal horizon of 30 years.
The model asset allocations are based upon analysis that seeks to balance long-term return potential with anticipated short-term volatility. The model reflects our view of appropriate levels of trade-off between potential return and short-term volatility for investors of certain ages or time frames. The longer the time frame for investing, the higher the allocation is to stocks (and the higher the volatility) versus bonds or cash.
Limitations:
While the asset allocation models have been designed with reasonable assumptions and methods, the tool provides models based on the needs of hypothetical investors only and has certain limitations:
- The models do not take into account individual circumstances or preferences, and the model displayed for your investment goal and/or age may not align with your accumulation time frame, withdrawal horizon, or view of the appropriate levels of trade-off between potential return and short-term volatility.
- Investing consistent with a model allocation does not protect against losses or guarantee future results.
Please be sure to take other assets, income, and investments into consideration in applying asset allocation models to your individual situation. Other T. Rowe Price educational tools or advice services use different assumptions and methods and may yield different outcomes.
Simplify your asset allocation
Both our target date funds and asset allocation funds are professionally managed all-in-one funds that are rebalanced regularly—so you can have one less thing to think about when it comes to diversifying your portfolio.
Target date funds
Designed to adjust over time based on an intended retirement year, these funds offer a range of solutions to help you meet your retirement objectives.
Asset allocation funds
Supplement your retirement savings while enjoying flexibility for withdrawals with a diversified, all-in-one fund in a general investing account.
Interested in learning more about retirement?
Why purposeful asset allocation is key for long-term success
Planning your asset allocation for retirement.
What’s The Best Approach for Portfolio Rebalancing?
There are advantages to letting technology help you maintain an appropriate level of risk in your portfolio.
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Explore our Retirement Planning Guide
All investments involve risk, including possible loss of principal. Diversification cannot assure a profit or protect against loss in a declining market.
The principal value of target date funds is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire. These funds invest in a broad range of underlying mutual funds that include stocks, bonds, and short-term investments and are subject to the risks of different areas of the market. In addition, the objectives of target date funds change over time to become more conservative.
1The average net advisory fee for the service assumes the use of primary funds and neutral portfolio weightings. Your actual net advisory fees will vary depending on your recommended model portfolio, the specific mix of funds in your managed portfolio, and their fees and expenses. The estimated net advisory fees for the model portfolios ranged from 0.41% - 0.55% as of April 2025. You will also pay the fees and expenses of the funds held in your managed portfolio. The total cost you are expected to pay for advice, which includes the net advisory fee and the underlying fund fees and expenses, is approximately 0.9% of assets under management. For additional information on fees and expenses of the service, please read the Fees and Compensation section of the Retirement Advisory Service ADV Brochure (PDF).
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