Published: October 15, 2025

Asset Allocation Through Different FI Stages

Your risk isn’t constant. The right allocation at 28 is not the right allocation at 58. Here’s a stage-based approach that accounts for real-world cashflows and emotions.

Stage 1 — Accumulation (heavy growth)

• Typical tilt: 80–95% stock index funds, 5–20% bonds/cash.
• Priority: low costs, broad diversification, high savings rate.
• Rebalance annually or on 5–10% bands; avoid performance chasing.

Stage 2 — Transition (CoastFI / pre-retire)

• Build a cash buffer (6–24 months of expenses) as you near work optionality.
• Glide from 90/10 toward 70/30 or 60/40 depending on needs and income stability.
• Start bucket planning: Cash (1–2 yrs), Bonds (3–7 yrs), Stocks (7+ yrs).

Stage 3 — Early FI (sequence-risk defense)

• Bucket strategy in action: Spend from cash; refill annually from bonds; refill bonds from stocks after good years.
• Consider guardrail withdrawals (e.g., start at 4%, cut 10% after bad years; raise 10% after strong years).
• Own tax-efficient funds in taxable; hold bonds in tax-deferred when possible.

Stage 4 — Late Retirement (longevity & inflation)

• Protect against late-life inflation (TIPS ladder, real assets) and cognitive load (simplify holdings).
• Evaluate annuities as insurance on longevity risk, not as a market bet.

Practical rebalancing rules

• Annual date + tolerance bands (5–10%).
• Use new contributions/withdrawals to nudge back to target before selling.
• Harvest losses in taxable when bands break during down years.

Up next (mindset): The Psychology of FI: Avoiding Burnout on the Path