One concept I think every retirement investor should understand is the glide path. In investing, this refers to how your portfolio’s asset allocation gradually changes as you get older and approach retirement.
Generally, the idea is to hold more stocks when you’re younger and have decades to recover from market downturns, then gradually increase your allocation to bonds and other lower-risk assets as retirement approaches.
However, this isn’t a roadmap that everyone needs to follow exactly. Investing isn’t cookie-cutter, and two people of the same age can have very different financial circumstances, retirement goals, and tolerances for risk.
Someone planning to retire at 45 might need a more conservative portfolio than someone who expects to work until 70. Your pension, debts, dependants, and other assets also matter. Working with a qualified financial advisor can help you develop a plan tailored to those circumstances. With that said, here’s how I’d personally approach retirement investing through three important decades.
Your 30s: Focus on growth and consistent contributions
For many Canadians, their 30s are when their earning potential starts to improve. You might be advancing in your career, paying down student debt, purchasing your first home, or raising a family.
These competing priorities can make retirement saving difficult, but I think the biggest advantage you have at this stage is time. With potentially 30 years or more until retirement, you can afford to emphasize long-term growth, provided you have a stable financial foundation and can tolerate stock market volatility.
I’d start by building an emergency fund, capturing any employer retirement contribution match, and making regular contributions to a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).
For the investment itself, I’d consider the BMO All-Equity ETF (TSX: ZEQT), which holds 100% stocks across Canada, the United States, developed international markets, and emerging markets.
It’s globally diversified and automatically rebalances its underlying holdings, making it a convenient option for long-term investors who don’t want to manage individual stocks. However, a 100% equity portfolio can experience substantial losses during bear markets. I’d only use this allocation if I were comfortable staying invested through those downturns.
Your 40s: Balance growth with risk management
By your 40s, your income may be approaching its peak, but so might your financial responsibilities. You could be managing a larger mortgage, supporting children, helping aging parents, or catching up on retirement contributions after earlier career interruptions.
At this stage, I’d focus on increasing my savings rate as earnings rise, avoiding unnecessary lifestyle inflation, and reviewing whether my current retirement goals remain realistic.
I’d also start thinking more carefully about portfolio volatility. There’s still plenty of time for compounding, so I wouldn’t necessarily abandon stocks. However, introducing some bonds can help reduce the impact of market fluctuations.
One option I’d consider is the BMO Growth ETF (TSX: ZGRO). ZGRO targets 80% stocks and 20% bonds, providing diversified exposure to global equity markets alongside investment-grade fixed income.
That modest bond allocation can help cushion portfolio volatility while preserving substantial long-term growth potential. Of course, 80/20 isn’t automatically the correct allocation for everyone in their 40s. Someone with a secure defined-benefit pension might reasonably hold more stocks, while someone with a lower risk tolerance may overweight bonds.
Your 50s: Prepare for retirement soon
Your 50s are when retirement planning can become much more concrete. Instead of thinking about retirement as a distant goal, you might now be estimating your expected spending, reviewing pension entitlements, and deciding when to begin withdrawals.
I’d also pay closer attention to sequence-of-returns risk. This is the danger that a major market decline shortly before or after retirement could force you to sell investments at depressed prices to fund living expenses.
One way to manage that risk is to gradually reduce equity exposure and increase your allocation to bonds. For this stage, I’d consider the BMO Balanced ETF (TSX: ZBAL), which targets 60% stocks and 40% bonds.
The equity portion still provides long-term growth potential, which remains important because retirement could last another 30 years. Meanwhile, the larger bond allocation can help moderate volatility and provide additional flexibility when markets decline.
I’d also begin developing a withdrawal strategy, including how to coordinate TFSA and RRSP withdrawals with workplace pensions, Canada Pension Plan benefits, and Old Age Security.