By the time you are in your 50’s and 60’s, a significant portion of your portfolio should be invested in bonds, from 20% to 50%, according to many online asset allocations.
That isn’t current reality. I had to get the wording right to find data to support that statement.
Of course, you can always argue that you can find data to support any claim. For those who have managed portfolios with investment advisors and a very conservative investment strategy that 20% – 50% is probably true. However, for those of us who invested in a 401(k) or similar retirement plan their entire working life, this isn’t true.
According to Empower, a provider of retirement plan solutions, investors in their 50’s have a total bond allocation (domestic and international) of 8.8% and those in their 60’s have 13% (Oct 2025).
Given that my combined assets with my husband is not far off that 8.8%, I find this to be more of a reality check. When you start contributing to a retirement plan like a 401(k), you’re young and want the most return for the least cost. You maybe check your allocation once a year and if the return has been satisfactory, you leave it. Or you may just increase the percentage contribution as your salary/bonus increases. In downturn years, many of us don’t even look at our portfolios because we don’t want to know.
You switch jobs, roll-over the previous 401(k) or keep it as is, and many times forget about it because other things in life become more important. Since your previous investment strategy was working, you continue that strategy with your new 401(k). That’s the reality of many.
Many DIY investors on recent online forums claim they hold mostly stocks (equity securities) and a smaller percentage of bonds (debt securities) far into their retirement. Even the IPERS asset allocation only has roughly 33.5% invested in bonds. And the 2020’s have segued into lackluster bond returns but this may be changing.
Bonds get far less exposure and coverage than stocks, crypto and even real estate because they are not exciting. To educate myself on investing in bonds, I read some current outlooks and found a few worthwhile podcasts which I share at the end. Even with the podcasts on YouTube, if there is no video and closed captioning, I completely zone out listening to them.
Incidentally, of the Top 100 Podcasts on YouTube, there is only 1 that has financial content, Financial Audit. Spotify has two, Financial Audit and The Money Guy Show. There are many, many other financial podcasts but with far fewer listeners/viewers.
Back to reading, where most people get their compounding financial education because podcasts are still viewed as entertainment posing debatable ideas and even more so in the streaming world competitions. Morningstar (Christine Benz) recently published an article on retirement bucket portfolios for Fidelity investors. It’s worth reading because it’s realistic. Retirement ‘Bucket’ Portfolios for Fidelity Investors | Morningstar
Fidelity also published an interesting bond market outlook including why bonds may be better than cash the second half of 2025. Yields on CDs and money markets rose to roughly 5% after the Fed began raising short-term interest rates in 2022. But those yields have moved lower following a series of Fed rate cuts late last year and are widely expected to fall further and stay lower than they had been. Investing | bond market outlook | Fidelity
This raises the risk for investors who need a certain level of income from their portfolios (those nearing or in retirement). They won’t get it if they stay in cash or short-term investments like money market funds and short-term CDs. I’ve already seen this with our current credit union raising the criteria needed to earn the highest rate on our PowerPlus Checking. We used to get it but now the number of transactions required is no longer attainable. Our money market account also had abysmal rates. So, I had to find a new high yield savings option that also could be set-up as a trust account (a future topic).
Bonds are making a comeback, and the case is being made to include more of them in your portfolio.
Bond ETFs Are Surging in Popularity in 2025. Here Are 5 of the Best
Bond Investing 101–A Beginner’s Guide to Bonds
Featured Image – A bonsai tree, a regular tree that has been intentionally kept small through cultivation techniques, The Huntington Library, Museum and Botanical Gardens, San Marino, CA. Photographer Cary Wauters