The Bond Tent

Raise bonds into the retirement date, then let equities climb back. The allocation traces the shape of a tent. (Michael Kitces.)

Sequence-of-returns risk is worst in the few years either side of the day you stop working. A bond tent is a neat response: build up bonds and cash as that window approaches, hold a higher safe allocation through it, then gradually rebuild equities once you are safely past it.

Plotted over time, the safe-asset share rises to a peak around the retirement date and falls away afterwards — the outline of a tent. It directly protects the most fragile years: early on, you draw income from the larger bond cushion instead of selling shares into a fall. As the danger passes, equities are allowed back to support a long retirement.

This is really the glidepath idea, sharpened. Instead of a single downward slope, the tent concentrates caution where it does the most good and relaxes it where a long horizon can again carry equity risk.

Illustrative example: the shape of the tent

The chart shows the bond share rising into the retirement date and easing afterwards. The exact heights are a matter of personal circumstance — your spending, your guaranteed income such as CPF LIFE, and your tolerance for swings — but the shape captures the goal: most protection in the riskiest window, not across the whole of retirement.