Stock allocation stress test
The usual question is “how much should someone my age hold in stocks?” The better one is “how long could I avoid selling them?”
After a 40% fall
$512,000
down $288,000 (36% of the total)
Years covered without selling stocks
2.0
from the $80,000 held outside stocks
Only 2.0 years of spending sits outside stocks. If a fall lasts longer than that, you are selling shares at reduced prices to eat — which converts a temporary decline into a permanent loss.
What the common rules of thumb would say at 70
100 − age30% in stocks
110 − age40% in stocks
120 − age50% in stocks
These are folk rules, not findings. They disagree with each other by twenty points at the same age, which tells you how much precision to credit them with. They are here as reference points, not answers.
This models one instant fall with no recovery and no other income — deliberately harsh. It ignores taxes, and it says nothing about what allocation suits you, which depends on income, pensions, health, and how you actually behave when markets fall.
Why age is the wrong variable
Rules like “100 minus your age” are memorable and roughly shaped like good advice: hold fewer stocks as you get older. But look at the three versions in the tool. At the same age they disagree by twenty percentage points. They cannot all be right, which tells you they are folk heuristics rather than findings.
The deeper problem is that age is a proxy for the thing that matters, and a poor one. A 70-year-old with a pension covering their expenses is in a completely different position from a 70-year-old funding everything from a portfolio — even though the rule gives both the same answer.
The variable that actually decides it
Stocks are not dangerous because they fall. They are dangerous because they might fall at the moment you need to sell them.
Someone who can leave stocks alone for years can wait out a decline — the loss stays on paper. Someone who must sell shares to pay for groceries turns that same decline into a permanent loss, because the shares sold are not there when prices recover.
That is why the calculator's headline number is not a percentage. It is years of spending covered by the non-stock portion. That figure answers the real question: how long a fall could you sit through without being forced to act?
So was the 90% stock allocation wrong?
It depends entirely on numbers the question usually leaves out. If other income covers the bills and the portfolio is not being drawn on, a high stock allocation at any age can be perfectly rational — the money has a long horizon regardless of the owner’s age, perhaps because it is intended for heirs.
If that same portfolio funds daily living with little held aside, the allocation is fragile — not because of the age, but because a bad couple of years would force selling at the worst time.
Set both cases in the tool and the difference is obvious. Same age, same percentage, entirely different risk.
The part no calculator can price
How you behave. An allocation you abandon during a fall is worse than a more conservative one you can hold, because selling near the bottom locks in the loss and usually means missing the recovery too.
If a 40% drop would make you sell, then 90% in stocks is the wrong allocation for you regardless of what any arithmetic says. Honesty about that is worth more than optimization.
What this tool does not do
It models a single instant fall with no recovery, no other income, and no taxes — deliberately harsher than reality, because a stress test that flatters you is useless.
It also cannot tell you what allocation is right, which depends on income, pensions, health, timeline, and temperament. That is a conversation for someone licensed to see your whole position.
Related: how much belongs in stocks is not a question about age
Educational only. This explains how these products and accounts work in general. It is not financial, tax, or legal advice, and not a recommendation to buy anything. Your situation is specific to you — check with a licensed professional before acting.