Question 1

What is a bond tent?

Accepted Answer

A bond tent (also called a rising equity glide path) is a retirement strategy where you temporarily increase your bond allocation around the time you retire, then gradually shift back toward stocks over the first 5–15 years of retirement. The 'tent' shape refers to the bond allocation peaking at retirement and declining afterward. This protects against sequence of returns risk during the most vulnerable early retirement years when large stock losses combined with withdrawals can permanently damage a portfolio.

Question 2

What is sequence of returns risk?

Accepted Answer

Sequence of returns risk (sometimes called sequence risk) is the danger that poor investment returns early in retirement — when you are also withdrawing money — can deplete your portfolio faster than average returns alone would suggest. Even if long-term average returns are adequate, a bad stretch in the first few years of retirement forces you to sell more shares at low prices, leaving fewer shares to benefit from any later recovery. A bond tent strategy addresses this by holding more bonds during that critical early window.

Question 3

How does a bond tent compare to a fixed stock/bond allocation?

Accepted Answer

A fixed allocation keeps the same percentage in stocks and bonds throughout retirement (for example, 60% stocks and 40% bonds every year). A bond tent starts with a higher bond allocation at retirement for downside protection, then gradually increases the stock allocation over time to capture more growth during the later, less vulnerable years. In favorable or average markets the two strategies perform similarly, but in scenarios with poor early returns the bond tent can significantly reduce the chance of running out of money.

Bond Tent Calculator

Assumptions

Bond Tent Final Balance

Fixed Allocation Final

Advantage

Portfolio Balance Over Time

Stock Allocation Glide Path

Year-by-Year Projection