The Future of the 60/40 Allocation

Modelling the Performance of the 60/40 Portfolio in Retirement

The 60/40 portfolio, with 60% in equities and 40% in fixed-income securities, has long been favored for balancing growth and stability. This report— the second in a two-report series—assesses the 60/40 strategy’s ability to sustain retirees through their post-working years, focusing on Australia and the United States.

The Future of the 60/40 Allocation: Modelling the Performance of the 60/40 Portfolio in Retirement uses Monte Carlo simulations to evaluate the impact of factors such as initial retirement savings, desired lifestyle, gender disparities, and market volatility on the sustainability of retirement funds.

Authored by a research team from Monash University, the report reveals significant differences in how long retirement savings last for men and women, highlighting the need for financial planning that addresses gender-related gaps. It also shows that poor market returns early in retirement can greatly reduce savings, making careful withdrawal planning and portfolio management essential. This study calls for a shift toward more nuanced retirement planning, with an emphasis on personalized retirement strategies that adapt to individual needs and changing market conditions.

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