Question

What is 'glide path' in the context of goal-based retirement planning?

Accepted Answer

The gradual reduction in equity allocation and increase in debt allocation as the investor approaches the retirement goal date — A glide path is the planned shift in asset allocation from aggressive (high equity) to conservative (high debt) as the goal date approaches. This reduces sequence-of-return risk near retirement — a large market fall just before retirement would be devastating if equity allocation remains high.