| Course | MT423 Asset Allocation and Risk Management |
|---|---|
| Unit | Unit 7 |
| Paper type | Glide path design |
| Length | About 930 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT423 Unit 7
Down to 40 at 65, Back to 50 by 75: An MT423 Unit 7 Glide Path Design Tied to a Capacity Limit
[Student Name]
Purdue University Global
MT423: Asset Allocation and Risk Management
Unit 7 Glide Path Design
[Instructor Name]
[Date]
Denise Hartley and her projections are composite; crisis losses use the bracketed class losses from Unit 5, and the sources cited are real.
The Path
The stock share at each birthday is 50 percent at 58, 47 percent at 60, 44 percent at 62, 40 percent at 65, 42 percent at 67, 45 percent at 70 and 50 percent at 75, holding at 50 percent after that. Between the listed ages the share moves in equal annual steps. Within the stock share, the proportions of U.S., international and real estate holdings stay as in the Unit 5 allocation; within the safe share, core bonds, inflation-protected Treasuries and cash keep their relative weights.
Why the Path Falls Before 65
The descent is set by capacity, not by age. Denise's capacity limit, the largest loss her plan can absorb and stay funded, shrinks as retirement approaches because there are fewer years of saving and growth left to repair a loss. Computed as in Unit 3, the limit is 28.3 percent of her assets at 58, 26.2 percent at 60, 24.5 percent at 62 and 22.5 percent at 65.
Each step of the path keeps the crisis replay from Unit 5 inside that limit. At 58, the 50 percent mix would lose about 25.6 percent. At 60, a 47 percent mix would lose about 23.9 percent. At 62, a 44 percent mix would lose about 22.2 percent. At 65, a 40 percent mix would lose about 19.8 percent. At every age the replayed loss stays two to three points below the limit.
In dollars at 65, her projected resources of $935,635 would lose about $239,500 at the starting 50 percent mix, beyond her limit of $210,516, while the 40 percent mix would lose about $184,956, within it.
The path falls because the limit falls; holding 50 percent to 65 would let a crisis at retirement run $29,000 past what her plan can absorb.
Why the Low Point Is at 65
The lowest stock share is placed at 65 because that is when withdrawals begin. Sequence risk, the harm a loss does when withdrawals are being taken from a fallen balance, is greatest at the start of retirement. Milevsky and Robinson (2000) modeled the odds that a retiree's savings run dry and found that what happens in the first years of drawing income weighs heavily on them. Denise's first two years are also her largest, at $62,000 each, because Social Security does not begin until 67.
Sizing the Safe Side
At 65, 60 percent of $935,635, about $561,381, is in core bonds, inflation-protected Treasuries and cash. That amount covers the two bridge years at $62,000 each, $124,000 in all, and about 14.5 years of the later $30,200 withdrawals after that. In a severe stock decline, she could draw from the safe side for more than fifteen years without selling stocks at a loss.
Why the Path Rises After 65
After 65 the safe side is being spent. If Denise draws withdrawals from bonds and cash first, her stock share rises naturally as the safe share shrinks. The path lets that happen gradually, from 40 percent at 65 to 50 percent at 75, rather than rebalancing back to 40 percent every year.
Pfau and Kitces (2014) found that a rising equity glide path through the early retirement years, starting from a low stock share at retirement, produced lower failure rates in their simulations than a static or declining path. The reasoning is that the most dangerous years for a loss come first, and by the time the stock share has risen, the remaining withdrawals are smaller relative to the balance. This is one argument in the research, not a consensus; many target-date funds continue to decline after retirement, and the design here is chosen for Denise's specific bridge years.
Her capacity also improves once Social Security begins at 67. Withdrawals fall by more than half, to $30,200, and a given loss does less damage to a plan whose remaining needs are smaller.
A Straight Decline for Contrast
A common alternative would lower her stock share in a straight line from 50 percent at 58 to 30 percent at 75. That path holds about 42 percent stocks at 65, close to this design at the start of retirement. The difference is after 65. By 75 the straight path would hold 30 percent stocks, giving up expected return over the twenty years when her savings must last, at a time when her safe side is already large and her withdrawals are small. Cocco et al. (2005) note that the right share of stocks over life depends on the other resources a person has, and once guaranteed income covers half her spending, a lower stock share protects against risks she is no longer exposed to.
Implementation
Each year on her birthday, the target stock share moves to the figure for her new age, and the rebalancing rule in Unit 10 brings her holdings to it. Changes are made in the SEP-IRA first, where selling stocks and buying bonds triggers no tax. Withdrawals after 65 come first from cash and bonds, then from stocks, which moves the share upward in line with the path. If her capacity changes, for example because her Social Security estimate or spending target changes, the limits are recomputed and the path is redrawn.
References
Cocco, J. F., Gomes, F. J., & Maenhout, P. J. (2005). Consumption and portfolio choice over the life cycle. Review of Financial Studies, 18(2), 491-533. https://doi.org/10.1093/rfs/hhi017
Milevsky, M. A., & Robinson, C. (2000). Self-annuitization and ruin in retirement. North American Actuarial Journal, 4(4), 112-124. https://doi.org/10.1080/10920277.2000.10595940
Pfau, W. D., & Kitces, M. E. (2014). Reducing retirement risk with a rising equity glide path. Journal of Financial Planning, 27(1), 38-45.
Reading the MT 423 Unit 7 instructions
The seventh unit asks students to design how a client's stock share should change over time, before and after retirement. Instructors expect a reason for the slope, not a smooth line from an age rule. Tying each step to a computed limit, such as a loss the plan can absorb at that age, or to the size of early withdrawals, is the strongest justification. The low point should sit where withdrawals start, since that is where sequence risk concentrates. A path that rises after retirement is legitimate but needs its source and rationale. Bridge years before Social Security, when withdrawals are larger, should be addressed. Implementation details are usually expected: when the target changes each year, which account trades and how withdrawals are drawn. A contrasting path helps show the design's choices.
How this MT423 Unit 7 example is built
The sample gives the stock share at each age and the annual step between them. The descent section recomputes Denise's capacity limit at four ages and shows the crisis loss of the path at each one, then gives the dollar gap at 65 if she held 50 percent, under a highlighted line on the path falling because the limit falls. A section explains the low point at 65 with Milevsky and Robinson on early retirement returns. The safe side at 65 is sized against the bridge years and later withdrawals. The rise after 65 is explained by spending down bonds first, citing Pfau and Kitces with a caution. A straight decline to 30 percent is shown for contrast, with Cocco and colleagues. Implementation closes the design.
MT423 Unit 7 rubric: what earns full points
Glide path designs are usually graded on a justified slope, a sensible low point, treatment of the bridge years and clear implementation. Paths drawn from an age rule with no reason for their shape miss what the unit tests. Rubrics reward slopes tied to a computed figure at each age. Credit goes to placing the low point at the start of withdrawals and explaining why. A rising path after retirement earns marks when its source is named and its status as one view is admitted; presenting the V as consensus overstates it. Sizing the safe side against the bridge years shows the design fits this client. Rules for yearly steps, accounts and withdrawal order complete the expectations, supported by an age table and a path chart.
MT423 Unit 7 help: mistakes that cost points
The most common weak design draws a line that falls one point a year to an arbitrary age and gives no reason for the rate. Another frequent error places the lowest stock share at 75 or 80, well after withdrawals begin, when sequence risk is greatest at the start. Students often ignore the years before Social Security, though they carry the largest withdrawals. Some present a rising path as settled practice without citing where it comes from. Implementation is often left as a sentence. Before submitting, compute the crisis loss of your path at three or four ages and set each beside the client's capacity limit at that age. If any step pushes the loss past the limit, the slope needs to change, and the paper should show the corrected step.
Get an MT423 Unit 7 example written to your instructions
Whatever retirement date, income sources and allocation the Unit 7 case gives its client, a first custom MT423 glide path can be designed from them free of charge, slope justified by computed limits and low point placed deliberately, in the rubric's format. Delivery runs 24-48h, and a conventional declining path is equally possible if required. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More MT423 papers and BS in Business Administration samples
- MT423 Unit 1: Downturn Exit Board Post
- MT423 Unit 2: Risk Tolerance Assessment
- MT423 Unit 3: Risk Capacity Analysis
- MT423 Unit 4: Asset Class Review
- MT423 Unit 5: Strategic Allocation Proposal
- MT423 Unit 6: Tactical Allocation Seminar Reflection
- MT423 Unit 8: Stress Test Report
- MT423 Unit 9: Sequence Risk Illustration
- MT423 Unit 10: Rebalancing Policy
- MT422 Unit 7: Fund Comparison Report
- MT421 Unit 7: Rent Versus Buy Analysis
- MT400 Unit 7: Process Redesign Proposal
MT423 Unit 7 questions, answered
Should a glide path always decline with age?
Not necessarily. Target-date funds typically decline through retirement, but research on rising equity paths after retirement argues for the reverse once early withdrawals have passed. Either can be defended; what matters is that the shape follows from the client's income, capacity and withdrawal pattern, stated in the paper with the figures that drive it.
How steep should the slope be?
Steep enough to meet whatever limit the design is protecting, and no steeper. Here the slope comes from the gap between today's loss limit and the tighter one at retirement. A slope chosen as a round number, or copied from a fund family, usually draws a question about where it came from.
Do I need to cite research for the bond tent?
Yes, if the design rises after retirement, because that choice departs from the most familiar paths. Kitces and Pfau's 2014 article in the Journal of Financial Planning is the usual reference. Cite it accurately, and present it as one supported view rather than a settled rule, noting that other researchers favor declining paths.
Where can I find a free MT423 Unit 7 sample paper?
The complete MT423 Unit 7 glide path is here, lowering a composite client's stock share to 40 percent at 65 and raising it to 50 by 75.
Why does the MT423 Unit 7 sample path rise after 65?
Withdrawals come from bonds and cash first and fall by more than half once Social Security starts at 67, so the stock share can climb as the safe side is spent.