Why glide paths could shape the next phase of retirement investing in Singapore
Such strategies offer a framework that evolves over time but remains aligned with investors’ long-term needs
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SINGAPORE’S plan to introduce a new voluntary Central Provident Fund (CPF) life-cycle investment scheme in 2028 is bringing renewed attention to a retirement investing approach designed to adjust risk as savers move through different stages of life.
Under the proposed scheme, members will have access to portfolios that gradually shift from higher-risk assets to lower-risk ones as retirement approaches, in an approach known as a glide path.
In simple terms, a glide path adjusts the mix of investments in a portfolio over time to reflect where an individual is in their savings journey. In the earlier years, when retirement is still far away, portfolios typically hold more growth assets such as equities. As retirement approaches, the allocation gradually shifts towards more defensive assets, such as bonds.
The logic is straightforward. Younger investors usually have more time to ride through market volatility and benefit from long-term growth. Closer to retirement, the focus shifts towards preserving accumulated savings and reducing exposure to large market swings.
Interestingly, research suggests that many Singaporeans already appreciate the idea behind glide paths, even if the terminology itself is unfamiliar.
T Rowe Price’s 2025 Singapore Retirement Survey, which polled 1,000 residents in the city-state, found that more than 70 per cent of respondents prefer retirement solutions that automatically adjust investment risk according to their life stage. Yet, almost 90 per cent said that they were unfamiliar with the concept of a glide path.
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Improving investors’ understanding of glide-path strategies could therefore play an important role in helping them make more informed retirement decisions.
The concept of glide paths first emerged in mature retirement markets, particularly in the US, when responsibility for retirement investing began shifting from employers to individuals. Life-cycle and target-date funds were introduced to help savers navigate this change by automatically adjusting asset allocation according to an expected retirement year.
Over time, these strategies gained widespread adoption because they provided an automated approach to adjusting portfolios in line with an investor’s retirement timeline.
Today, glide-path investing can be more sophisticated than a simple automatic shift from equities to bonds. While a glide path provides the long-term framework for how risk should evolve, some strategies also incorporate a tactical overlay.
This allows portfolio managers to make measured adjustments around the strategic allocation in response to market valuations or economic conditions, while remaining anchored to the investor’s long-term retirement objective.
This way, the glide path provides structure, while the tactical overlay introduces flexibility and allows portfolios to capture potential opportunities while managing risk.
Why they matter
One of the most important benefits of glide paths is that they help manage sequence-of-return risk. This refers to the risk that a significant market downturn can occur just before or shortly after one’s retirement.
Even if a portfolio generates strong long-term returns, losses at the point when withdrawals begin can have a lasting impact on retirement savings. By gradually reducing exposure to growth assets over time, glide-path strategies aim to cushion portfolios from market shocks during this particularly sensitive phase.
Glide paths can also manage behavioural risks by helping investors stay disciplined.
Many people understand the importance of long-term investing, but maintaining discipline through market cycles can be difficult. Market declines can trigger fear, while strong rallies may tempt investors to take on excessive risk.
By embedding a long-term risk-management framework into the portfolio itself, glide paths reduce the need for constant decision-making and help investors stay focused on their long-term goals.
Another advantage is that glide paths recognise that retirement is not limited to a single date, but a long phase of life.
Retirement today can last 20 to 30 years. This means that portfolios still need some growth potential even after retirement begins, particularly to help keep pace with inflation and address longevity risk – the possibility of outliving one’s savings.
A well-designed glide path therefore balances capital preservation with the need to sustain long-term growth.
Seen in this context, Singapore’s upcoming CPF life-cycle investment scheme could help introduce more investors to a structured approach in managing investment risk across different stages of life. It complements the stability provided by the CPF system, while offering savers an additional framework for navigating long-term retirement investing.
Ultimately, successful retirement investing is not about predicting every market turn. It is about building a framework that evolves over time, remains aligned with investors’ long-term needs and helps them stay on course.
Glide paths offer exactly that, and they may well become an increasingly important part of Singapore’s retirement landscape.
The writer is head of South-east Asia intermediary distribution at T Rowe Price
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