• Customizing the time horizon and purpose for every investment account can help optimize your savings and ensure you meet your goals.

  • We have developed four primary types of investing goals: Retirement, Safety Net, General Investing, and Major Purchase.

  • Each of these goal types is based on a different stock allocation glide path, which provides an allocation plan based on your personal time horizon for each goal.


Life means having a lot of different financial goals like saving for retirement or saving for a down payment. So why should you have a brokerage account that can only handle one goal at time?

Betterment has solved this problem with goal-based investing.

Goal-based investing offers people a way to manage risk for individual goals. It’s a personalized application of an institutional technique called asset-liability management, which is a framework for ensuring that your future expenditures are funded (if not over-funded) whenever they appear.

While the future is uncertain, it’s safe to say you will have new financial assets and liabilities in the coming years. These could be tuition costs, retirement, changes in income, supplemental income, emergency outlays of cash, and so on.

We believe this can be narrowed down into four buckets: retirement, emergencies, capital growth, and major purchases. To that end, we have developed four primary types of investing goals named: Retirement, Safety Net, General Investing, and Major Purchase. When you sign up for a Betterment account, you select one or more of these goals for your investments.

Each of these investing goals requires a different strategy—that is the quintessence of smarter investing. Betterment’s automated advice and technology provide each of these a unique investment portfolio. Underpinning each type of goal is a customized stock allocation glide path, which provides an allocation plan based on the time horizon for each goal.

For each of these goal types, we provide a recommended maximum and minimum stock allocation, anticipated term, and certain cash-out assumptions. However, every investor can adjust the dial, if desired, for a more aggressive or more conservative profile in any goal type.

Default Range of  Stock Allocation Advice, By Goal Type: 
Type of goal Stock allocation range Anticipated term Cash-out assumptions
Retirement 90%/56% Up to 50 years Shift to a Retirement Income goal at the target date
Retirement Income 56%/30% Up to 30 years Steady drawdown with dynamic withdrawal rate until target date
Safety Net 40% Rolling term Up to full liquidation at any time
General Investing 90%/55% Indefinite No liquidation
Major Purchase (House, Education, Other) 90%/5% Up to 30 years Full liquidation at target date


Retirement is both the largest future liability most people will have and the one that differs most from other investing goals. At Betterment, a Retirement goal can be used as a regular investment account, as well as a Roth or Traditional IRA.

A hallmark of our retirement account is that there is no absolute calendar date for account liquidation. Rather, the longevity of the account can span more than 50 years in two distinct phases, accumulation and decumulation. Or in other words, earning and spending. Your retirement savings may look like a bell curve—with a consistent growth in your active working years on the left side of the curve and then consistent decumulation in your retirement years on the right side of the curve.

In both phases, the recommended amount deposited or withdrawn from a retirement account may vary from year to year depending on these factors: how far along you are in your savings plan, your current account value, and your desired target value.

The purpose of the stock allocation we recommend for you at every point of your timeline is to ensure that you are exposed to a proper amount of risk given your needs and goals.

Once you are in retirement, our Retirement Income goal takes into account all of these dynamic factors to tell you the amount you can safely withdraw each month to help make your savings last as long as you need it to.

Retirement Goal Risk Advice

Accumulation Phase

In the accumulation phase and when you have 20 or more years until you retire, we recommend 90% stocks.

Our advice reduces your recommended risk level over time until your retirement date, where it levels off at 56% stock allocation. Then, when you have arrived at your retirement age, we hand off our advice to our flexible Retirement Income model.

Decumulation Phase

The decumulation-phase stock allocation advice considers a number of factors to suggest a safe liquidation target or withdrawal amount:

  • Current balance
  • Desired monthly income amount
  • Minimum acceptable income level
  • Desired certainty about not falling beneath minimum income level
  • Conditional life expectancy

For example, a 65-year-old male has a remaining life expectancy of nearly 18 years, according to projections used by the Social Security Administration.¹ That is 18 years over which he will be both liquidating his portfolio but also growing his assets to support future years of consumption. With regards to the stock allocation, we seek to:

  • Maximize the average monthly income over the remaining expected life
  • Minimize the probability of falling beneath the desired minimum income amount
  • Constrain for a degree of certainty

Dynamic withdrawal rates depend on the balance of the retirement accounts, the life expectancy, and the minimum income level; you can learn more about our Retirement Income service here.

Safety Net Goal

A Safety Net goal is one of the highest priority goals we recommend for investors. Our Safety Net goal type is slightly different from other goals in that we assume the money may never be needed—but when it is, we assume a substantial portion of the balance will be liquidated all at once.

That is why our allocation advice for this goal is conservative and never wavers from 40% stocks. To be sure, investing in an emergency fund may sound counterintuitive at first. Our rigorous modeling and testing have shown that investing is a good alternative to a cash savings account and provides counter to interest-rate risk. (You can read more about our rationale here.)

Based on our analysis, the default recommendation for a Safety Net goal is 40% stocks, which creates an investment portfolio that we expect to grow faster than inflation—but can also tolerate as much as a 23% drawdown in portfolio value over a five-year time period all while preserving the minimum balance you need to have available.

Over time, if you do not tap your Safety Net goal, your account may grow too big to act for the purpose of your emergency fund. In this case, we recommend either transferring the excess to another goal or liquidating excess for a spending event.

Safety Net Goal Risk Advice

Emergency goal recommended allocation

General Investing Goal

Often you do not have a specific goal you are saving for or you’re unsure of what your future goals might be—but you understand investing is necessary for capital growth. The General Investing goal allows for this flexibility—it’s our utility player of investment goals.

Unlike Retirement or Major Purchase goals, a core assumption for a General Investing goal is that there is no specific liquidation event on your horizon. This makes it an ideal goal type for objectives like long-term savings that are earmarked for generational wealth transfer or assets that may be converted into a trust account at a later date.

As a result, we advise decreasing from 90% stocks to a minimum stock allocation of 55% stocks over time and remaining there indefinitely.

General Investing Goal Risk Advice

General Investing Risk Advice

Major Purchase Goal

The Major Purchases goal should be used by investors who have a very specific goal or purchase they are saving for, like a home down payment, future tuition, or any other event with a specific timetable.The goal type is appropriate for short- and medium-term goals, with risk decreasing on an annual basis.

The goal type is appropriate for short- and medium-term goals, with risk decreasing on an annual basis.

The glide path takes a much more conservative path than a Retirement glide path—moving to low stock allocations—for very short time horizons. Why is that? This is because we expect that you will fully liquidate your investment at the intended date and will need the full balance. Shorter-term goals mean less risk is appropriate.

Major Purchase Goal Risk Advice