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How does Vanguard determine the optimal asset allocation for their Target Retirement Funds?
While the Vanguard paper is good, it doesn't do a very good job of explaining precisely why each level of stocks or bonds was optimal. If you'd like to read a transparent and quantitative explanation of when and why a a glide path is optimal, I'd suggest the following paper:  https://www.betterment.com/resources/how-we-construct-portfolio-allocation-advice/ (Full disclosure - I'm the author).  The answer is that the optimal risk level for any given holding period depends upon a combination of:  Using these two factors, you construct a risk-averse decision model which chooses the risk level with the best expected average outcome, where it looks only at the median and lower percentile outcomes. This produces an average which is specifically robust to downside risk. The result will look something like this:   The exact results will depend on the expected risk and return of the portfolio, and the degree of risk aversion specified.  The result is specifically valid for the case where you liquidate all of the portfolio at a specific point in time. For retirement, the glide path needs to be extended to take into account the fact that the portfolio will be liquidated gradually over time, and dynamically take into account the longevity risk of the individual.  I can't say precisely why Vanguard's path is how it is.