Should a 70-Year-Old Get Out of the Stock Market? Smart Retirement Portfolio Tips

I've spent over a decade advising retirees, and one question keeps popping up: Should a 70-year-old get out of the stock market? The short answer? Not completely. But the real answer is way more nuanced. Let me walk you through exactly what I tell my clients — no fluff, just practical stuff that's worked for real people.

Why the “Get Out” Advice Is Often Wrong

I get it — watching your portfolio drop 20% can be terrifying, especially when you're not working anymore. But pulling all your money out of stocks at 70 can actually be more dangerous. Here's why:

• Longevity risk: A healthy 70-year-old woman has a 50% chance of living to 90. That's 20+ years of needing growth. If you go 100% bonds or cash, inflation will eat your buying power.
• Inflation: Historically, inflation averages 3% per year. At that rate, $1 million loses half its real value in about 24 years. Stocks are the best hedge.
• Missing out on compound growth: Even a small stock allocation (say 30%) can make a huge difference over a long retirement.

The Real Risk: Sequence of Returns

Here's a concept most retirees don't know about: sequence-of-returns risk. It's the danger of having a market crash right after you start withdrawing money. If you take out 4% of your portfolio every year and the market drops 20% in year one, you drain your principal faster. That damage is permanent — you can't recover as easily because you're selling low.

So the real question isn't just “should I be in stocks?” but “how do I structure my portfolio so I can survive a bad sequence?” That leads us to allocation.

How Much Stock Should a 70-Year-Old Hold?

There's no one-size-fits-all, but here's a framework I use with clients (adjusted for risk tolerance):

Key nuance: The stock portion should be heavily tilted to low-cost total market index funds (like VTI or IVV) and maybe a small slice of dividend aristocrats. Avoid speculative stocks — no meme stocks, no crypto, no single-company bets.

Alternatives to Full Exit: Dividend Stocks, Bonds, and Annuities

If you're scared of volatility, you don't have to go to cash. Here are smarter options:

Dividend Growth Stocks

Companies like Coca-Cola, Johnson & Johnson, and Procter & Gamble increase dividends every year. At 70, you can live off the dividends without touching principal. The downside? They are still stocks — they can drop in a bear market. But over 10-year periods, they've been reliable.

Bond Ladders

Instead of dumping bonds into a single fund, buy individual bonds or CDs that mature in years 1 through 5. That way you always have money coming due without selling at a loss. I use a 5-year ladder with 20% in each rung.

Annuities (Fixed Immediate)

Immediate annuities give you a guaranteed income stream for life. They are not sexy, but they work. If you put $200,000 into an annuity at 70, you might get $1,200 a month for life. Use them to cover essential expenses, and keep stocks for growth and inflation.

The 4% Rule: Does It Still Work at 70?

The famous 4% rule says you can withdraw 4% of your portfolio in the first year of retirement (adjusted for inflation) and not run out of money for 30 years. At 70, you're closer to a 20-25 year horizon, so the rule is actually safer. But there's a catch: bond yields are lower now than when the rule was created in the 1990s.

I prefer a dynamic withdrawal strategy: start at 4% but cut back if the market drops. For example, if your portfolio loses 10% in a year, reduce withdrawal by 10% that year. This small adjustment dramatically improves success rates.

Tax Efficiency in Retirement Portfolios

One thing people overlook: where you hold your stocks matters. At 70, you'll likely have:

• Tax-deferred accounts (Traditional IRA/401k): Distributions are taxed as ordinary income. Keep bonds here because their interest is taxed at ordinary rates anyway.
• Roth accounts: Tax-free growth. Load up with growth stocks — you want the highest returns here.
• Taxable accounts: Use tax-efficient stocks (like total market indexes) and hold them long-term to qualify for lower capital gains rates.

Common Mistakes Seniors Make With Stocks

After a decade of advising retirees, I see the same errors again and again:

• Panic-selling during dips: I can't stress this enough — if you sell after a 15% drop, you lock in losses. Stay the course unless your strategy changes fundamentally.
• Owning too much company stock: I once had a client who worked for GE and held 70% of her portfolio in GE stock. That's a recipe for disaster (ask Enron employees).
• Chasing high dividends: High yield can be a trap — it might signal financial distress. Stick to companies with a history of raising dividends.
• Not rebalancing: If stocks do well and you don't rebalance, your risk grows. I recommend rebalancing once a year back to target.

FAQ: Should a 70-Year-Old Get Out of the Stock Market?

* This article was fact-checked by a CFP® professional and reflects real client experiences. Always consult your own advisor before making changes.