Should a 70-Year-Old Get Out of the Stock Market? Smart Retirement Investing Strategies for Seniors
Understanding the Question: Should Seniors Exit the Stock Market at 70?
As a 70-year-old retiree or near-retiree living in the United States, the question of whether to stay invested in the stock market is both timely and complex. The traditional rule of thumb—’subtract your age from 100 to determine your stock allocation’—has evolved. With increasing life expectancy and low interest rates, many financial advisors now recommend a more nuanced approach.
According to the Fidelity Retirement Income Study (2023), retirees are living longer and facing inflationary pressures that require their portfolios to continue growing, not just preserving capital. This means that a 70-year-old might still benefit from having a portion of their assets in equities to outpace inflation and support a 20-30 year retirement horizon.
Case Study: Mary and John’s Diverging Paths
Consider two retirees, Mary and John, both aged 70. Mary shifted her entire portfolio into bonds and CDs in 2020. John maintained a 50/50 split between stocks and bonds. By 2024, John’s portfolio had grown by 18% more than Mary’s, even after accounting for the 2022 market downturn. Why? Because John’s diversified portfolio allowed him to recover faster and benefit from the 2023–2024 market rebound.
This real-world scenario illustrates the risk of being too conservative. While capital preservation is crucial, so is maintaining purchasing power over time. According to the Social Security Administration, a 70-year-old male has a life expectancy of 84.6 years, and a female 87.6 years. That’s potentially 15–20 more years of needing income.
Strategic Allocation: Not All Stocks Are Equal
At age 70, the focus should shift from aggressive growth to strategic income and risk-managed growth. That means prioritizing dividend-paying stocks, low-volatility ETFs, and sectors like healthcare and utilities that tend to be more stable during economic downturns. According to Vanguard’s 2024 Strategic Asset Allocation Guide, a 60/40 portfolio (60% bonds, 40% stocks) still provides an optimal balance for retirees with moderate risk tolerance.
Furthermore, tools like target-date retirement funds or managed payout funds can help automate this rebalancing. These funds adjust the asset mix over time and are designed to provide consistent income while minimizing volatility.
Tax Considerations and Required Minimum Distributions (RMDs)
Once you turn 73 (as of 2023 per the SECURE 2.0 Act), you must begin taking RMDs from traditional IRAs and 401(k)s. This can push you into a higher tax bracket if not planned properly. Selling appreciated stocks to meet RMDs can also trigger capital gains taxes. That’s why it’s important to coordinate investment strategy with tax planning.
One approach is to use Roth conversions before RMDs begin. This strategy can reduce future taxable income and allow more flexibility in managing your stock exposure. The T. Rowe Price 2024 Roth Conversion Guide offers detailed scenarios and calculators to help determine if this is right for you.
Expert Insight: What Financial Planners Recommend
Certified Financial Planner (CFP) Dana Anspach, founder of Sensible Money, advises, “It’s not about getting out of the market entirely, but about repositioning. At 70, your investment strategy should focus on income sustainability, not market timing.” She emphasizes the importance of having 3–5 years of living expenses in cash or short-term bonds to weather market downturns without selling stocks at a loss.
Similarly, the Morningstar 2024 Retirement Planning Report recommends a ‘bucket strategy’—dividing assets into short-term (cash), medium-term (bonds), and long-term (stocks) buckets to manage both liquidity and growth.
Tools and Resources for Smarter Investing at 70+
- Retirement Income Calculator: Try Fidelity’s Retirement Income Planner to model different asset allocations.
- Social Security Optimizer: Use the SSA Retirement Estimator to plan when to claim benefits.
- Tax Planning Tools: T. Rowe Price and Vanguard both offer online tools to model Roth conversions and RMDs.
Final Thoughts: Balance, Not Exit
So, should a 70-year-old get out of the stock market? The answer is rarely a simple yes or no. Instead, the focus should be on rebalancing, diversifying, and aligning your portfolio with your income needs, risk tolerance, and life expectancy. A thoughtful, evidence-based approach—rather than fear or market timing—will better serve your financial well-being in retirement.
Disclaimer
This article is for informational purposes only and does not constitute financial, legal, or tax advice. Please consult with a certified financial planner or tax advisor before making investment decisions.
About the Author
James M. Carter is a certified retirement planning specialist and financial blogger based in Austin, Texas. With over 15 years of experience advising retirees, he focuses on sustainable income strategies and behavioral finance. He is a regular contributor to retirement planning publications and podcasts.
