For generations, retirees were given a simple investing rule: once you stop working, get conservative.Move money out of stocks. Load up on bonds. Protect what you’ve accumulated. That advice is being challenged.

Many financial advisors now argue that retirees who become too conservative may actually increase their risk of running out of money, particularly as Americans live longer and inflation steadily erodes purchasing power.

The result is a major shift in retirement planning. Instead of abandoning stocks, many advisors recommend retirees maintain 40% to 60% of their portfolios in equities, while some investors could reasonably hold considerably more.

The objective isn’t to chase the stock market. It’s to make sure a retirement portfolio can continue growing for what could be another 20, 30 or even 40 years.

The Old Retirement Investing Rule Is Changing

Traditional retirement planning often called for dramatically reducing stock exposure when someone stopped working.

Cheri Belski, head of investment management solutions at LPL Financial, said the old rule of thumb sometimes meant dropping stocks to around 30% of a portfolio.

Today, the thinking is different.

Rather than automatically becoming conservative at retirement, advisors increasingly recommend building portfolios around the retiree’s actual spending needs, income sources, risk tolerance and expected lifespan.

That can mean keeping substantially more money invested in stocks.

There is no universal allocation, but advisors increasingly suggest equities should remain a meaningful portion of most retirement portfolios, often somewhere between 40% and 80% depending on individual circumstances.

The reason comes down to two risks retirees can’t afford to ignore: inflation and longevity.

Your Retirement Could Last 30 Years

Retirement isn’t necessarily the final few years of someone’s financial life anymore.

Someone retiring at 65 could easily spend another 25 or 30 years in retirement. Some will live well into their 90s or beyond.

That’s particularly important right now.

More than 11,200 Americans are estimated to turn 65 every day from 2024 through 2027, according to the Retirement Income Institute at the Alliance for Lifetime Income. That’s more than 4.1 million people reaching traditional retirement age each year.

A portfolio built primarily around preserving principal could struggle to generate enough growth over such a long period.

Stuart Katz, chief investment officer at Robertson Stephens, describes the strategy retirees need as “growth with guardrails.”

Stocks provide the growth component. Bonds, cash and other lower-volatility investments can provide the guardrails.

Inflation Is the Retirement Risk That’s Easy to Underestimate

Consider what happens to purchasing power over a long retirement.

At an average inflation rate of 3%, something costing $50,000 today would cost roughly $90,000 in 20 years.

After 30 years, it would cost approximately $121,000.

That’s why simply preserving the dollar value of a retirement account isn’t necessarily enough.

Retirees need their investments to grow sufficiently to preserve what those dollars can actually buy.

Equities have historically provided greater long-term growth potential than bonds or cash, although they also bring substantially greater short-term volatility.

That creates a balancing act.

Retirees need enough growth to fight inflation without taking so much risk that a major market decline forces them to sell stocks at precisely the wrong time.

How Much Should Retirees Have in Stocks?

There isn’t one number that works for everyone.

Collin Lindsey, managing director and wealth manager at Steward Partners’ Lindsey Trost Group, generally recommends clients in their late 60s and early 70s maintain roughly 40% to 60% of their portfolios in equities, depending on their finances and risk profile.

Other advisors may recommend allocations ranging from roughly 40% to as high as 80%.

The appropriate percentage depends on factors including:

Social Security and pension income
Annual spending
Other assets and income sources
Risk tolerance
Taxes
Health and expected longevity
Whether money will be left to children or grandchildren
How much cash is needed for near-term expenses

Someone whose Social Security and pension cover virtually all essential expenses may be able to tolerate substantially more stock exposure than someone withdrawing heavily from an investment portfolio every month.

That’s why retirement investing can’t be reduced to a single percentage.

One Market Risk Retirees Can’t Ignore

Stocks solve one problem while creating another.

A severe market downturn early in retirement can be particularly damaging if a retiree needs to sell investments to pay expenses.

This is known as sequence-of-returns risk.

Imagine two retirees earning roughly the same average investment return over 20 years.

One experiences a major market decline during the first few years of retirement. The other experiences it much later.

The first retiree can end up significantly worse off because withdrawals during the downturn force that investor to sell more shares while prices are depressed. Those shares are then unavailable to participate in the eventual recovery.

That’s one reason retirees generally shouldn’t treat maintaining stock exposure as permission to speculate.

Highly volatile investments, concentrated positions and newly public companies can create risks that someone depending on a portfolio for living expenses may not be able to tolerate.

“If you have a big downswing and you need to take the money out to live on, you’re never going to get it back,” Lindsey warned.

Diversification Matters More After You Retire

Keeping money in stocks doesn’t mean putting everything into the biggest technology companies or whatever sector happens to be outperforming.

Retirement portfolios can include a mixture of:

Large-, mid- and small-cap stocks
U.S. and international equities
Growth companies
Dividend-paying companies
Broad-market ETFs
Real estate investment trusts

The objective is to avoid becoming dependent on one company, sector or investment style.

That can become especially important following long bull markets, when strong performance can leave investors unintentionally concentrated in the market’s biggest winners.

Periodic rebalancing can bring the portfolio back toward its intended risk level.

Your Stock Allocation Shouldn’t Stay Frozen

Another increasingly important retirement strategy is treating asset allocation as something that changes over time.

The portfolio someone needs at 65 may not be appropriate at 75 or 85.

Spending can change. Markets change. Family circumstances change.

A retiree might also decide later that leaving an inheritance has become a priority. That effectively extends the investment time horizon because some of the money isn’t expected to be spent during the retiree’s lifetime.

That could justify maintaining greater equity exposure.

Advisors generally recommend reviewing allocations at least annually and after major financial or life changes.

Don’t Assume the Next Decade Will Look Like the Last One

Another danger is building a retirement plan around recent stock-market returns.

The S&P 500 has delivered unusually strong performance during much of the past decade, including several years with gains exceeding 20%.

Retirees shouldn’t assume that will continue.

Matt Gentzkow, managing director and wealth advisor at Coastal Bridge Advisors, said he prefers stress-testing financial plans using more conservative assumptions of around 6% to 7% annual stock returns.

That can help determine whether a retirement plan still works during periods of weaker market performance.

The important question isn’t how much money a portfolio could generate if markets perform exceptionally well.

It’s whether the plan survives if they don’t.

Even 80-Year-Olds May Still Need Stocks

Equity exposure doesn’t necessarily disappear late in retirement either.

Someone who reaches 80 could still live another 15 or 20 years.

Katz suggested that even an 80-year-old might maintain 20% to 40% in equities, depending on circumstances.

At this stage, however, the emphasis may increasingly move toward income and capital preservation.

Dividend-paying stocks and funds can play a larger role.

Morningstar’s list of high-dividend ETFs for passive income in 2026 includes funds such as the Capital Group Dividend Value ETF (CGDV), Fidelity High Dividend ETF (FDVV), JPMorgan Dividend Leaders ETF (JDIV) and Schwab International Dividend Equity ETF (SCHY).

Investors should remember that dividends aren’t guaranteed and dividend-paying stocks can still fall sharply during market downturns.

Target-Date Funds Can Make Retirement Investing Simpler

Retirees who don’t want to manage allocations themselves have another option: target-date funds.

Companies including Vanguard, T. Rowe Price and American Funds offer funds designed to automatically adjust investment allocations as investors approach and move through retirement.

The important detail is the fund’s glide path, which determines how quickly stock exposure declines.

Not every target-date fund works the same way.

Some continue reducing stock exposure for years after retirement. Vanguard, for example, eventually reduces total stock exposure to approximately 30% several years after the target retirement date.

That could be appropriate for some retirees but too conservative for others.

Investors should therefore look beyond the year printed on the fund and understand how much stock exposure they’ll actually have at 65, 70, 75 and beyond.

The Bigger Retirement Risk May Not Be What You Think

Market crashes are frightening for retirees because losses are immediate and visible.

Inflation and longevity are different.

Their damage can accumulate slowly over decades.

That’s why moving almost entirely into cash and bonds at retirement can create a false sense of security. A portfolio may fluctuate less while simultaneously losing the growth potential needed to fund a long retirement.

The solution isn’t simply owning more stocks.

It’s finding the balance between enough equities to generate long-term growth and enough stable assets to avoid selling those equities during a downturn.

For today’s retirees, the biggest investing mistake may no longer be taking too much risk.

It could be taking too little.