Retirees may think moving all their investments to cash and bonds — and out of stocks — protects their nest egg from risk.
They would be wrong, experts say.
Most, if not all, retirees need stocks — the growth engine of an investment portfolio — to ensure they don’t run out of money during a retirement that might last decades, experts said.
“It’s important for retirees to have some equities in their portfolio to increase the long-term returns,” said David Blanchett, head of retirement research for PGIM, an investment management arm of Prudential Financial.
Longevity is biggest financial risk
Longevity risk — the risk of outliving one’s savings — is the biggest financial danger for retirees, Blanchett said.
The average life span has increased from about 68 years in 1950 to to 78.4 in 2023, according to the Centers for Disease Control and Prevention. What’s more, the number of 100-year-olds in the U.S. is expected to quadruple over the next three decades, according to Pew Research Center.
Retirees may feel that shifting out of stocks — especially during bouts of volatility like the recent tariff-induced selloff — insulates their portfolio from risk.
