Retirees need 40% to 80% equity exposure to fund 30-year retirements

Retirees who shift too heavily into bonds risk outliving their savings, pushing financial advisors to recommend equity allocations of 40% to 80% — up from the old 30% ceiling — to combat inflation and longevity risk.

"The new way of thinking is to get intentional about retirement, not conservative," said Cheri Belski, head of investment management solutions at LPL Financial in Fort Mill, South Carolina.

More than 11,200 Americans turn 65 every day — over 4.1 million annually from 2024 through 2027, according to estimates from the Retirement Income Institute at the Alliance for Lifetime Income. The S&P 500 delivered double-digit returns in most of the past decade, including gains above 20 percent in four of the past ten years, yet advisors like Matt Gentzkow of Coastal Bridge Advisors still project a conservative 6 to 7 percent annual return for stocks when stress-testing client plans.

The stakes are high: a retiree who over-rotates to conservative assets faces a real risk of running out of money in a 30-year retirement. With more than 4.1 million Americans turning 65 each year through 2027, the shift toward higher equity exposure could materially improve retirement income sustainability for a generation entering its final decades.

Stuart Katz, chief investment officer at Robertson Stephens in San Francisco, described the appropriate approach as "growth with guardrails" — not overly aggressive, but with enough long-term growth potential to address both inflation and longevity risk. Collin Lindsey, managing director and wealth manager at the Lindsey Trost Group of Steward Partners in Lake Oswego, Oregon, generally recommends clients in their late 60s and early 70s allocate 40 to 60 percent to equities, depending on other retirement resources, lifestyle needs and risk profile.

Lindsey cautioned against high-volatility assets such as IPOs, pointing to SpaceX, which has lost more than $500 billion in market capitalization since its first trade on June 12. "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," he said.

Diversification remains critical within the equity sleeve. Advisors recommend international holdings, stocks across different market capitalizations, and a mix of growth and dividend-focused positions. Overconcentration in a single sector such as technology, even where returns look attractive, is a common pitfall.

Equity exposure should not be fixed in retirement

Just because a retiree starts with one equity allocation doesn't mean it should stay static. Rising expenses might warrant a slightly more aggressive equity allocation for income purposes, said Gentzkow. Inheritance goals also matter — a retiree who has satisfied income needs but wants to provide for the next generation can extend the time horizon and take on more equity risk.

Brad Rollins, chief investment officer for Mariner in Tulsa, Oklahoma, advises revisiting allocations at least once a year, accounting for market conditions and life changes such as health issues or financial support for adult children.

Income and preservation for ages 80 and beyond

As retirement progresses, advisors suggest shifting focus to income and capital preservation while maintaining equity exposure. An 80-year-old today might live to 95 or 100, meaning they need their money for another 15 years or more. "Even at 80, you might want equities at a 20% to 40% range. Not zero," Katz said.

Income can come from dividend-paying stocks and income-focused ETFs. Morningstar considers Capital Group Dividend Value ETF (CGDV), Fidelity High Dividend ETF (FDVV), JPMorgan Dividend Leaders ETF (JDIV) and Schwab International Dividend Equity ETF (SCHY) among the best high-dividend ETFs for passive income in 2026.

For do-it-yourself investors seeking simplicity, target-date funds offer a managed solution. These funds typically become more conservative around the target date but may still hold significant equity exposure as retirement progresses. Vanguard, for example, drops total stock market exposure to 30 percent seven years after the retirement year is reached — below the 40 to 80 percent range many advisors now consider appropriate. American Funds, T. Rowe Price and Vanguard are among fund companies offering target-date funds designed to support lifetime income.

Belski advised investors to choose a target-date fund matching their planned retirement year and read the description carefully to ensure the allocation glide path matches long-term plans. Figures cited in this article reflect data available as of August 2026; readers should verify against the latest official announcements and consult a qualified professional for personalized guidance.

This article is for informational purposes only and does not constitute investment advice.