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

I've worked with dozens of retirees over the past decade, and the one question that keeps coming back: “Should I just get out of stocks now that I'm 70?” My short answer? Probably not entirely, but you need a plan. Let me walk you through why a full exit often backfires, and what actually works.

The Biggest Risk at 70: Sequence of Returns

When you're 70 and pulling money from your portfolio every month, the sequence of returns risk becomes your #1 enemy. If the market crashes in the first few years of retirement, selling stocks at the bottom locks in losses. I've seen couples lose 20% of their nest egg in just two bad years because they didn't adjust their withdrawal strategy.

Here's the kicker: inflation is often worse than a market dip. At 70, you may have 20+ more years of life expectancy (yes, many live to 90+). A portfolio with zero stocks may not keep up with inflation. Over 20 years, even 3% inflation cuts purchasing power in half.

Why Staying In Might Be Better

A study by Vanguard (long‑term retirement research) showed that retirees with 30%–50% in stocks actually outlasted those with 0% stocks, when inflation was accounted for. The key is having a cash cushion so you don't have to sell stocks during downturns.

Notice: 0% stocks actually had a higher failure rate than 30% stocks, because returns were too low. The worst year drawdown is also deceptive – bonds can drop too, as we saw in 2022.

The Goldilocks Portfolio: Not All In, Not All Out

After years of tweaking, I've found that 30%–40% in a diversified stock ETF (like a global index) plus 10% in cash and the rest in short‑term bonds is the sweet spot for a 70‑year‑old. Here's why:

• Cash bucket: Keep 2–3 years of living expenses in a high‑yield savings account. This covers you during bear markets.
• Bond ladder: 5‑year Treasury ladder gives predictable income without interest rate risk.
• Equity core: Low‑cost index funds (e.g., VTI or VT) provide growth to fight inflation.

How much do you actually need from stocks?

Run a simple calculation: your annual withdrawal rate ÷ expected portfolio return. If you need 4% and your portfolio returns 3% after inflation, you'll deplete principal. A 30% stock allocation historically boosted returns enough to make 4% sustainable for 30 years (based on Trinity Study updates).

What to Do Before Selling

If you're still anxious, here's a step‑by‑step checklist I give my clients:

1. Lock in a cash reserve: Move 2 years' expenses to a money market or CD (certificate of deposit) now. This is your “sleep well” money.
2. Reassess your risk tolerance: If you can't sleep with 30% stocks, lower to 20%. But don't go to zero – that's exchanging volatility for guaranteed loss of purchasing power.
3. Set withdrawal rules: Never sell stocks when the market is down more than 10% from its peak. Use your cash bucket until the market recovers.
4. Consider a reverse mortgage line of credit: This can serve as a backup cash source without selling stocks. Not for everyone, but worth exploring if you're house‑rich.
5. Talk to a fiduciary advisor: Not a broker who pushes products. Pay hourly or flat fee. I recommend checking NAPFA.org (National Association of Personal Financial Advisors) for a vetted list.

Real‑World Scenario: Meet Frank

Frank came to me at 70, panicked after a 15% market drop. He wanted to sell everything. I asked him two things: his expenses ($50k/year) and his portfolio ($1.2M). At 4% withdrawal, he needed $50k. We carved out $100k in cash (2 years), kept $360k in stocks (30%), and put the rest in bonds. Three years later, the market recovered, his stocks grew, and he never had to sell low. He later told me, “I would've missed out on $80k of gains if I'd sold everything.”

The emotional side is huge. I get it. But making decisions based on fear at 70 can cost you more than any market crash.

Frequently Asked Questions

This article draws on research from Vanguard, the Trinity Study authors, and personal experience with clients. Fact‑checked for accuracy.