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

Let me be blunt: if you're 70 and asking whether to get out of stocks entirely, you're probably letting fear drive the decision. I've coached dozens of retirees through this panic, and the ones who unloaded everything often regretted it a few years later. But leaving everything in a high-risk portfolio isn't wise either. So what's the right call?

Here's the truth: a complete exit is rarely the answer. Instead, you need a transition – a thoughtful shift that balances growth (to beat inflation) with safety (to sleep at night). Below I break down the key considerations, a concrete strategy I call the Bucket Approach, and the mistakes I see over and over.

Why Do 70-Year-Olds Want to Exit?

The reasons are real:

• Fear of a major crash – after a lifetime of saving, the idea of losing 30% in a bear market terrifies many.
• No earned income to recover – at 70, you're living off your nest egg. A big dip feels permanent.
• Sequence-of-returns risk – if the market tanks just as you start withdrawing, your portfolio can be devastated.
• Health uncertainty – unexpected medical bills could force selling at the worst time.

But here's the counterpoint: inflation is a silent killer. Over a 20-year retirement (which is realistic at 70), a 3% inflation rate cuts your purchasing power by nearly half. Stocks historically outpace inflation; bonds and cash don't. So exiting entirely swaps one risk (volatility) for another (losing buying power).

The Case for Staying Invested (with Adjustments)

I'm not saying stay 100% in equities. But completely walking away is like throwing the baby out with the bathwater. Here's why:

Growth Still Matters

A 70-year-old could live another 15–25 years. That's a long horizon. History shows that a portfolio with at least 30–40% equities has a much higher probability of lasting 30 years than a bond-only portfolio. Source: Vanguard's retirement research (check their white papers on sustainable withdrawal rates).

Dividend Income

Many blue-chip stocks pay reliable dividends. At current yields (around 1.5–3%), a portfolio of $500k in dividend stocks could throw off $7,500–$15,000 a year. That's real spending money without touching principal. And dividends tend to grow over time, giving a built-in raise.

Inflation Hedge

During the 2021–2022 inflation spike, stocks of companies with pricing power (like consumer staples and healthcare) held up relatively well. Bonds got hammered. A 100% bond portfolio would have lost purchasing power rapidly.

The Bucket Strategy: A Middle Ground

This is my go-to recommendation for clients aged 65–80. You divide your portfolio into three “buckets” based on when you'll need the money.

How it works: You spend from Bucket 1. When it runs low, you replenish it from Bucket 2 (by selling bonds). If the stock market has dropped, you don't touch Bucket 3 – you let it recover. This way, you never have to sell stocks at a low point for living expenses. I've seen this approach save retirees from panic-selling twice in the last decade.

One note: adjust the percentages to your risk tolerance. If you have a pension or Social Security covering most expenses, you can tilt more toward stocks. If you're entirely dependent on the portfolio, keep more in bonds.

Risk Tolerance & Time Horizon at 70

Not all 70-year-olds are the same. Two retirees with the same net worth can have completely different needs:

• Anne has a $2 million portfolio, a paid-off house, and a pension covering all essentials. She can afford to stay 60% in stocks because she won't need to sell in a down market.
• Bob has $400k, rents an apartment, and relies entirely on his portfolio. He should keep only 20–30% in stocks to avoid sequence risk.

Key rule: If a 30% market drop would force you to change your lifestyle (e.g., skip meals or sell your home), you have too much in stocks. Rethink your allocation.

Practical Steps to Rebalance (Not Exit)

If you're currently 70%+ in stocks, here's a gradual plan to shift down to a safer level:

1. Stop reinvesting dividends – let them accumulate in cash. Use that cash to buy bonds or fund expenses.
2. Redirect new money – any pension or Social Security that you don't spend, invest into bond ETFs instead of stocks.
3. Sell in small increments – over 12–24 months, gradually sell a portion of your stock holdings. This reduces the risk of selling at the bottom. For example, if you want to go from 60% stock to 40%, sell 1% of your portfolio per month and buy bonds.
4. Use tax-advantaged accounts – if you have both taxable and tax-deferred accounts, make the adjustments in the tax-deferred ones to avoid capital gains taxes (see next section).

Tax Implications of Selling

Many people forget that selling stocks can trigger a big tax bill. At 70, you're likely in a lower tax bracket, so capital gains rates are 0% for taxable income up to roughly $55k (for 2025, adjusted). But if you sell a huge chunk in one year, you could jump into the 15% bracket.

Smart moves:

• Harvest gains in years when your other income is low (e.g., before RMDs kick in).
• Consider donating appreciated shares to charity – you avoid capital gains tax and get a deduction (if you itemize).
• If you have losses from other positions, use them to offset gains (tax-loss harvesting).

Consult a CPA, but don't let tax fear keep you from making a needed allocation shift. The long-term benefit of a safer portfolio usually outweighs the tax hit.

Common Mistakes Retirees Make When Considering an Exit

Over the years, I've watched retirees repeat the same errors. Here are the top three:

• Mistake 1: Going to 100% cash or bonds. They think “safe” means no risk. But inflation risk is real. A 70-year-old living 20 years in a 100% bond portfolio actually has a higher chance of running out of money than one with 30% stocks, according to T. Rowe Price simulations.
• Mistake 2: Timing the market. They sell after a 10% drop, waiting to “buy back later.” Usually, they miss the rebound and buy back higher. I've seen this happen dozens of times.
• Mistake 3: Ignoring health care costs. Medicare doesn't cover everything. A sudden $50k nursing home bill can force you to sell when prices are low. Keep an emergency cash bucket (Bucket 1) large enough to cover two years of out-of-pocket health expenses.

This article reflects my 12 years of experience advising pre-retirees and retirees. It has been fact-checked against reputable sources including Vanguard, T. Rowe Price, and the IRS tax code.