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Conventional wisdom holds that when you reach age 70, you should adjust your investment portfolio so that it leans heavily toward low-risk bonds and cash accounts and away from higher-risk stocks and mutual funds. That strategy still has merit, according to many financial advisors. But as people live longer, You should dedicate a larger proportion of your portfolio to stocks now than older people 30 or 40 years ago.
Many older Americans are following that advice. As The Street reported earlier this year, among seniors with taxable brokerage accounts at Vanguard, nearly a quarter of people ages 75 to 84 had a nearly 100% weighting in stocks. Even a fifth of investors aged 85 and older were similarly weighted in stocks.
Mick Heyman, an independent financial advisor in San Diego, told The Street that one of the reasons older investors keep more money in stocks these days is to avoid taxes on capital gains from selling them (assuming they are in non-retirement accounts).
"If you originally had 60% to 70% of your assets in stocks, maybe now you have 70% to 80%," he said.
As for why many older investors are investing more in stocks, much of that has to do with income, an important consideration for those who expect to live long after retirement.
"The most important thing is revenue," Heyman said. “Do you have enough, based on your allocation and potential stock volatility, to fund your expenses if you live as long as possible?”
Americans are living longer, which means retirement investment mixes have changed
In terms of how much money you should have in the stock market at age 75: that depends on several different factors, ranging from your health and preferred lifestyle to your debt load, net worth, monthly bills, sources of income and risk tolerance.
An old general tip cited by CNN is that you should subtract your age from 100 to get the percentage of your portfolio that should be in stocks. If you are 75 years old, for example, you should have 25% in stocks.
But now that Americans are living longer, that formula has changed to 110 or 120 minus age, meaning that if you're 75, you should have between 35% and 45% of your portfolio in stocks. Using this formula, if your portfolio totals $100,000, then you should have no less than $35,000 in stocks and no more than $45,000.
According to a recent analysis of Authorize, a financial services company, investors age 70 and older hold 31% to 33% of their portfolio assets in U.S. stocks and 5% to 7% in international stocks. Among the investors Empower analyzed, here's the breakdown by age group based on average holdings:
| Age | US stocks | International actions |
| 70's | $247,645 | $39,774 |
| 80s | $196,042 | $24,795 |
| 90's | $145,292 | $13,183 |
In terms of bond holdings as a percentage of their overall portfolio, here's how older investors break down:
| Age | US bonds | International bonds |
| 70's | 11.39% | 2.04% |
| 80s | 11.05% | 1.81% |
| 90's | 9.97% | 1.32% |
Like most investors, older people tend to have less money in alternative investments. Below is how much money older investors have in alternative investments and their percentage of the overall portfolio.
| Age | Median allocation of alternatives | PCT. of alternatives in the overall portfolio |
| 70's | $14,361 | 3.74% |
| 80s | $8,773 | 3.48% |
| 90's | $4,228 | 3.17% |
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