We just retired at 67 with $4.1 million. My husband insists on keeping half our portfolio in stocks. I say it's not worth the risk. Who's right?

A couple in their 60s discusses finances or other planning in front of a laptop. They sit at the dining room table with coffee, food and light coming through the windows.

Question: We just retired at 67 with $4.1 million. My husband insists on keeping half our portfolio in stocks. I say it's not worth the risk. Who's right?

Answer: As of 2022, Americans aged 65 to 74 had an average of $537,560 in retirement savings, according to the Federal Reserve. If you're a 67-year-old couple with a $4.1 million nest egg, you're probably in a much stronger financial position than many of your peers.

Using the 4% rule, a $4.1 million nest egg could produce $164,000 in annual income, without accounting for inflation. But to sustain a 4% withdrawal rate, your portfolio may need a reasonable mix of stocks and bonds. And if one of you isn't comfortable with that, it's an issue you'll need to resolve early on.

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It may be that your husband is fine with keeping half of your retirement portfolio in stocks while you'd prefer to go all-in on cash and bonds, which come with far less risk in the context of losing principal. But it's important to recognize that not investing in stocks during retirement carries its own risks, and that, within the context of owning stocks, there's a safer way to go about it.

You're dealing with two types of risk

You may feel that investing in stocks as a retiree is risky. Your spouse might feel that not owning stocks is risky.

"You’re both right," says Jen Heerensperger, CPWA, client advisor and portfolio manager at Segment Wealth Management.

"Taking risk is the only way to outpace inflation, which, along with withdrawals, taxes, and fees, can ravage a portfolio over time," Heerensperger says.

"However, she cautions, "there is an additional risk more precarious even than equity risk. That comes from your decision making. If you cannot endure the fluctuation of value in your account, you will liquidate at the wrong time, fail to re-enter, and hunker down in cash or very safe investments, significantly worse off than you were to start."

In other words, Heerensperger says, if you want safety in your portfolio, it's going to cost you something.

"You can have safety by investing in fixed income, whose returns are often just barely above inflation," says Heerensperger. But, she warns, "much of your return is comprised of interest income, which is taxed at ordinary income rates, compared to half that rate on qualified dividends from stock ownership."

Michael Boggiano, Managing Partner at Wealthcare Financial, agrees.

"In retirement, the key is to balance between growth and safety, so in this situation, neither of you is wrong," he insists. "At 67 with $4.1 million, the biggest financial risks you face aren’t just market downturns. They are longevity risk and inflation quietly eroding purchasing power."

Avoiding stocks is an issue in both regards. If your portfolio doesn't keep growing at a decent pace, you could risk running out of money if you live a very long life. And if your portfolio can't at least match inflation, you're pretty much guaranteed to lose buying power over time, especially during periods when inflation is elevated.

"For many retirees, a 40% to 60% stock allocation is ... not overly risky, provided there's a disciplined structure around it." — Michael Boggiano

A safer way to hold stocks in retirement

Without stocks in your portfolio, a $4.1 million nest egg may not hold up well over time. So, avoiding stocks completely in retirement is generally not recommended.

"Historically, portfolios that are too conservative struggle to keep up with inflation over a 25- to 30-year retirement," Boggiano insists.

However, he says, sequence of returns risk, like taking withdrawals during a market downturn, can permanently damage a portfolio. The question, therefore, should really shift from "should we own stocks?" to "how can we safely own stocks?"

Boggiano explains that for many retirees, a 40% to 60% stock allocation is common and not overly risky, provided there's a disciplined structure around it.

"If you’re going to keep 50% of your retirement savings in equities, the approach matters more than the percentage," he says. "You’ll want to favor diversified lower-volatility strategies, like broad index funds, dividend-focused stocks, and quality companies. It’s also best to avoid concentrated bets or overly aggressive sectors, all while rebalancing regularly."

Put some guardrails in place

In addition to maintaining a diversified portfolio of stocks and steering clear of higher-risk investments, Boggiano recommends putting guardrails in place that may allow you and your husband to meet in the middle.

One thing he's a big fan of is a cash buffer.

"Keep enough in cash or very short-term bonds to cover your lifestyle for a few years," Boggiano says. "This keeps you from selling stocks in a downturn and helps you to ride out market volatility without panic."

Boggiano also recommends a bucket strategy for psychological and financial stability. This way, "you know your near-term income is protected, which makes it easier to tolerate stock market swings," he explains.

Boggiano's basic suggestion is as follows:

Bucket 1 (0–3 years): Cash/money market/short-term bonds
Bucket 2 (3–10 years): Intermediate bonds or conservative investments
Bucket 3 (10+ years): Stocks for long-term growth

Even within this strategy, Boggiano says, it's a good idea to plan to reduce withdrawals after a bad market year. But, he says, you can also increase modestly after strong years.

All told, Boggiano says, "With the right structure, keeping 50% in stocks can be entirely reasonable, but only if it’s supported by a thoughtful income plan and safety buffers."

Maurie Backman is a freelance contributor to Kiplinger. She has over a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. She has written for USA Today, U.S. News & World Report, and Bankrate. She studied creative writing and finance at Binghamton University and merged the two disciplines to help empower consumers to make smart financial planning decisions.