Should a 70 year old invest?
Conventional wisdom holds that when you hit your 70s, you should adjust your investment portfolio so 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.
Ideally, you'll choose a mix of stocks, bonds, and cash investments that will work together to generate a steady stream of retirement income and future growth—all while helping to preserve your money.
It's never too late to start investing, but starting in your late 60s will impact the options you have. Consider Social Security strategies, income sources and appropriate asset allocation. A financial advisor may be able to help you project out your investment and income plan into the coming decades.
If you're 70, you should keep 30% of your portfolio in stocks. However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age.
How much does the average 70-year-old have in savings? We were curious, too, so we asked. Our 2023 Planning & Progress study found that the average amount of retirement savings for 70-year-olds in the U.S. is $113,900.
- Know your portfolio. Meet with a financial advisor and make sure you're investing 15% of your annual income in retirement accounts like a 401(k) or a Roth IRA. ...
- Don't borrow money from your retirement account. ...
- If you have a mortgage, start paying it down.
But now that Americans are living longer, that formula has changed to 110 or 120 minus your age — meaning that if you're 75, you should have 35% to 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.
As there's no magic age that dictates when it's time to switch from saver to spender (some people can retire at 40, while most have to wait until their 60s or even 70+), you have to consider your own financial situation and lifestyle.
Over the long term, stocks outperform bonds. So, stock market investments should be one component of a plan you use to prevent your savings from running dry before the end of a retirement that can last 20 or 30 years or longer.
$3,000 X 12 months = $36,000 per year. $36,000 / 6% dividend yield = $600,000. On the other hand, if you're more risk-averse and prefer a portfolio yielding 2%, you'd need to invest $1.8 million to reach the $3,000 per month target: $3,000 X 12 months = $36,000 per year.
What should my portfolio look like at age 70?
While, again, this depends entirely on your individual needs, many retirement advisors recommend higher-growth assets around the following proportions: Age 65 – 70: 50% to 60% of your portfolio. Age 70 – 75: 40% to 50% of your portfolio, with fewer individual stocks and more funds to mitigate some risk.
The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances. Taken on their own, those numbers aren't incredibly helpful. There are a variety of decent retirement savings benchmarks out there, but how much money other people have isn't one of them.
The national average for retirement savings varies depending on age, but according to the Economic Policy Institute, the median retirement savings for all working age households in the US is around $95,776. This figure includes both employer-sponsored retirement accounts and individual retirement accounts (IRAs).
Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.
According to the 4% rule, if you retire with $500,000 in assets, you should be able to withdraw $20,000 per year for 30 years or more. Moreover, investing this money in an annuity could provide a guaranteed annual income of $24,688 for those retiring at 55.
$1 million, $5 million, $10 million
However, if you have $1m, are retired and are living an expensive lifestyle, you might go from wealthy to poor in a relatively short period of time. The Schwab survey found that overall, Americans say they need: $1.9 million to be wealthy in 2021 (down from $2.6 million in 2020)
| Age | Income | Net Worth |
|---|---|---|
| 25 | $35,000 | $87,500 |
| 30 | $50,000 | $150,000 |
| 50 | $55,000 | $275,000 |
| 60 | $75,000 | $450,000 |
By spreading their wealth across multiple investments, they reduce the risk of losing it all in a single stroke of misfortune. For example, The Rockefeller family, one of the most iconic examples of old money wealth in America, has successfully diversified their wealth across multiple asset classes for generations.
“Your most powerful wealth-building tool is your income. And when you spend your whole life sending loan payments to banks and credit card companies, you end up with less money to save and invest for your future. It's time to break the cycle!” the post read, in part.
Reinvest Your Payments
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
How much should an 80 year old have in the stock market?
The less money you have, the more important it is to have a good plan.” A common, dated rule is that the equity portion of a portfolio should be 100 less your age. So if you're age 80, you would have 20% in equities.
Exposure to stocks should remain an important part of your allocation target, even in retirement. However, a possible need to access these assets for income in the near term means you are more susceptible to short-term risks.
Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund.
Retirement: 70s and 80s
Sample Asset Allocation: Stocks: 30% to 50% Bonds: 50% to 70%
If you run out of money in retirement, you may face financial hardship and reduced quality of life. You may need to rely on family members or government programs for financial assistance, reduce your standard of living, or make significant lifestyle changes.
