For retirees, staying in the stock market is critical. How much exposure is the make-or-break question

In retirement, your equities exposure is the make-or-break factor Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Being too conservative with investments in retirement raises the likelihood you'll run out of money. Most wealth managers and financial advisors now recommend at least 40% in the stock market after leaving the workforce. Generating income is critical, and bonds are part of that, but staying in equities is also important to mitigate inflation and due to longevity risk. In this article .SPX Follow your favorite stocks CREATE FREE ACCOUNT NEW YORK, NEW YORK - AUGUST 05: Stock market numbers are displayed on the New York Stock Exchange during morning trading on August 05, 2026 in New York City. Michael M. Santiago | Getty Images News | Getty Images Attention retirees: Being overly conservative with your investments after exiting the workforce raises the likelihood you'll run out of money in retirement . Many retirees may have heard from friends or family members to take a conservative approach in retirement. But the conventional wisdom has changed. Modern thinking among financial advisors is that equities should be a meaningful part of every retiree's portfolio — often between 40% and 80% — to generate income and mitigate inflation and longevity risk. In the past, there was a general rule of thumb to reduce the equity portion of a portfolio as soon as you retire, to about 30%, at most, said Cheri Belski, head of investment management solutions at LPL Financial in Fort Mill, South Carolina. "The new way of thinking is to get intentional about retirement, not conservative." There's no single target allocation that fits every individual in early retirement. Rather, coming up with an appropriate equity exposure means crunching the numbers, taking into account factors such as account age, risk tolerance, income, assets, spending needs and taxes, to increase the likelihood that retirees' nest eggs will last 30 years or more. The stakes are especially high, given that more than 11,200 Americans turn 65 every day — or over 4.1 million every year — from 2024 through 2027, according to estimates from the Retirement Income Institute at the Alliance for Lifetime Income. "To me, equities aren't about taking more risk; it's about giving your portfolio a fighting chance to keep up with your life," Belski said. "You're probably going to have 30 years in retirement. You want to make sure you have the assets to support it." Here's what retirees need to know about holding equities in their investment portfolio. Inflation, longevity risk require portfolio growth "You need a portfolio allocation that has long-term growth benefits, and equities can serve that purpose — to address longevity risk and inflation," said Stuart Katz, chief investment officer of Robertson Stephens in San Francisco. There's no need to be overly aggressive, but, rather, the approach in retirement should be "growth with guardrails," he added. Collin Lindsey, managing director and wealth manager at the Lindsey Trost Group of Steward Partners in Lake Oswego, Oregon, generally recommends clients in their late 60s and early 70s allocate about 40% to 60% to equities, depending on other retirement resources, lifestyle, needs and risk profile. The equity portfolio might include individual stocks, exchange-traded funds, unit investment trusts and REITS, depending on the client's goals. He recommends that retirees limit volatility in their portfolio where possible. That likely includes avoiding high-volatility assets like IPOs. A recent example of this is SpaceX , which since its first trade on June 12, has lost more than $500 billion in market cap . "If you have a big downswing and you need to take the money out to live on, you're never going to get it back," Lindsey said. Diversification also remains important in a retiree's portfolio. Within equities, retirees should have international holdings and stocks with different market capitalizations. Some holdings should be growth-focused, and some should focus on income through dividends. Don't get overexposed to a particular sector such as technology, even if that's where it seems a quick way to generate returns, advisors said. Stock market exposure should not be fixed in retirement Just because you start with one equity allocation in retirement doesn't mean it's where you should be later on. If your expenses increase, for instance, you might need a slightly more aggressive equity allocation for income purposes, said Matt Gentzkow, managing director and wealth advisor at Coastal Bridge Advisors in Nashville, Tennessee. When determining an appropriate allocation, it's also important to consider whether your goals include leaving an inheritance to children and grandchildren. Maybe you've satisfied your retirement income needs but want to