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The S&P 500 Index (SPY) is up 14.3% over the past year as stocks have significantly outperformed bonds over the past decade.
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Retirees with a 30-year horizon should continue to hold S&P 500 stocks rather than abandon stocks due to market timing concerns.
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Financial planners recommend holding 3-5 years of living expenses in cash and investing the remainder in stocks.
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Investors reconsider “letting go” of investing and decide to start making money
As investors approach retirement, market timing anxiety increases, especially when headlines trumpet economic uncertainty. The urge to abandon your winning strategy at the finish line can be overwhelming.
On a January 2026 episode of The Dave Ramsey Show, a caller named Robert from Nashville shared his dilemma. Robert, 70, and his wife plan to retire at the end of the year, having built up a nest egg of $400,000 in 401k and Roth accounts, plus $100,000 in high-yield savings. Over 23 years, his portfolio has returned 10.89% annually, 93% of which is in stocks. With gold prices high and the economy uncertain, Robert wonders if he should put some of his retirement savings into a money market fund.
“Well done. That’s exactly what we tell people you should do,” the host said of Robert’s return. The advice is clear: Don’t give up on stocks out of fear. “You have another 30 years to live,” the host reminded Robert, noting that his wife planned to live to be 100. “You’re going to miss out on a lot of returns” by panicking into bonds.
Ramsey’s core insight is mathematically sound. A 70-year-old man with a spouse who plans to live to be 100 faces a potential investment horizon of 30 years. Historical evidence supports maintaining a stock investment: Over the past decade, stocks have significantly outperformed bonds, and the gap in performance illustrates why giving up stocks in retirement could cost Robert hundreds of thousands of dollars over three decades of growth.
The opportunity cost of moving to bonds becomes apparent when you consider the reduction in purchasing power. Rolling his savings into bonds would generate a modest annual income, but inflation would steadily erode the real value of that income over decades of retirement. This seemingly safe option can actually lead to lower living standards as the cost of goods and services rises faster than bond yields.
Ramsey’s guidance assumes that Robert can emotionally withstand a 30-40% portfolio decline without panicking. The S&P 500 is up 14.3% over the past year, but maintaining 93% equity exposure means accepting significant short-term volatility. Retirees who receive income during a market crash face sequence of returns risk: selling stocks as they decline permanently locking in losses.
