I work with a lot of retirees, or those who are about to retire. One common question I get is, “when is the proper age to transition from a stock portfolio to a bond portfolio”? The answer is:
You are never too old to own stocks, or equity mutual funds, which I prefer, in your portfolio. Let’s look at some reasons why equities are always a good thing.
History has proven that equity funds outperform income funds over the long term (and of course, there is no guarantee that will continue; however, for the past 80+ years, that is the history of equity performance). Many retirees under estimate how long they will live in retirement. If equities can add, conservatively, 4% annually to your balance, your portfolio may last an additional ten years.
Many stocks can be safe. There are a number of very old, stable companies that have modest growth and pay regular dividends. AT&T is one that comes to mind. Most of us are very familiar with AT&T and we probably use their services. While the stock value has been very stable over the past five years, the current dividend it pays is 5.73% (according to yahoofinance.com).
Through diversification, stocks can make up a portion of your portfolio, but should not make up the whole portfolio. Bond funds and cash should be part of your mix to provide some stability that the stocks may not.
Cash and bonds provide some safety, but they can be boring. Stocks can be more fun to watch, and through mutual funds you can own a piece of the pie.

disclosures:http://www.hechteffect.net/?page_id=31