Over 50? Maybe You Shouldn't Own Stocks

Who Should Own Stock?

For some people, the decision whether to own stocks may be irrelevant, especially if they have too little saved in their retirement accounts or their anticipated cash-flow needs in retirement are so high that they can't take the risk.

"If you've got $1 million and you only need to spend $30,000 to supplement your pension, you only need 3 percent of that $1 million (each year). You can afford to invest more aggressively with a longer term perspective because you won't be forced to sell at steep losses in order to buy your bread this week," Camarda says.

"On the other hand, if you need to take 7 percent of your portfolio each year to live on regardless of what the stock market is going to do, you simply just can't take the risk and you need to be focused on fixed income."

Julie Jason, author of "The AARP Retirement Survival Guide," says stock allocations should be structured based on the future spending demands of the portfolio.

"Somebody who is retired and needs X number of dollars per year should start with that calculation and work backwards into how much should be in stocks and how much should be in bonds and cash," says Jason, who directs the investment management practice of Jackson, Grant Investment Advisers in Stamford, Conn.

"In the real world, you need to know how much income you need to produce, and what you have left over is what goes into growth (stocks). Otherwise you are speculating and doing yourself a disservice.

"Cash flow is the key for anyone going into retirement. Cash flow determines how much you should have invested in stock. Cash flow determines whether or not you'll have enough money to live on. Cash flow determines whether or not you'll be happy when you retire, and cash flow is the easiest thing to figure out," she says.

"That is the message for anyone who is trying to figure out whether they should be buying stock if they're 50 or older." Typical Story Inserts:

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