Retirees may think moving all their investments to cash and bonds — and out of stocks — protects their nest egg from risk.

They would be wrong, experts say.

Most, if not all, retirees need stocks — the growth engine of an investment portfolio — to ensure they don’t run out of money during a retirement that might last decades, experts said.

“It’s important for retirees to have some equities in their portfolio to increase the long-term returns,” said David Blanchett, head of retirement research for PGIM, an investment management arm of Prudential Financial.

The average life span has increased from about 68 years in 1950 to to 78.4 in 2023, according to the Centers for Disease Control and Prevention. What’s more, the number of 100-year-olds in the U.S. is expected to quadruple over the next three decades, according to Pew Research Center.

Retirees may feel that shifting out of stocks — especially during bouts of volatility like the recent tariff-induced selloff — insulates their portfolio from risk.

They would be correct in one sense: cash and bonds are generally less volatile than stocks and therefore buffer retirees from short-term gyrations in the stock market.

Indeed, finance experts recommend dialing back stock exposure over time and boosting allocations to bonds and cash. The thinking is that investors don’t want to subject a huge chunk of their portfolio to steep losses if they need to access those funds in the short term.

Dialing back too much from stocks, however, poses a risk, too, experts said.

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Retirees who pare their stock exposure back too much may have a harder time keeping up with inflation and they raise the risk of outliving their savings, Blanchett said.

Stocks have had a historical return of about 10% per year, outperforming bonds by about five percentage points, Blanchett said. Of course, this means that over the long term, investing in stocks has yielded higher returns compared to investing in bonds. 

“Retirement can last up to three decades or more, meaning your portfolio will still need to grow in order to support you,” wrote Judith Ward and Roger Young, certified financial planners at T. Rowe Price, an asset manager.

• Bucketing. Retirees can do lasting damage to the longevity of their portfolio if they pull money from stocks that are declining in value, experts said. This risk is especially high in the first few years of retirement. It’s important for retirees to have separate buckets of bonds and cash they can pull from to get them through that time period as stocks recover.

In general, the economic benefits of a college education still far outweigh the high cost. However, college does not pay off for everyone, according to a new study by the Federal Reserve Bank of New York.

Many factors, including how much financial aid is offered and how much students have to pay out of pocket, as well as the choice of major, future earnings potential and how long it takes to graduate, determine the actual return on investment, the Fed researchers found. 

Overall, “majors providing technical training — that is, quantitative and analytical skills—earn the highest return, including engineering, math and computers,” the Fed researchers wrote in the blog post on April 16.

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“While expensive schools and on-campus living may seem to make college a risky bet, our estimates suggest that even a relatively high-cost college education tends to yield a healthy return for the typical graduate,” the Fed researchers said.

“Taking five or six years to complete a degree also still generally pays off. However, as many as a quarter of college graduates appear to end up in relatively low-paying jobs, and for them, a college degree may not be worth it, at least in terms of the economic payoff,” according to the Fed researchers.

College tuition costs have indeed risen significantly, averaging a 5.6% annual increase since 1983, outpacing inflation and other household expenses. And families now shoulder 48% of college expenses with their income and investments, up from 38% a decade ago, according to a report by J.P. Morgan Asset Management.

“College continues to get more expensive and even though we’ve made aid more accessible by making the FAFSA [The Free Application for Federal Student Aid] shorter and more digestible, it’s not enough,” said Tricia Scarlata, head of education savings at J.P. Morgan Asset Management. (The new Free Application for Federal Student Aid was meant to improve access by expanding aid eligibility.)

In fact, these days, more students are opting out. Both bachelor’s degree and associate degree earners fell for the third consecutive year in 2023-24, according to a recent report by the National Student Clearinghouse Research Center.

“Today’s students want shorter-term, lower-cost credentials that lead to faster employment opportunities,” Doug Shapiro, the National Student Clearinghouse Research Center’s executive director said in a statement.

“It is certificate programs, not associates or bachelor’s degrees, that are drawing students into colleges today,” Shapiro added.

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Consumer debt is rising, and now credit scores have declined.

The national average FICO credit score dropped to 715 from 717, according to a recent report from FICO, developer of one of the scores most widely used by lenders. FICO scores range between 300 and 850.

Amid high interest rates and rising debt loads, the share of consumers who fell behind on their payments jumped over the past year, FICO found. Also, the resumption of federal student loan delinquency reporting on consumers’ credit was a significant contributing factor, the report said.

“Those are now being reported for the first time since March 2020,” said Tommy Lee, senior director of scores and predictive analytics at FICO. “This is really driving the increase in severe delinquencies.”

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The Federal Reserve Bank of New York cautioned in a March report that student loan borrowers who are late on their payments would experience “significant drops” in their credit scores.

Initially, those borrowers benefitted from the pandemic-era forbearance on federal student loans, which marked all delinquent loans as current. Median credit scores for student loan borrowers increased by 11 points between the end of 2019 to the end of 2020, the Fed researchers found. However, that relief period officially ended on Sept. 30, 2024.

“We expect to see more than nine million student loan borrowers face substantial declines in credit standing over the first quarter of 2025,” the Fed researchers wrote in the blog post last month.

“Although some of these borrowers may be able to cure their delinquencies,” the Fed researchers said, “the damage to their credit standing will have already been done and will remain on their credit reports for seven years.”

Lower credit scores could result in reduced credit limits, higher interest rates for new loans and overall lower credit access, the researchers also said.

During the 2007-2010 housing crisis, average nationwide credit scores fell to 686 due to a surge in foreclosures. They subsequently ticked higher until the Covid-19 pandemic, when government stimulus programs and a spike in household saving helped boost scores to a historic high of 718 in 2023.

However, last year, FICO scores notched their first decline in over a decade, dropping to 717 in 2024, when rising credit card balances and an uptick in missed payments started to take a toll.

This year, scores fell even further as severe delinquencies, or 90-day past-due missed payments, surpassed pre-pandemic levels for the first time.

In general, the higher your credit score, the better off you are when it comes to getting a loan. Lenders are more likely to approve you for loans when you have a higher credit score, or offer you a better rate. Alternatively, borrowers with lower scores are typically charged more in interest, if they are approved for a loan at all.

In fact, increasing your credit score to very good (740 to 799) from fair (580 to 669) could save you more than $39,000 over the lifetime of your balances, a recent analysis by LendingTree found — with the largest impact from lower mortgage costs, followed by preferred rates on credit cards, auto loans and personal loans.

Some of the best ways to improve your credit score come down to paying your bills on time every month and keeping your utilization rate, or the ratio of debt to total credit, below 30% to limit the effect that high balances can have, FICO’s Lee said.

A good score generally is above 670, a very good score is over 740 and anything above 800 is considered exceptional.

An average score of 715 by FICO measurements means most lenders will consider your creditworthiness “good” and are more likely to extend lower rates.

“There are still many consumers that are managing their payments very well,” Lee said. “On the other hand, the decline [in average credit scores] does indicate there are some consumers being impacted by the current economy.”

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