Ask a Fool: Are Stocks Too Risky for Retirees?

The short answer to this question is no. All retirees should have some exposure to stocks or stock-based funds in their portfolio. While they are indeed more volatile investments than bonds, for example, they are essential for achieving long-term growth, which you'll need if you want your retirement portfolio to keep pace with inflation.

Having said that, it's a good idea to reduce your exposure to stocks as you get older. A rule of thumb I like to use is to subtract your age from 110 to determine the percentage your portfolio that should be in stocks. For example, if you're 65 years old, this formula suggests that your asset allocation ought to be roughly 45% stocks, with the rest in less-volatile fixed-income investments.

Companies with rock-solid businesses and long histories of consistent dividend growth can work well for retirees; stalwarts such as Microsoft, ExxonMobil, and Johnson & Johnson immediately come to mind.

Source: Fool.com