A retirement that could stretch 20 or 30 years is a different problem than the one bonds were built to solve, and a 66-year-old sitting entirely in fixed income may be taking on a risk that never shows up on…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
You’re 66, and every dollar you’ve saved sits in bonds. Maybe you moved there after a bad market shook you. Maybe stocks never felt comfortable. Either way, you built something stable, and that took discipline. The question now is whether that portfolio fits a retirement that could last decades. If you decide to add some stock exposure, three funds offer a measured way in: iShares Core 40/60 Moderate Allocation ETF (NYSEARCA:AOM), Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ), and First Trust Value Line Dividend Index Fund (NYSEARCA:FVD).
Why an All-Bond Portfolio Can Quietly Fall Short
For some retirees, an all-bond portfolio makes sense. If Social Security, a pension, or an annuity already covers your spending, you may not need more growth. Bonds also pay real income today, with the 10-year Treasury yield at 5.00% as of Oct. 26. However, bond funds can still lose value, especially when rates climb.
For everyone else, the risk is quieter than a crash. Over a long retirement, inflation and longevity can slowly eat away at a portfolio that never grows much. Stocks give you a claim on corporate earnings growth, something a fixed coupon can’t provide.
Owning stocks comes with a price. Part of your portfolio will now decline sometimes, occasionally sharply. Go in expecting that, and remember that a rough market in the first few years of retirement does far more lasting damage than one later on (we walked through that sequence-of-returns problem, and how to defend against it, in a free guide here).
How to Start Small and Avoid a Surprise Tax Bill
There’s no need to move a lot or move it all at once. Shift a modest portion, add to it gradually, and see how the swings feel before going further.
Where your bonds live matters. According to the IRS, “Generally, amounts in your IRA, including earnings and gains, aren’t taxed until distributed” (Publication 554). This generally allows you to shift bond holdings inside an IRA without triggering a tax bill at the time of the trade. In a taxable account, selling bonds can realize a gain or a loss, so check before you sell.
AOM Adds Stocks While Bonds Stay in Charge
AOM is the easiest step because it adds stocks inside a fund that still holds plenty of bonds. Its name signals a 40/60 stock-to-bond mix. As of July 31, 2026, its largest position was a U.S. bond index fund at about 49.6% of net assets, plus an international bond fund at roughly 8.9%. On the stock side, an S&P 500 index fund made up about 23.4%, with international developed markets at 11.7% and emerging markets at 4.4%.
One ticker gets you global diversification and automatic rebalancing. The fund holds roughly $1.74 billion in net assets and pays quarterly, distributing about $1.55 per share over the trailing 12 months. Payouts vary from quarter to quarter.
SPHQ Screens for Financially Sturdy Companies
SPHQ tracks the S&P 500 Quality Index, a subset of S&P 500 companies “determined to have high quality based on return on equity, accruals ratio, and financial leverage ratio.” Translated: profitable businesses whose earnings are backed by cash, carrying manageable debt.
It costs a 0.15% net expense ratio, has operated since Dec. 6, 2005, and manages about $19.4 billion. No single holding topped roughly 5.8% of assets as of July 31, and exposure covers technology, financials, industrials, consumer brands, and health care. It paid about $0.87 per share in quarterly dividends over the past year.
Quality screens don’t prevent declines. SPHQ slipped 0.91% over the past month alone.
FVD Pays Quarterly Income From Safety-Ranked Dividend Stocks
FVD tracks the Value Line Dividend Index, which selects dividend payers that Value Line ranks for safety and that yield more than the S&P 500. The index uses modified equal dollar weighting, so positions sat near 0.4% each as of June 30, 2026. No single company dominates.
You get utilities, insurers, health care, consumer staples, and real estate trusts, plus some international names. The fund holds about $8.04 billion and distributed $1.1225 per share over the trailing 12 months, most recently $0.2562 paid on Sept. 30. Companies can cut dividends, and FVD remains a stock fund that can fall with the market.
Trade-Offs to Weigh Before You Commit
Each fund asks you to accept something. AOM’s bond-heavy mix moderates both the swings and the growth, and it can still decline. SPHQ leans heavily on chipmakers and tech names, which can be volatile. FVD’s tilt toward utilities and real estate trusts can lag if rates climb.
Used gradually, these funds let you test stock ownership on your terms: one blended fund that keeps bonds in charge, one that screens for financial strength, and one built around steady dividend payers. For a 66-year-old who owns nothing but bonds, that combination offers a way to add growth potential without giving up the stability you worked to build.
Contact [email protected] for any questions or corrections.