May 12, 2026
Patricia, 66, is retired from her full-time job, but still does some consulting work on the side to bring in extra cash. Overall, she’s in a good position for her golden years: She’s paid off her house, doesn’t have any debts, has plenty of savings and is in good health.
She also has about $100,000 in cash sitting in a high-yield savings account, which for many years she used as an emergency fund. Now she’s wondering if she should move that money into S&P 500 index funds, which have been experiencing record highs.
Advertisement
The S&P 500 is 16.5% above this year’s low, according to Morningstar (1) — though there are concerns that the party can’t last forever.
Patricia doesn’t need the money right away. She’s planning to take her Social Security benefit at her full retirement age (FRA) of 67. In the meantime, she’s living off her savings and bringing in extra cash through her part-time consulting work.
While she’s in a good financial position, she also doesn’t want to risk losing her $100,000 if the market crashes.
What’s happening with the stock market
The S&P 500 has been rallying since the end of March — despite the war in Iran and a blockade of the Strait of Hormuz that’s led to the largest oil-supply disruption in history, which has sent oil prices through the roof.
The U.S. stock index initially fell during the first few weeks of the war, which began Feb. 28. But stocks have since rallied, now trading near all-time highs.
“The stock market isn’t trying to price what’s happening today,” Joe Seydl, senior markets economist at J.P. Morgan Private Bank, told CNBC (2). “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
And investors are betting that the Iran conflict will be short-lived. They’re also hoping that President Trump’s meeting with Chinese President Xi Jinping in Beijing on May 13 could lead China to push Tehran towards de-escalation.
Advertisement
At the same time, the S&P 500 has been boosted by gains in tech and AI-related stocks — in part driven by high demand for new data centers to fuel the rapid growth of AI. This is despite concerns of inflation related to rising oil prices (3).
Still, there are concerns of a market correction (or a crash) amid fears that the war is dragging on and that the AI bubble could burst. Billionaire investor Warren Buffet says the stock market is “playing with fire (4),” and ‘Big Short’ investor Michael Burry is warning of a dot-com-style crash.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — are you doing the same?
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Robert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
To invest or not to invest?
Since its launch in 1957, the S&P 500 has delivered annual returns of around 10.5% (5). Markets have also historically rebounded after a crash, although the timelines vary. So, if you might need the money sooner rather than later, investing in the S&P 500 could be a riskier proposition.
For an older American like Patricia, deciding to invest more of her money in S&P index funds is a matter of risk tolerance. Most people who’ve reached retirement age are taking a different strategy, shifting to more conservative investments to reduce exposure to market volatility.
On the other hand, being too conservative could erode your purchasing power over time. For example, if Patricia’s $100,000 is earning 1% and the rate of inflation is 3%, then she’s losing 2% in purchasing power.
If Patricia doesn’t need the money for another five to 10 years, she could potentially afford to take more risk — if she’s up for it. She’ll have to decide how much risk she’s comfortable with and if a market crash would cause her to lose sleep at night.
Advertisement
There are a few other considerations, too. While Patricia is healthy, life happens. She’s covered by Medicare, which kicks in at age 65, but it doesn’t mean she’s covered for everything. For example, Medicare doesn’t cover long-term care in an assisted living facility.
Plus, there are premiums, deductibles and co-insurance for certain services. A 65-year-old retiring today can expect to spend about $172,500 on healthcare in retirement, according to Fidelity’s 2025 Retiree Health Care Cost Estimate (6).
Many financial experts recommend diversifying your investments across asset classes, industries and geographic regions so you’re not putting all of your eggs in one basket. The S&P 500, however, has become less diversified, thanks to its high concentration of tech stocks.
If Patricia isn’t comfortable rolling the dice with her money — especially during a time of geopolitical uncertainty — she could continue to keep it in a high-yield savings account or a certificate of deposit (CD), which has a set interest rate for a specific period of time. The downside is that she’ll receive lower returns, but she’ll also reduce risk.
Patricia may want to sit down with her financial advisor and explore her options, taking into account her upcoming Social Security retirement benefit and future withdrawal strategies to extend her retirement savings.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Morningstar (1, 3); CNBC (2); Fortune (4); Official Data (5); Fidelity (6).
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- Inside a $1B real estate fund offering access to thousands of income-producing rental properties — with flexible minimums starting at $10
- Vanguard’s outlook on U.S. stocks is raising alarm bells for retirees. Here’s why and how to protect yourself
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Vawn Himmelsbach is a veteran journalist who covers tech, business, finance and travel. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, CBC News, Yahoo Finance, MSN, CAA Magazine, Travelweek, Explore Magazine and Consumer Reports.
