I'm 68 and retired. With Treasury yields so high now, should I just exit stocks and put all my money into 30-year bonds?

But is this really a good idea, or should Sam think twice before making such a drastic move?

Sam’s plan has more risks than he thinks

While it may seem tempting to give up on equities and stick to a bond-only portfolio, most financial experts advise against that, even with yields so high right now.

“Yes, we are at a high mark for interest rates on Treasury yields, but I would never suggest that you put all your assets in one type of investment,” Domenick D’Andrea, a financial advisor and co-founder of DanDarah Wealth Management, told Moneywise.

D’Andrea explained that falling market interest rates could affect the income Sam could earn from reinvesting maturing bonds or purchasing new bonds at lower yields. Experts also point out that bonds are not necessarily completely risk-free.

“Bonds are great. They offer predictable income, less volatility, and high yields (at least right now), but an all-bond portfolio contains hidden risks,” said Michael Schramm, a CFA and founder of Emotional Finance.

Schramm explained that Sam may need his money for decades yet. “If you only own bonds, your portfolio’s average return will likely be lower than with a mix of stocks and bonds, which could cause you to outlive your nest egg.”

Longevity risk and interest rate risk are two major issues that should make Sam rethink his plan, but he also needs to consider inflation risk, since his fixed payments could be worth less over time as prices rise. Reinvestment risk should also be on his radar, as Sam may have to reinvest at lower prevailing yields when his bonds mature.

“At 68, you could need your money for 20 to 30 more years. That’s why retirees with less room for risk still want to own some stocks so their money grows enough to last,” Schramm said.

What should Sam do instead?

Rather than dumping his stocks, Sam should create a customized investment plan that aims to maximize potential returns while limiting risk to a reasonable level.

“I would investigate a diversified strategy, especially in retirement,” D’Andrea said. You can have some of your assets in Treasuries, but you should also have some in stocks or equities to help protect yourself in different markets.” This approach should expose Sam to an appropriate level of risk that balances his future concerns with the need to earn reasonable returns.

“Ironically, one of the biggest mistakes people make when approaching and during retirement is becoming overly risk-averse,” Robert R. Johnson, professor of finance at Heider College of Business at Creighton University, told Moneywise.