Although it is generally a rule of thumb that the percentage of stocks invested in bonds should be equivalent to your age (i.e., a 70 year old would have 30% other assets such as stocks and 70% bonds), that is just a broad outline and doesn't take into consideration the individual finances of people. Many seniors continue to have significant equity exposure if they have substantial assets, no need to live on them other than the dividends, and maintain a comfortable lifestyle. There are members of my own family that are around the same age that have near total equity exposure because they don't need the funds for day-to-day expenses as a result of their pension income and social security checks so they focus on the long-term to maximize the value of the estate for those who will inherit after they've passed away.
The bigger concern is your focus on short-term market fluctuations. You are confusing volatility with value. Yes, Dow stocks have been hit hard this year. But time and time again, for more than one hundred and fifty years, blue chip equities, when bought on a diversified basis with dividends reinvested, have crushed every other asset class. In fact, at these lower prices, a very strong argument can be made for those who hold their stocks because the dividends that are being reinvested are purchasing far more shares due to depressed stock prices. You need to get a copy of Ivy League Wharton Professor Jeremy Siegel's book, The Future for Investors: Why the Tried and True Beat the Bold and New. It will open your eyes. His research is magnificent. Stock prices are the greatest asset class for building wealth for the average man but the gains don't come in gradually upward sloping markets. They are jagged ups, downs, sideways, drops, skyrockets, and more. Find a chart of the Dow over the past 100 years, though, and you'll see even the Great Depression was a blip on the chart (when you factor in reinvested dividends, it was even smaller). Despite war, famine, the threat of nuclear annihilation, a Presidential assassination and resignation, the advent of the Internet, space travel, planes, trains, and automobiles, biomedicine, civil rights movements, and more, ownership of businesses has proven to be the most lucrative long-term proposition from someone looking to grow their capital. The ride is bumpy so it requires you to stick to your guns, buy quality, and ignore fluctuations! Otherwise, you'll just be handing your hard earned money to professional traders and business men / women who buy for their own brokerage accounts.
Please understand that in most cases, when I get these types of letters, they seem to come from adult children with parents that have built up substantially more assets than they currently have. Many times, the sons and daughters are legitimately concerned about their parents, but equally as concerned about the value of any potential assets they will inherit. Yet they fail to realize that the very reason their parents often have money and they don't is because mom and dad have diligently invested in high quality stocks for decades, ignoring market fluctuations and profiting from the well documented real growth in equity valuations on an after-inflation basis. What's especially frustrating is that people often look at the high water mark of their portfolio and say they need to "get back to there." Instead, they fail to realize that if they've been investing for long enough (say, 20 years), they already have many, many times (literally multiples) the money they would have had by parking it in bonds or the bank. Yet, even though they are richer on a net basis, they feel the psychological sting of a perceived paper loss. For professionals, it's baffling because you're still better off than you would have been. It's like the people that sue a doctor who broke one of their ribs despite saving their life in a restaurant by performing the Heimlich maneuver.
What do you propose now? You seem to be suggesting that they sell out of their stocks and switch into more conservative investments at the very time when stocks appear to be the most attractively priced in many, many decades. I can't offer you financial advice or give you any recommendations. All I can tell you is that the "super investors" such as Warren Buffett are pouring their personal resources into American stocks at this time, even going so far as to publicly declare it. Much of my personal capital came in the aftermath of the September 11th stock market crash when people panicked after massive drops, allowing me to buy up shares that I had been watching for years. I've invested more money in the past six months than I have in my entire life.
My opinion is that you have only a handful of options. (Go to the next page to find out what they are).