Here's a bad idea whose time has gone: Retirees should keep a lot of their money safe in bonds.

Traditionally a popular source of income for folks on the receiving end of Social Security, bonds have failed miserably to protect retiree income, according to a recent study by financial adviser Tom McGuigan. The standard industry mantra of balance -- the 60/40 split (with 60 percent in stocks, 40 percent in bonds) -- is not suitable for most people's retirement income, he says. It's a little less risk, a little less return, and a lot less retirement.

His firm, Burns Advisory Group in Old Lyme, Connecticut, tested the endurance of different portfolios against typical retirement withdrawals for a 30-year period. (The withdrawals started at 5 percent of the portfolio in the first year and moved up every year at the average inflation rate. The portfolios were tested using historical data for 26 different rolling 30-year periods, beginning with 1969-1998 and ending with 1975-2004.)

The all-bond portfolio was the big loser; it only lasted 30 full years in three of the 26 periods tested. But the 60/40 mix -- a portfolio made up 60 percent of the Standard & Poor's 500 Stock Index and 40 percent of corporate bonds -- wasn't that much better. It succeeded less than half of the time, lasting 30 years in just 11 of the 26 periods tested.

Even the all-stock portfolio had just a 69 percent success rate when it was invested fully in the big companies that make up the S&P500. The only portfolio that had a 100 percent success rate was a completely diversified portfolio of stocks that included shares of large and small companies and growth and value companies.

The lesson is not what it seems: Don't put 100 percent of your retirement money into stocks, McGuigan says. You need some bonds and bank savings for short-term security. But he recommends that retirees put as much of their portfolios into diversified stocks as they can stand. Here's how:

Just don't go overboard. Remember the real standard of retirement savings is this: You need to eat well AND sleep well. That means invest with enough risk to afford you the withdrawals you need to maintain your lifestyle -- but not so much risk that you are up all night worrying about it. (Editing by Maureen Bavdek)

Investment Aging