What percentage of their portfolios should retirees allocate to equities?

There is the old "Rule of 100" that financial planners have long used to advise their clients on equity allocation.  The rule goes as follows: Subtract your age from 100; that is the portion in percent of your portfolio that you should allocate to equities.  For example, I am 66, so I should have 34% of my portfolio in equities, which is about what I have.

There is an interesting article on this subject in yesterday Wall Street Journal (R1).  The article discusses possible allocations from 0% to 100% and finds advisors who advocate each mix for retirees.  One advisor, Tim Shanahan in Braintree, MA, says he has 70% of his personal accounts in cash and is advising his clients to do the same.  He believes equities and bonds are both very overvalued.

The article is worth reading.  Here is a link to download it.  (Click on the photo of pigs in the Bahamas.)