How much money an investor should have invested in stocks at retirement and at what pace to transition to less-risky investments has been a matter of debate since the 2008 market crash left many retirees strapped. It s an issue that s resonated particularly loudly with investors who banked their Golden Years on target-date funds, which shift their asset allocations as investors approach retirement. And many of them have joined a chorus of Washington officials and investor advocates calling for a more conservative approach.

Now, a new report from Russell Investments gives this group more ammunition. The report suggests the optimal strategy for a target-date fund calls for smaller allocation in equities at retirement than is typical today.

The Russell study, which examined funds with a 20-year post-retirement horizon, suggests that a 32% equity allocation at retirement assures investors of a 94% probability of making their nest egg last, assuming an annual withdrawal of 4% of the initial balance from the point of retirement. When the equity allocation is bumped up to 60%, the probability of preservation falls to 88%, and with an allocation of 80%, the odds slip to 84%.

The 2008 downturn validates our approach , says Josh Cohen, a defined-contribution practice leader for Russell. Not that we knew this was coming, but those are types of situations we worry about.

Russell, which sells target-date funds of its own, is not the first company to have assessed their prime asset allocation, but others have pressed for more aggressive strategies. For example, T. Rowe Price, which had $48.3 billion in its target-date portfolios as of March 31, advocates having 55% of the fund in equities at the time of retirement, and decreasing that number to 20% over 30 years. The firm published a report a year ago comparing three portfolio strategies over 30-year periods ending between 1955 and 2008 that supports its approach.

T. Rowe Price said that in the vast majority of the 30-year periods, investors tended to benefit more from a transition of equity allocation from 55% to 20% over the course of 30 years than from more conservative strategies. The more aggressive approach provided significantly higher final balances to retirees, the company wrote.

Making precise comparisons between the two studies is problematic. The Russell study has a time horizon of 20 years, but the T. Rowe Price analysis looks at a 30-year post-retirement period. In the 30-year scenario, investors would be more at risk of rising inflation and would need payouts to sustain them longer. They would also have more time for a market to correct after a downturn.

For investors, the debate over asset allocation is often referred to as to (or flat ) vs. through because the critical question is whether plans should be more conservative up to the point of retirement or ease out of a higher percentage of equities throughout the retirement period.

I think it really comes down to someone s individual status, and when people look at this they really need to think about what they re cash-flow needs are truly going to be, says Charles Rotblut, vice president of the American Association of Individual Investors. He adds, For people looking at these funds, it s not a question of should they go flat or through, but what are their needs and what best suits their individual situation.

The government looked into the matter in 2009 after there were large discrepancies in how the funds performed in the aftermath of the stock market crash. (The Morningstar universe of 2000-10 target date funds had a range of returns in 2008 from -3.6% to -41.8%.) On April 27, the Department of Labor said it intends to make more information on the risks and benefits of the funds available to fund participants and sponsors who evaluate and choose funds for employees.

Advisors say that, as with most investments, less risk yields less reward, and because retirees are competing with the rate of inflation, they will need capital-building investments if they want to keep from running out of cash. You can t just go to cash at 64; you have to think about the long-term, says Jim Holtzman, an advisor with Legend Financial. But no matter how you look at it, when you re approaching retirement, even if you have a 30-year life span, you have to protect capital, he says.

If an investor were retiring in 2009 and had an allocation of 50% equities, he would have suffered major losses and would now face a shortfall, Holtzman says. I can appreciate having an equity component, he says. The problem is we are dealing with an extreme situation of two blow-ups in a decade. He adds, investors really have to understand the mix and the worst-case scenario if the market makes a 50% drop, how much are you going to lose?