Are You Taking the Right Amount of Risk as You Approach Retirement?

Are You Taking the Right Amount of Risk as You Approach Retirement? As you get closer to retirement, the question isn’t just “How much have I saved?” It’s also,

“Am I taking the right amount of risk?”

For investors in their 50s and 60s, this becomes one of the most important planning

conversations. Too much risk can expose your portfolio to unnecessary volatility at a time

when you may not have decades to recover. Too little risk can limit growth and increase the

chances of outliving your assets.

At Financial Life Advisors, we believe retirement planning is about balance—aligning your

portfolio risk with your timeline, income needs, and long-term goals.

The Ripple Effect:

Sequence of returns risk becomes real. A significant market decline in the early years of

retirement—combined with withdrawals—can permanently impact the sustainability of your

portfolio.

Managing risk doesn’t mean eliminating it. It’s about structuring your portfolio so:

• Short-term income needs are protected

• Long-term assets can continue growing

• Market downturns don’t derail your retirement

Common Mistakes We See:

1. Staying aggressive too long-

Some investors keep a heavily equity-weighted portfolio because it “worked before.”

Growth is important, however sharp volatility at the wrong time can be costly.

2. Becoming too conservative too quickly-

Others shift mostly to cash or low-yield investments out of fear. While that may feel

safe, inflation risk over a 20 or 30 year retirement can quietly erode purchasing

power.

The goal isn’t reacting to headlines. It’s aligning your asset allocation with your retirement

income plan.

Evaluate Your Retirement Risk Level:

If you’re within 10 years of retirement, ask yourself:

• When will I need to begin drawing income?

• How much will I need from investments each year?

• What guaranteed income sources do I have (Social Security, Pensions, ect.)?

• How would I feel during a 15–20% market decline?

Tolerance vs Capacity:

Risk tolerance (how you feel) and risk capacity (how much you can afford to take) are not

the same. A strong financial plan accounts for both.

As retirement approaches, the focus typically shifts:

• From accumulation to distribution.

• From maximum growth to sustainable it.

• From aggressive risk-taking to strategic allocation.

This doesn’t mean abandoning equities. Retirees will need growth to keep pace with inflation

and longevity. Instead, a tiered strategy can help.

• Positioning short-term income conservatively.

• Mid-term assets moderately.

• Long-term funds for growth.

Retirement planning isn’t about chasing returns. It’s about building a portfolio designed to

support the life you want to live. The right amount of risk is different for everyone. It depends

on your goals, income needs, and vision for the future.

Because retirement isn’t just about reaching a number.

It’s about building clarity, confidence, and peace of mind for the years ahead. Josh Hussong, CFP®

Investment advisory and financial planning services are offered through Financial Life

Advisors.