As you approach retirement, one of the most important conversations you can have with your financial advisor is about risk tolerance. Your willingness—and ability—to handle market ups and downs will directly affect how your money performs and how secure you’ll feel as you transition from earning to withdrawing. At MB Wealth Advisors, we help Huntersville residents clarify their risk profile and adjust their portfolios for a smooth and confident retirement.
What Is Risk Tolerance?
Risk tolerance refers to how much volatility or potential loss you can emotionally and financially handle in your investments. It’s not a one-size-fits-all number—it’s a combination of:
- Emotional comfort: How well you sleep at night when the market drops.
- Time horizon: How soon you’ll need to draw from your investments.
- Financial capacity: Your income, savings, and ability to recover from losses.
For example, a 40-year-old with a long runway to retirement may tolerate more risk than a 62-year-old preparing to retire in 3 years. But even two retirees of the same age may have different tolerances based on income sources, debt, or mindset.
Why Risk Tolerance Changes Near Retirement
As retirement nears, your goals shift from growing your money to preserving it. You no longer have the luxury of waiting 10–15 years for the market to recover. Here’s what often changes:
1. Less Time to Rebound
A bear market at 65 is very different from one at 45. If your portfolio drops 20% right before or during retirement, your withdrawals may permanently reduce your balance. This is known as “sequence of returns risk.”
2. New Dependence on Investments
Many pre-retirees are used to earning steady income from a job. Once that paycheck stops, your investments need to generate income through interest, dividends, or strategic withdrawals.
3. Emotional Pressure Increases
When retirement is years away, a market correction feels like a bump in the road. When retirement is next year, that same drop can feel like a crisis. Emotional decision-making becomes more common—especially if you don’t have a plan in place.
How to Assess and Adjust Your Risk Tolerance
At MB Wealth Advisors, we walk clients through a retirement risk tolerance assessment to determine whether their current investment strategy aligns with their lifestyle goals. We ask questions like:
- How much income do you need from your portfolio?
- What are your essential vs. discretionary expenses?
- How did you react to past market downturns?
- Do you have pensions, Social Security, or rental income?
Based on your answers, we may recommend adjusting your asset allocation—for example, shifting from 80/20 stocks/bonds to a more balanced or conservative mix. We’ll also ensure you’re not taking on unnecessary risk in search of returns that may not match your needs.
Creating a Retirement Investment Strategy That Matches You
Your portfolio should reflect your goals, not just your age. For some, staying aggressive into retirement makes sense. For others, dialing back provides peace of mind. We use risk-aligned portfolios that may include:
- Dividend-paying stocks or ETFs for stable income
- Bond ladders or bond funds for principal preservation
- Structured notes or annuities for guaranteed income
- Cash equivalents for short-term expenses
We also build in flexibility—so you can pivot when markets change without derailing your retirement plan.
Common Risk Tolerance Mistakes Near Retirement
- Waiting too long to rebalance: If your portfolio grew heavily in equities, you may be overexposed and not know it.
- Getting too conservative too soon: Inflation can erode purchasing power. Too much cash can be risky, too.
- Making emotional trades: Panic selling locks in losses. Our job is to help you stay calm and make data-driven decisions.
We Help Huntersville Retirees Make Confident Moves
You’ve worked hard to build your savings. Now it’s time to protect it—and use it with confidence. At MB Wealth Advisors, we help you find the right balance between growth and safety so your money supports your goals throughout retirement.
Schedule your personalized retirement review or call (704) 584-9363 to speak with an advisor today.
