If you’re planning to retire in just a few years, you may be getting excited about this next phase of your life. However, your ability to enjoy retirement fully will depend, at least partially, on the resources you can draw from your investment portfolio. So, while you still have time to act, ask yourself if you’re comfortable with your portfolio’s risk level.
Your relationship with risk can change noticeably over time. When you started saving for retirement, you may have been willing to take on more investment risk, which translated into a relatively high percentage of stocks and stock-based mutual funds in your investment portfolio. As you know, stocks offer the potential for greater returns than other assets – such as bonds and certificates of deposit (CDs) – but they are also typically more volatile and carry more risk. But when you were many decades away from retirement, you had sufficient time to recover from market fluctuations. (Of course, there are no guarantees – it’s possible that some stocks will lose value and never regain it.)