Investors nearing retirement typically shift their investment portfolios to include which type of risk?

Investors approaching retirement are generally focused on preserving their capital and ensuring a stable income for their retirement years. As a result, they typically shift their investment portfolios to include lower-risk options. This strategy aims to protect their savings from market volatility and reduce the likelihood of significant losses that could impact their financial security in retirement.

By investing in lower-risk assets, such as bonds or dividend-paying stocks, retirees can achieve more predictable returns. This is particularly important in retirement when individuals often rely on their investment portfolios for income to cover living expenses. Lower-risk investments tend to be less volatile than higher-risk options, providing a sense of stability and security that aligns with the financial goals of individuals who are nearing the end of their working life. The transition to a more conservative portfolio is a prudent step to safeguard the funds accumulated over a lifetime of work.