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Many Pre-Retirees Are Too Aggressive with Investing

By Alex Padalka March 27, 2018

Many American retirees and pre-retirees could be suffering from cognitive dissonance when it comes to saving for their twilight years: while most are concerned about losing their retirement savings in a market downturn, many are nonetheless too aggressive with their investment strategies, according to a recent survey from MassMutual.

Ninety-four percent of pre-retirees and 92% of retirees say they “strongly agree” or “somewhat agree” that it’s essential to protect themselves against stock market losses just before retiring, according to a survey conducted in January of 801 retirees who have been retired for 15 years or less and have at least $100,000 in investable assets, as well as 804 pre-retirees within 15 years of retirement with at least $40,000 in liquid assets. In addition, 49% of pre-retirees and 32% of retirees worry about taking on too much investment risk, according to MassMutual.

Nonetheless, 59% of pre-retirees and a third of retirees say their primary investment strategy is aggressive or moderate growth, the survey found. Meanwhile, 32% of pre-retirees and 49% of retirees say their investments are balanced between growing and preserving savings, according to MassMutual. And while pre-retirees are most likely to think that once they retire they will focus their investments on preservation and not growth, retirees aren’t as likely to actually live by that strategy, the survey found.

Financial advisors have a far different approach to risk, on the other hand. Those polled in the MassMutual survey who have worked with an advisor say their advice was to change their strategy: 73% of pre-retirees and 88% of retirees say their advisor told them to be more conservative.