Retirement Risk & Age: How Your Age Impacts Investment Strategy

When investing your money for retirement it is important to consider many factors in order to determine the retirement risk you are comfortable with. Among these factors, and quite possibly most importantly, is your age. Younger investors can afford to take risks with their money. Those approaching retirement need to stay away from risky investments, and play things closer to the vest.

Young Investors have more Time to Recover

There is no denying that the stock market goes up and down over time. As a young investor, you have plenty of time to ride out any bad waves and make up for them before retiring. Older investors do not have the same luxury. Instead, too much risk can lead to losing a lot of money with no time to make up for it.

Scale Back as Retirement Nears

Most people cut back on risky investments as they near retirement age. While it is true that you have less time to recover from a market downturn, you do not want to become so safe that you are not keeping pace with inflation. Those nearing retirement will not take as many risks as young investors, but must still consider the fact that their money has to last for years to come.

As a general rule of thumb, the older you get the less risk you should take with your retirement investments.