People in their 20s and 30s are often told that they can invest aggressively, especially when they don’t anticipate that they’ll be living on their investments for years. But once you get within 5 years of retirement, I think you should start thinking about preserving what you already have. How do you do that? Part of the process is to understand the threats to your financial wellbeing—like market risk.
Retirement researcher Wade Pfau studied the impact of market risk on retirement income planning by measuring 151 hypothetical portfolios.