When people talk about risk as retirement approaches, they’re usually thinking about market downturns. That concern is completely valid. After years of saving and building wealth, stability becomes a priority.
But retirement risk is broader than market headlines. It also includes inflation, taxes, longevity, and how income is structured over time. A portfolio that feels conservative today can still create challenges later if it isn’t positioned to support the decades ahead.
Many retirees today are planning for more than a decade of living expenses. That changes the conversation. Risk isn’t only about protecting your balance; you need to protect your purchasing power too.
Why Being Too Conservative Can Create Its Own Risk
There’s still an old-school belief that once you hit 65, your investing life is basically over, and everything should move into ultra-conservative mode. That might have worked 20+ years ago when people retired at 65 and didn’t necessarily need their money to last another 25–30 years.
But today? Many people are living beyond 80
That means your retirement portfolio doesn’t need to last for 15 years, it needs to last for decades. And it needs to hold up against rising costs the entire time.
For example: Some investors hold a large portion of their savings in cash or GICs because certainty feels reassuring. But when bond returns aren’t staying ahead of inflation, rising costs, and taxes reduce that income even further, the long-term impact can be significant. Over time, it can mean:
- Drawing down capital sooner than expected
- Losing flexibility in later retirement years
- Or feeling like the lifestyle you worked toward is no longer within reach.
Being conservative doesn’t automatically mean being protected. It depends on what you’re trying to protect yourself from: short-term market movement or long-term purchasing power.
The Risks Most People Don’t See Right Away
When we talk about risk, there are two conversations happening at once in retirement planning.
- The first is market risk, the natural ups and downs that come with investing.
- Then there’s inflation risk, the gradual loss of purchasing power that happens when returns don’t keep up with rising costs.
Many investors focus heavily on avoiding volatility and unintentionally accept the long-term impact of inflation. That can lead to sitting money on the sidelines, increase and cost from investing only in interest bearing investments.
Think of it like this: If you’re earning 2–3% in a conservative portfolio and inflation is sitting around 2.7–3%, you’re not really getting ahead. And if that return is coming from interest income, taxes take a bite as well.
So even though things feel safe, the math doesn’t always support it. When you stop working, you don’t stop living. And the cost of living doesn’t stand still because you’ve retired.
What the Right Level of Risk Can Actually Do
Our goal for our clients is to build portfolios that continue working long after paycheques stop.
That includes a fully diversified investment designed to be tax efficient to provide income while still allowing for measured growth. It means providing context and support on how assets are invested during market fluctuations so clients don’t make emotional decisions.
Appropriate risk often looks much less dramatic than people expect. This simple, streamlined approach helps portfolios generate income while maintaining long-term resilience.
Risk Is Personal, And So Is the Plan
One of the biggest misconceptions we see is that retirement investing should follow a fixed formula. Every plan depends on individual goals, timelines, and comfort levels.
Some clients want to leave a legacy. Others want flexibility to travel, support family, or adapt to changing health needs. These priorities shape how risk is approached.
What matters most is understanding how different types of risk affect your future and building a strategy that accounts for real life, rising costs, market cycles, health changes, and the fact that retirement can last longer than expected.
Ready to Revisit Your Retirement Strategy?
If you’ve been leaning toward a more conservative approach because it feels responsible, it may be worth revisiting what “risk” actually means for you. A conversation with an experienced advisor can help clarify whether your current strategy is protecting your future or limiting it.
Click here to start the conversation.
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