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Many Older Investors Take Risks With Retirement Savings

A new study finds that some pursue surprisingly aggressive strategies

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Are longer life spans one of the reasons for greater retirement saving risks among some older investors?

Most retirees and those within 15 years of retirement agree that it’s crucial to invest conservatively to protect their nest eggs from stock market losses. But surprisingly, many actually do the opposite, a new poll indicates.

The survey, conducted by Massachusetts Mutual Life Insurance Co. (MassMutual), included 804 preretirees with incomes of at least $40,000 and 801 current retirees with at least $100,000 in investable assets.

The poll found that 94 percent of preretirees and 92 percent of retirees agreed on the importance of avoiding too much investment risk close to retirement. Nevertheless, 59 percent of preretirees and 32 percent of retirees described their investment strategy as one of moderate or aggressive growth.

Thirty-two percent of preretirees and 49 percent of retirees said they were trying to strike a balance between riskier investments aimed at growth and preservation of their savings, while just 6 percent of preretirees and 18 percent of retirees were mostly or wholly focused on the more conservative preservation strategy. The remainder were unsure.

Seventy percent of preretirees and 65 percent of retirees were fine with at least some risk, if it meant the possibility of above-average returns.

Tina Wilson, head of Investment Solutions Innovation for MassMutual, sounded a note of caution. "Because many retirees rely on their investments for income and have more limited-time horizons to recoup investment losses, a significant market downturn could significantly reduce their income," she said.