De-risking isn’t about abandoning stocks—it’s about protecting your future income. Morakot Kawinchan/Shutterstock
For investors hurtling toward retirement, sitting tight with stocks has been the path of least resistance in recent years. Stocks, especially U.S. names, have soundly outperformed bonds.
However, recent events should serve as a wake-up call to take some risk off the table and give bonds a closer look. Stocks have recently encountered some volatility, but they’re still near all-time highs. That provides pre-retirees and retirees with an opportune time to scale back equity exposure and plow the proceeds into safer assets like cash and high-quality bonds.
The Benefits of De-Risking
The key benefit that bonds confer on a retirement-decumulation portfolio is their lower volatility. Even though bond returns are apt to be lower than stocks’, bond returns are much more reliable.
