A lack of understanding about risk means that at least some workers within 15 years of retirement aren’t taking the appropriate steps to protect their assets. (Image: Shutterstock)

Workers approaching retirement are taking too much risk with their retirement savings.

So says a new MassMutual Retirement Savings Risk Study, which finds that a lack of understanding about risk means that at least some retirees and workers within 15 years of retirement aren’t taking the appropriate steps to protect their assets.

Retirees, the study finds, are more likely than pre-retirees to say they are not substantially more conservative with their investments after retirement (36 percent compared with 29 percent). But pre-retirees are more likely to say they will become substantially more conservative when they retire, with 43 percent of them saying they expect to be primarily focused on asset preservation when they retire. In fact, just 23 percent of retirees said they were focused on asset preservation at that time.

Many retirees and pre-retirees are more focused on growing rather than preserving their assets. For instance, 59 percent of pre-retirees and 32 percent of retirees describe their primary investment strategy as focused on either “aggressive growth” or “moderate growth.” In addition, 32 percent of pre-retirees and 49 percent of retirees characterize their investment mix as a balance between growing and preserving their savings.

And when either group discusses investments with their advisors, they’re more focused on growth while 88 percent of the time advisors suggest they should be investing more conservatively.

And guaranteed income either through a pension or annuity makes a difference. Although they report similar risk tolerances, study respondents with a source of guaranteed income were more likely to focus on growing their assets just before and into retirement than those without guaranteed income.

Few retirees wish they had been more conservative just before retirement, but the report notes that that could be due to their participation in one of the longest bull markets on record. Fifty-eight percent of retirees say they would employ the same investment strategy just before retirement and 35 percent say they would have invested either “much more” or “somewhat more” aggressively if they could alter past decisions, the study finds.

“It’s clear from our research that many retirees may be vulnerable to sudden market corrections and volatility, which can adversely impact savings,” Tina Wilson, head of investment solutions innovation, is quoted saying in the report. She adds, “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.”

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This story first appeared on our partner site BenefitsPro.