The Investing Mistake Almost Everyone Makes in Their 50s
Written by
John Csiszar
Edited by
Jenna Klaverweiden
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An investing mistake almost everyone makes in their 50s is mismanaging risk. This is why financial planners often describe that era as the retirement “red zone.”
By the time workers are in their 50s, there is no longer enough time to offset big portfolio mistakes. This is why understanding how to properly manage risk is critical for investors in their 50s.
Also see the savings you need to be financially stable at 50 in 2026.
Taking Risks To Catch Up
Many Americans take saving and investing too casually in their younger years, only to find themselves coming up short in their 50s. At that point, panic can set in, and taking excessive risks can feel like the only way to jump-start returns and catch up to where they need to be.
Unfortunately, this exposes investors to the danger of big market losses just before they retire, a phenomenon known as “sequence-of-returns risk,” according to U.S. Bank.
At that point, there’s not enough time to recover. The only options left may be working longer or retiring with a much-reduced quality of life, both unattractive alternatives.
Becoming Too Conservative
While courting too much risk can result in financial disaster, so too can being too conservative too early. Investors looking to protect their wealth as they head into retirement often overlook the effects of inflation, which can decimate the purchasing power of a portfolio and lead to lowered financial flexibility in retirement.
Experts point out that retirement can easily last 20 to 30 years, a period of time in which inflation can eat away as much as half of an investor’s purchasing power. To combat that drag, retirees and pre-retirees need to avoid letting expenses chip away at their savings, Mallon FitzPatrick, head of wealth planning at Robertson Stephens, shared with InvestmentNews.
Failing To Stress-Test Portfolios
A “stress-test” is simply a series of projections run on a portfolio to forecast realistic potential outcomes.
According to Bogart Wealth financial advisor Daniel Evans, many pre-retirees underestimate future needs because they haven’t thoroughly vetted their retirement assumptions. As Evans told Kiplinger, the earlier investors can make these types of plans, the longer runway they will have to correct course and manage their risk properly.
Risk management plays a huge role in the success of your retirement portfolio, and the time to tend to it is in your 50s — or even earlier. Without adequate planning, both too much and too little risk can have lifelong ramifications in terms of your retirement income.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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