"As retirement nears and the start of 2026 right around the corner, reallocating a 401(k) becomes critical to balance growth, income, and risk, ensuring savings last through decades of life after work. In their 50s, many investors, like a recent Redditor on the r/PersonalFinance subreddit, seek to shift from aggressive saving to a strategy that protects their nest egg while supporting a sustainable 4% withdrawal rate."
"At 55, risk tolerance typically declines as retirement looms, but the need for growth persists to outpace inflation, projected by the Federal Reserve to run at 2.6% annually in 2026. Start by evaluating your comfort with market volatility. Can you stomach a 20% portfolio drop, as we saw in 2022's bear market, or do you prefer stability? Consider your 401(k)'s size, other assets (e.g., home equity, IRAs), and expenses."
As retirement nears and 2026 approaches, reallocating a 401(k) becomes essential to balance growth, income, and risk so savings last through decades after work. Investors in their 50s should shift from aggressive saving toward protecting the nest egg while preserving enough growth to support a sustainable 4% withdrawal rate. Risk tolerance typically declines at 55, yet growth is still needed to outpace inflation projected near 2.6% annually. Evaluate comfort with market volatility, portfolio size, other assets (home equity, IRAs), and expenses. If 4% covers living costs, a conservative allocation is viable; otherwise maintain higher stock exposure. Reallocation should be gradual to avoid locking in losses.
Read at 24/7 Wall St.
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