Experts Warn 86% of High-Risk Retirees Fail Vital Diversification Test Raising Serious Financial Concerns

Core Insights - Many retirees are shifting their investment focus from stocks to safer assets like bonds and cash, but this strategy may expose them to significant long-term risks such as inflation and the risk of outliving their assets [2][3][8] Diversification and Risk Assessment - A study by Jackson National Life Insurance Co. indicates that 86% of high-risk retirees fail to achieve proper diversification, which is critical for long-term financial security [2][5] - The study categorized investors based on their adherence to five financial benchmarks: spending, saving, cash allocation, stock-bond split, and asset diversification, with those meeting fewer than two benchmarks classified as high-risk [4] Investor Classification - The study surveyed over 1,000 investors, revealing that 22% were classified as high-risk, 57% as medium-risk, and 21% as low-risk [5] - High-risk investors often allocate too much of their portfolio to cash or bonds, with 49% holding nearly half their assets in cash, significantly above the recommended 20% [6][7] Recommendations for Retirees - Financial experts recommend that retirees balance their portfolios by including growth assets like stocks alongside cash and bonds to mitigate risks associated with inflation and ensure long-term growth [3][7] - Dynamic withdrawal strategies and adjusting asset allocation are essential for managing market risk during retirement [7]