That's one of the most important questions you can ask as you approach or enter retirement.

Your investment allocation shouldn't just reflect how much risk you think you can handle; it should also match how much risk you need to take to reach your goals and how long your money needs to last.

Risk tolerance vs. risk capacity

• Risk tolerance: your emotional comfort with market ups and downs.
  • Some investors can handle a 20% dip without losing sleep; others can't stand a 5% drop.
• Risk capacity: your financial ability to take risk.
  • If you're retiring in the next five years, your portfolio can't afford large short-term losses the same way it could in your 30s or 40s.

How timeline should shape allocation

• Still several years from retirement: you may lean more toward growth to outpace inflation.
• Retired (or retiring soon): you likely want more stability, with part of your portfolio designed to generate reliable income while another portion remains invested for long-term growth.

A practical way to think about alignment

A well-aligned allocation usually ties each investment "bucket" to a purpose:

• Short-term income needs
• Medium-term spending goals
• Long-term growth for later years

Regular reviews (at least annually) help ensure your allocation stays consistent with your evolving goals, market conditions, and comfort level.

In short: alignment means your money isn't just invested—it's invested intentionally to support your lifestyle, timeline, and peace of mind throughout retirement.