Why “Catching Up” With Aggressive Investing Can Backfire
If you started saving for retirement later than you planned, you’re not alone — and you’ve probably heard it suggested to “be aggressive” in your investment profile to make up for lost time. A stock-heavy portfolio grows faster, so a late saver should be able to catch up, right?
In a rising market, that’s true. But there’s a catch that rarely gets mentioned: sequence-of-returns risk.
The Misconception
Here’s the thinking behind the aggressive approach: if you’re 58 and plan to retire at 65, putting 90% of your savings into equities should help you close the gap faster. And in years when the market climbs, it works exactly as advertised.
But markets don’t always climb. In 2022, a diversified stock portfolio dropped roughly 20%. If a downturn like that hits in year two of your retirement — rather than during your working years — the math changes dramatically. You’re no longer just watching paper losses. You’re selling shares at a loss to cover everyday living expenses. That combination of bad timing and forced withdrawals is what makes sequence-of-returns risk so damaging for late-stage portfolios.
A Real-World Example*
Consider this scenario: you’ve saved $200,000 by age 63, invested aggressively.
- An aggressive portfolio drops 25% in your first year of retirement — your $200,000 becomes $150,000.
- You withdraw $20,000 to live on, bringing you down to $130,000.
- The market eventually recovers, but the shares you sold to cover expenses are gone. They can’t recover for you.
Now compare that to a more balanced 60/40 portfolio. In the same downturn, it might have dropped only 12% instead of 25% — leaving you with significantly more to work with, and far less permanent damage from those withdrawals.
A Better Approach
The alternative isn’t to abandon growth altogether. It’s to gradually shift toward a mix of fixed income investments as you approach retirement, while still keeping some exposure to growth. This isn’t about playing it safe for the sake of it — it’s about protecting the withdrawals you’ll actually depend on once you stop working.
The Bottom Line
Catching up matters. But protecting what you’ve already built matters just as much — especially in the years right before and after you retire. Talk with your Moneta advisor about a strategy that accounts for when you’ll need this money, not just how much you want to have saved.
*This example is hypothetical and for educational purposes only. It does not reflect real results or the impact of taxes and fees.
© 2026 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
