As retirement plan participants begin nearing retirement age, the risk-averse investor’s primary goal becomes capital preservation. That can mean exchanging return for risk mitigation, usually by reducing the allocation to stocks and adding to bonds.
However, a lot is happening in the bond market now, most notably inflation at a 40-year high, pushing real yields to record low levels. Surging inflation means a decrease in purchasing power but also led to the first Fed rate hike since 2018.
