Investment risk tolerance

The foundation of your investing strategy is your comfort with risk. Once you understand your risk tolerance, you can allocate your assets accordingly.
As you approach retirement, your asset allocation strategies will change, and you may want to make adjustments to help manage market risk while retaining potential for growth.
In retirement, your asset allocation needs to generate income from your savings while growing your overall portfolio.
Whether you're just starting to invest for retirement, or have a substantial amount set aside, the foundation of investing is understanding your comfort with risk, adjusting the mix of assets in your portfolio and diversifying your investments within it.
As you near retirement, you may want to assess your comfort with risk, adjust the mix of assets in your portfolio accordingly and select a diverse range of investments to help manage your portfolio during market volatility and prepare you to live off your savings.
Once retired, your focus shifts from saving to generating income from your savings in retirement. You'll want to re-assess your comfort with risk, determine if a different mix of assets is appropriate, then select the investments that best align with your needs. 

Assessing your risk tolerance

In general, investments that have potential to generate higher returns are also more risky. Only you can decide how comfortable you are with that trade-off. The more time you have to save, the more likely it is that undertaking a little higher risk can pay off. As retirement approaches, you have less time to recover from market losses. While it may be tempting to avoid risk completely, you still have time for your assets to grow, and should consider taking advantage of that potential. Once you retire, your comfort with risk may be lower than it was during your working life. However tempting it may be to avoid risk completely, you may still need to have some assets in growth-oriented investments to give your dollars the potential needed to outpace inflation and to last throughout retirement.