Retired investors prefer steady income over maximizing returns

For many Americans planning or living in retirement, the old adage, “a bird in the hand is worth two in the bush,” seems to apply. According to a new Capital Group Investor Retirement Income Survey, retirees and pre-retirees overwhelmingly prefer steady income and capital preservation over chasing higher returns.

The survey of more than 5,000 investors found that nearly six in ten (59%) would accept lower returns if it meant lowering investment risk — a reflection of a growing appetite for stability in an uncertain economic climate.

“The survey shows investors are risk-averse in retirement planning across a number of areas,” said Samir Mathur, portfolio manager and member of Capital Group’s Capital Solutions Group. “When it comes to retirement income, people prefer lower risk and steady income over higher risk and the potential for higher returns.”

Risk aversion increases with age

As retirement nears, financial caution increases. The survey found that 78% of retirees preferred lower-risk options, compared with 54% of investors further from retirement. Many are also holding a substantial share of their portfolios — about 41% on average — in “low-risk” assets such as bonds or cash equivalents.

Even when offered the chance to grow their savings by 50%, few investors said they’d risk losing more than 15% of their nest egg. Inflation worries, market volatility, and lingering economic uncertainty may all play a part in this conservative stance.

Perhaps the most striking finding: investors’ desire to preserve 100% of their savings during retirement, even while taking withdrawals. This goal may not be entirely realistic, but it underscores a deep emotional and psychological connection to the retirement nest egg — one that’s stronger among older investors and those with higher assets.

“People want to feel their lifetime of saving won’t disappear,” said Mathur. “Even if that means accepting a smaller paycheck in retirement.”

How retirees fund their ‘paycheck’

The survey revealed generational differences in how retirees expect to fund their living expenses:

• Retirees today rely heavily on Social Security (46%), followed by employer-sponsored savings plans and personal investments.
• Younger investors expect those roles to reverse — with 401(k)s and similar accounts playing a bigger part as Social Security’s future feels uncertain.

At the same time, 76% of respondents said they are willing to tap into their principal if needed, showing that while many want to preserve capital, practicality often wins when expenses arise.

When asked to choose a time horizon for withdrawals, most investors favored a 20-year plan, even though 70% believe their savings will last longer. However, a growing share is shifting toward 30-year horizons, likely reflecting longer life expectancies and better investment conditions, such as higher bond yields.

Advisors, meanwhile, take a different view. Capital Group’s companion survey of financial professionals found that advisors are more tolerant of risk, willing to weather up to a 30% decline in account balances and preferring 30-year withdrawal strategies. The contrast highlights a persistent gap between professional guidance and investor comfort levels.

Despite their caution, retirees and near-retirees aren’t pessimistic. Roughly 69% of investors said they feel confident they will meet their retirement goals — a sign that prudence and optimism can coexist.

In short, today’s retirees appear to be redefining success in retirement. Instead of maximizing returns, they’re focused on maximizing peace of mind — opting for predictability, stability, and the reassurance that their savings will last as long as they do.