What I Learned From an Investing Pro About Managing Risk in Your 30s, 40s, 50s and 60s
Author and veteran money manager Ben Carlson talks about managing market volatility and building wealth at all stages of your investment journey.
Risk is a natural part of investing, and indeed, volatility is the price of admission to building long-term wealth. This is what Ben Carlson, director of Institutional Asset Management at Ritholtz Wealth Management, reminds us in his new book, Risk & Reward.
"Risk does exist in the market, and if you want to earn a return on your capital above the rate of inflation, you have to step out and take some risk in some form," Carlson told me when we sat down to discuss his book, which goes on sale on May 12. "And over the long run, that risk has been rewarded and I think it still will be rewarded."
In other words, he says, "risk and reward are attached at the hip."
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This seems especially true in recent years, with investors and their portfolios managing major events and massive swings. In 2020, for instance, the S&P 500 plunged more than 30% in about a month at the onset of the pandemic. And in 2022, the broad-market index posted its worst annual return (-18.1%) since the 2008 financial crisis.
More recently, the stock market sold off sharply in April 2025 after the Trump administration unveiled retaliatory tariffs and again in March 2026 amid the war in Iran and worries over an artificial intelligence (AI) bubble.
But, as Carlson emphasizes, the long-term trend is up and to the right — and the stock market rebounded sharply from each of these recent sell-offs. The S&P 500 finished 2020 up 18.4%, bounced back for a 26.3% gain in 2023, and ended April 2026 at a new record high.
Still, this idea that the market will recover can be difficult for investors to accept, which is why Carlson's new book is a good read for investors of all ages. With this in mind, I asked Carlson how people at different stages in their lives and investing journeys can approach risk.
Time is on your side in your 30s and 40s
During an appearance on The Dan Patrick Show in 2014, Warren Buffett famously quipped, "It's pretty easy to get well-to-do slowly. But it's not easy to get rich quick."
For many millennials, this is a hard concept to stomach. Northwestern Mutual's 2026 Planning & Progress Study shows that Gen Z and millennials make up the largest share of Americans who are either investing in or considering investing in high-risk and speculative assets this year.
The main reason for this, according to Northwestern Mutual, is that they feel financially behind and think these investments will help them reach their goals faster than traditional methods.
And that's understandable. Having a long-term mindset is hard, Carlson says. "I remember when I first started investing in my 20s, I made a thousand-dollar investment in a target-date fund and I was saving $50 a month. I was doing the calculations and thinking, 'It's going to take me forever to get to whatever my goals are.'"
But it's important for those with decades until retirement to understand that time is their friend and the power of compounding will slowly but surely help them work their way to their goals.
"You don't just go from the couch to the marathon," Carlson advises. "You have to slowly build up your tolerance. It's the same with saving."
He also says that it's OK to set aside some capital for speculative bets to "scratch that itch," just make sure "you size it correctly and you have the rest of your portfolio that you leave alone."
Find a balance in your 50s and 60s as retirement approaches
For folks in their 50s and 60s who are nearing retirement, managing risk looks a little different.
"For young people, they have time to sit and wait out bear markets, they have future savings they can put to work, so the risk to them of a bear market is much smaller," says Carlson. "But if you're retiring and you have a bear market hit at the wrong time, you don't want to be selling your stocks when they're down."
So for those nearing retirement, it makes sense to have more balance in their portfolio, Carlson advises. However, he notes that because people are living longer, they can't fully derisk.
"We could be having not just 10 or 15 years, but 20, 25, 30, 40 years in retirement depending on how long you live," he explains. "And so you have to be willing to accept some risk in retirement. It's almost like a barbell where you want to make sure you have that liquidity provision and a certain number of years' worth of cash and fixed income saved so you can wait out a bear market."
But, he adds, you also "need to be able to grow your money above the rate of inflation to keep your standard of living." This creates more of a balancing act for those nearing retirement, but finding that equilibrium isn't necessarily easy.
Indeed, the 60-40 portfolio of 60% stocks and 40% bonds has traditionally been one option for finding that healthy balance between risk and stability, but Carlson notes that more recently, many folks have had to rethink the 40 part of the portfolio. This is because we had the worst bond bear market in history at the start of this decade in response to rising interest rates and soaring inflation.
"This caused a lot of people to consider being more diversified on the fixed-income front, too," he adds. Now, with higher inflation and more volatility in rates, many folks are considering more cash positions, such as Treasury bills, money market funds and certificates of deposit (CDs), or Treasury Inflation-Protected Securities (TIPS) to protect against inflation.
In other words, it's worth considering diversification not just of asset classes, but also of strategies within those asset classes to help you mitigate risk across various economic environments.
How risk looks in retirement
As for those solidly in retirement, Carlson says most have the benefit of going into their golden years with a much higher net worth because the bull market has been going on for so long. Specifically, the secular bull market began in March 2009, following the global financial crisis, making it one of the longest in history.
At this stage, there's a shift from investment and portfolio management to financial planning. Carlson says many of the conversations he's having with clients center on how much they need to withdraw from their portfolio and what the tax implications are.
"While the market risk is still there and the volatility is still there, the calculus changes to, 'How do I intelligently spend down my portfolio?'," he explains. So for folks in retirement, the mindset toward risk has to shift to how much they can successfully take out of their portfolio each year without depleting it.
What it ultimately boils down to for investors at any stage in their journey is that market risk is unavoidable, and, according to Carlson, the ones "who win over time aren't the ones who predict these events — they're the ones who persist through them."
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