You'll often hear that saving well for retirement is only half the battle. You'll also need to invest your savings wisely so that your money grows over time. After all, a dollar today won't have the same buying power in 20, 30, or 40 years, so the money in your 401(k) or IRA should be invested so that it grows enough to keep up with or, better yet, outpace inflation.

But some older Americans may be taking that concept to too dangerous an extreme. A recent report from Fidelity shows that 23.2% of baby boomers in a defined contribution plan have too much exposure to high-risk investments. And that, in turn, could open the door to serious losses that these savers may never recover from.

The problem with aggressive investing at an older age

Let's be clear: Boomers on the cusp of retirement should not dump their stocks completely. But if you're within a few years of that milestone, you shouldn't have the bulk of your retirement savings invested in the stock market.

Older man at laptop on a cell phone

Image source: Getty Images.

The stock market is known to be extremely volatile. Just take a look at the events of the past nine months. In March, stock values plummeted as the coronavirus outbreak took hold, and while many people's portfolios have since recovered, there have been several sell-offs to follow March's plunge.

Not every year will feature a pandemic (at least, let's hope not), but the point is that stocks are more likely to fluctuate heavily in value than bonds, and so while they're an appropriate investment for younger savers, older ones should scale back as retirement nears. If you go heavy on stocks in your portfolio and the market crashes right before you're set to retire, your plans to leave the workforce could be shattered.

So what is a safe stock allocation if you're older and nearing retirement? It depends on what your total income picture looks like. If you have income sources outside of your 401(k) or IRA, then you may be able to keep your retirement plan invested more aggressively. But let's assume that account is your only retirement income source outside of Social Security.

If so, and you're in your 60s nearing retirement, a 50/50 stock-bond split in your portfolio may be more appropriate than an allocation that leaves you with a higher percentage of stocks. If your risk tolerance is higher, a 60/40 stock-bond split may work for you, too. But having the bulk of your portfolio in stocks when you're within a couple of years of retirement could wreck your plans in a very meaningful way, or subject you to losses if you retire and the market tanks shortly thereafter.

Some older savers may run into trouble simply because they don't know what their asset allocation looks like. If you're one of them, do yourself a favor and give your portfolio a thorough checkup. If you see that you're too heavily invested in stocks, make some changes soon, while the market is still up.

The last thing you want to do is see your savings balance take a tumble just as you're gearing up to tender your resignation, so make sure you have a mix of stocks and bonds suitable for your age.