Vanguard founder Jack Bogle thinks taking more risk in retirement is not the right move.

Bogleheads, the large group of investors that follow Bogle’s philosophy, focuses on diversification and avoiding excess risk.

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The late John C. Bogle built a legacy around a simple but powerful idea: investors don’t need to be market experts to succeed; they simply need to minimize costs, stay disciplined, and let compounding do the majority of the work. As the founder of The Vanguard Group, he helped popularize low-cost index investing, a philosophy that guides millions of investors even today, especially those looking for a clear plan to reach wealth. Investors who follow Bogle's advice of focusing on low-cost index funds, diversification, and disciplined investing are affectionately called Bogleheads.

At its core, Bogle’s advice emphasized maintaining an appropriate asset allocation while avoiding excessive risk. Indeed, not shocking advice by any means, but you would be surprised how many retirees are biting off more risk than they can chew. After a strong multi-year run, markets have experienced periods of correction.

Indeed, the Vanguard S&P 500 ETF (NYSEARCA:VOO) and the Vanguard Total Stock Market ETF (NYSEARCA:VTI) have declined during recent market volatility, causing some soon-to-be retired Bogle followers to wonder if their equity allocation is a tad too high. How much equity exposure is too much of a risk for a retiree? And is it possible to take too much risk in the world of bonds?

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Let's dive in with Bogle's cautious (but optimistic) beliefs in mind:

Goldman Sachs (NYSE:GS) has warned that future equity returns could be lower than historical averages, sometimes described as a potential ‘lost decade’ of below-average returns. Many investors have likely shot for riskier, higher-growth, higher-multiple plays to keep the gains going strong.

While it's certainly possible to achieve above-average results, one may have to take on more risk for the shot to do so. Indeed, if you bet big on tech plays, you could get a chance to top the S&P 500 in the next decade. But if the tech trade sours more than your average S&P 500 holding, you may get even lower returns than the below-average ones served up by the broader market.

Unless you have decades left to invest, I'd argue being fine with lower returns (for lower risk) is the right move to make. Chasing returns with riskier investments simply is not the answer in a stock market that could further correct itself.

Retirees should aim for an asset allocation that fits their risk tolerance. Of course, the 60/40 or 40/60 stock-to-bond allocations are quite popular. But the "right" allocation for you may lie somewhere in the middle. Either way, bonds aren't 100% safe, as we found out during the 2022 stock and bond market sell-off. Stocks and bonds have historically often moved differently, but they can decline at the same time. Retirees must be aware of the inherent risk associated with bonds. Some bonds are safer than others — though, they offer less in the way of returns.

For retirees who chase yield in the bond market, they may think they're getting better returns in a supposedly "safe" asset class. However, by chasing yield, a retiree could set themselves up to take on far more risk than they ought to bear for their age. Indeed, higher-yielding bonds carry significantly more risk and can behave more like equities during downturns.

Bogle emphasized maintaining an appropriate asset allocation and avoiding excessive risk, especially in retirement. And for retirees seeking to follow this advice, it's better to stick with a low-cost basket of high-quality bonds — think the Vanguard Total Bond Market ETF (NASDAQ:BND) — as they aim to keep fees low and their investment game plan as simple as possible.

Bogle’s philosophy suggests those nearing retirement must stop taking too much risk for a shot at better returns. It's just not worth risking a good retirement for a great one if it means risking having to stay at work for several years longer.

If returns are projected to be lower, the answer isn't to take more risk for more return. It's to accept the returns associated with an appropriate level of risk and plan accordingly until your nest egg is in the right spot.

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