If you’re getting close to retirement and are a little slim on the retirement funds, do not try to compensate by ratcheting up your risk in an attempt to catch an up-swing as a means of catching up. First, don’t worry, you are hardly alone if you’re a little behind in your latter years. Second, the emphasis of your retirement plan should be on saving more. By creating a larger balance, you allow more reasonable rates of return, coupled with reasonable risk, to take over and get you where you need to be. Risk has a funny way of burning you when you least expect or can afford it, so avoid taking too much risk so close to retirement.
Now, if you’re a few years away from retirement, one alternative is to work a few more years so that your retirement savings can grow to where they need to be. A few more years of work means a few more contributions to your retirement savings, a few more years of the balance growing because of your investment choices, and a few more years for you to figure out what it is you want to do with your new free time.
Lastly, after you take advantage of the catch-up provisions in accounts like a Roth IRA, you might want to push the envelope on your investments and maybe put a little more in stocks than the general consensus. Don’t pick a hot new biotech to plow all your money into, that’s just straight stupid, you can’t afford to lose that money; but you can put a couple more percent into that index fund and maybe catch up that way. Don’t go crazy though!