Do funds get safer as you get older?

What "safer" is actually measuring

Before the question can be answered, it is worth knowing what the published measure of risk is, because it is narrower than the word suggests.

Every managed fund in New Zealand must show a risk indicator, and regulation 26 of the Financial Markets Conduct Regulations 2014 prescribes the words that go under it, down to the punctuation:

The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the fund's assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way.

Volatility. How much the value moves about. Not the chance of losing money, not the chance of running out, not the chance of the fund being wrong about something.

Risk category, and the volatility behind it

1under 0.5%20.5 to 2%32 to 5%45 to 10%510 to 15%615 to 25%7over 25%

The Financial Markets Authority explains how the number is produced: the categories "represent the annualised volatility of weekly returns over the previous five-year period", which makes it a description of the past five years rather than a prediction of the next thirty.

And the regulations require one more sentence, which is the most useful thing on the whole disclosure:

Note that even the lowest category does not mean a risk-free investment.

A category 1 fund has moved about very little. It has not thereby become safe, and nothing in the indicator captures the risk of a low-volatility fund failing to keep up with the cost of living over twenty years.

New Zealand: the default moved the other way

New Zealand has no lifecycle default. What it has is a single default setting, chosen by the government, and in 2021 that setting was deliberately moved towards more volatility rather than less.

From 1 December 2021 the default became a balanced fund. The FMA describes what that means: "A balanced fund is one that's less volatile than a growth fund but more likely to grow in value over the longer term than a conservative fund."

The decision is worth sitting with, because it runs against the instinct this guide is about. Faced with hundreds of thousands of people who had made no choice at all, the government's judgement was that they were being harmed by too little volatility rather than too much.

There is one place the approach to retirement is formally recognised. The FMA sets out what default providers must contact members about, and the list includes "what to think about 10 years and one year out from reaching 65".

Read that carefully. It is a requirement to raise the question ten years out. It is not a rule about what the answer should be, and it is not an instruction to move anyone anywhere.

And New Zealanders went the same way

The FMA published research in July 2025 on what has actually happened to KiwiSaver risk since then, and the movement is not subtle.

The proportion of KiwiSaver invested in risk category 5 funds (high volatility) has quadrupled from around 10% in 2021 to more than 40% in 2024, with the proportion in risk category 3 funds (low to medium volatility) decreasing from 30% to 10% over the same period.

The FMA attributes it to a combination of policy changes, investor behaviour and market movements, and concludes that "regardless of cause, KiwiSaver has become notably weighted towards higher-risk funds over time."

So the population has moved towards volatility, at every age, over a period in which the median member also got four years older.

Australia: the idea is built into the product

Australia does what New Zealand does not. Where you have made no choice, your money goes into a MySuper option, and one of the two kinds of MySuper option does exactly what this guide is asking about.

Moneysmart, which is the Australian Securities and Investments Commission's own consumer site, describes a lifecycle option:

The fund invests your money across a mix of assets, and the mix is automatically adjusted as you age. When you're younger, it puts more into growth assets like shares and property. As you get older, it shifts more into steadier assets like bonds and cash. This helps reduce the risk as you near retirement.

The other kind keeps the mix steady over time. Both are defaults, and which one you are in depends on the fund rather than on you.

Then the same regulator declines to give the rule:

Some people choose to be more conservative with their investments as they approach retirement to reduce the risk of their balance going down. Others stay in growth options to seek higher returns. There's no single approach that suits everyone.

That is a regulator with every incentive to give guidance, choosing not to, on the record.

The United States: the glide path, and a distinction worth knowing

The American version is the target date fund, and the Department of Labor describes it in one sentence: they "offer a long-term investment strategy based on holding a mix of stocks, bonds and other investments (this mix is called an asset allocation) that automatically changes over time as the participant ages."

The shift itself has a name: "The shift in the asset allocation over time is called the TDF's 'glide path.'"

And here is the part almost nobody checks, which decides what happens in the years that matter most. Two funds with the same year in their name can do completely different things at that year.

• A "to" approach "reduces the TDF's equity exposure over time to its most conservative point at the target date."
• A "through" approach "reduces equity exposure through the target date so it does not reach its most conservative point until years later."

The Department spells out the consequence: "Since these funds continue to invest in stock, your employees' retirement savings may continue to have some investment risk after they retire."

Two people who both retire in 2040, both holding a 2040 fund, can be in materially different positions on the day they stop working. The year on the label does not tell you which.

The part that is not published

The question most people are really asking is a number. Move at what age, and to what. Something like the old rules of thumb that put a percentage in shares and subtracted your age.

No published figure was found. Not from the Financial Markets Authority, not from ASIC, not from the Department of Labor. Each regulator describes the mechanism, requires the disclosure, and stops before the number.

That is not an oversight. The answer depends on when you will spend the money, how much of it you need, what else you have, and how you behave when a balance falls. None of those are things a regulator can know, and a published number would be acted on by people it did not fit.

What the sources do give you, and what is worth carrying:

• Risk here means volatility, measured backwards over five years.
• The lowest category is not risk free, and the regulations say so.
• The moment the system itself flags is ten years out from 65, not the week before.
• In two of these three countries the shift happens automatically unless you stop it, and in the third it never happens unless you do it.

What this guide does not tell you

It does not tell you which fund to be in, or when to change, and it names no scheme, fund or provider anywhere.

It does not cover fees, which are the other thing that compounds over thirty years, or what happens to a balance you keep invested after you start drawing on it.

It does not cover the sequence of returns, which is the reason the years either side of retirement are treated as special, and which is its own question about timing rather than about risk categories.

And it does not tell you what your own fund's current risk indicator is. That is in its latest fund update, it changes over time, and it is the one number in this whole guide that is about you.