What is a major risk of having a poorly diversified investment portfolio for retirement?

A poorly diversified investment portfolio for retirement presents a higher potential for loss due to lack of risk mitigation. When investments are concentrated in a limited number of assets or asset classes, they become susceptible to significant volatility. If one of those assets performs poorly or faces market downturns, the overall value of the portfolio can plummet sharply.

Diversification minimizes the impact of any single investment's poor performance on the overall portfolio. By spreading investments across various asset types—such as stocks, bonds, and real estate—a retiree can protect themselves against unexpected market fluctuations since different assets often perform differently under various economic conditions.

This concept of risk mitigation is central to sound investment strategies. Properly diversified portfolios can cushion against catastrophic losses and provide a more stable growth trajectory over time, making "B" the most accurate and relevant answer regarding the risks of poorly diversified investments.