Even in a bad year, 2022, my aggressive growth fund, VPMCX, had a pretty good dividend and capital gains return. Why switch to something "safer" as I approach retirement?

It’s down -10% YTD.

That doesn’t mean the fund hasn’t realized some degree of capital gains on some of its stocks - clearly it has made some distributions - but you’re mistaken to assume you’ve made a profit this year since Jan 1. This means they sold some of the winning stocks and realized a capital gain that was paid out, and then of course the underlying stocks pay a dividend.

they’ve picked stocks that haven’t gone down as much as the rest of the market though. That however does not mean there’s a positive return.

You go more conservative near retirement because a near retiree can’t handle a 50% drawdown the year before retirement, as can happen with an all stock portfolio. 1970 or 2000 or 2007 would be a bad year to retire if you’re all in stocks.

Furthermore, in a recession or bad economy, companies can and do suspend their dividends. This would slow your payouts.