John is a $52$ years old and works as a senior police officer. He has accumulated $$750,000$ in retirement assets and has no debt except for mortgage which he will be paying off in $12$ years. His wife works as a senior loan officer in a local bank and he has two twins who just graduated from college. John has been relatively conservative with his investment style preferring equity index funds $($both large and small stocks$)$ to any active mutual funds. Which is the best characterization of John's risk preferences:

John's risk capacity is below average and his risk tolerance is above average.

John's risk capacity is above average and his risk tolerance is above average.

John's risk capacity is above average and his risk tolerance is below average.

John's risk capacity is below average and his risk tolerance is below average.