You will have many things to consider when investing for retirement. How your money will perform in the stock market, how long you may need an income for and whether the amount you withdraw from your pot each year is sustainable. You must also think about timing, because the movements in the stock market can have a huge impact on how long your pension pot lasts.
This is called ‘sequencing risk’. Weak or negative investment performance in the early years as you start to spend your pot will have a much bigger impact than if it happens later, because of compounding. Sequencing risk is often overlooked in retirement planning so it is extremely worthwhile seeking retirement financial advice. It is crucial to manage income withdrawals as this can have a large impact on how long your pension pot lasts.
In any market conditions you should ensure that you are drawing a sustainable income. This means ideally living off just the yield of your investments to start with and drawing down capital later in your retirement. Taking for example perhaps c. 4% from your pot each year which is normally considered a safe bet because your investments are likely to earn this back in growth – although, of course, nothing is guaranteed.
For help with your retirement plans and investments, please contact us today. A free consultation is without obligation . Call us now on 01603 957599.