Five-point checklist for investing for retirement

investing for retirement


Gareth Trainor

20th July 2015 at 9:23am

Investing for retirement

Pensions changed from 6 April 2015. As a result, more people have more choices about how and when they can access their pension pot from the age of 55.

People can take cash, a flexible income (called drawdown), or a fixed income (known as an annuity), or a mix of these. It’s likely that drawdown will become a lot more popular and is a big change from the days when most people had no option but to buy a fixed income that was guaranteed for life.

So what should you be thinking about when it comes to the money in your pension? Read some top tips for investing in retirement as featured in five of our popular blogs.

Think about your pension early

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It’s worth thinking about how you’re planning on taking your pension in the years before you retire. That means you can choose your investments to suit what you’re planning to do, whether that’s buying an annuity, taking a flexible income, taking your money as a cash lump sum or a mix of all three. You can find out more about this in my ‘Check your pension options now’ blog.

Once you’re retired – stay invested

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Once you’ve reached retirement, what should you do with your money? If you’re taking a flexible income from your pension it can be tempting to leave all your money as cash – but this may not give you the best results. Although cash is less likely than shares to fall significantly in value, the odds are that if you keep your money in cash it might not last as long as if you had invested it over the long term. That’s because you won’t get much growth. My ‘Investments or cash: what is best for your retirement money?’ blog has more on this.

Balance your income goals

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One of the biggest challenges is making your money last over time; taking the income you need today as well as making your money last through your retirement. And, of course, with new rules reducing tax when inheriting a pension, reducing it to zero in some circumstances, you might want to make sure you have enough left to pass on to your loved ones too. I’ve looked at some ways to balance these different goals in ‘Take control of your retirement income’.

Take care of the early retirement years

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When you’re taking an income, the first years of your retirement are especially important. If you’re taking an income, you need to try to manage how much your investment moves up and down in value. That’s because it can be harder for your pension to recover its value after any early falls in the stock market.

Have a look at our ‘How to make your pension pot last’ blog for more on this.

Keep your cool and think long term

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It can be nerve-wracking to see the value of your money fall, which can happen with investments. But as with any investment, it’s important to keep your composure and think about the long term. ‘Why it pays to take a long term view when you’re investing’ highlights the difference this approach can make.

What are your thoughts?

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A pension is an investment. Its value can go up or down and it may be worth less than you paid in. Investment returns aren’t guaranteed.  Past performance is not a reliable indicator of future performance. This blog and any responses are not financial advice.