Choosing the right investment options for retirement


MoneyPlus Features Team

13th February 2019 at 2:04pm

Nowadays there’s much more freedom in how and when you can take your pension money in retirement (normally from age 55). You can set up a guaranteed income for life (an annuity), leave it invested and take money as a regular income or as and when you need it, or even take it all out. You can also do a bit of everything.

That means, in the lead-up to retirement, it’s more important than ever to make sure how your pension is invested is aligned to how you plan on taking your money.

And when you reach retirement, if you decide to keep your money invested, you’ll need to make investment choices that can help make your money last as long as you need it to.

Here we take a look at what you need to be aware of when you’re still saving into your pension as you approach your retirement, and what you need to think about if you decide to keep your money invested while in retirement.

What to think about if retirement is still some way off

Even though you’re not ready to retire, it’s time to start thinking about what you plan to do with your pension money when that day comes around.

With so much choice now available, more people are taking advantage of the flexibility modern pensions offer, with fewer choosing to set up a guaranteed income for life. However, many people’s pension money may still be in investments that were specifically designed for doing that.

If you aren’t planning on setting up a guaranteed income for life, you could be taking unnecessary risk. This is because these investments are designed to move in line with annuity rates. If annuity rates fall significantly just before you retire, this could have an impact on the value of your pension and your retirement plans.

So, in the lead-up to retirement, it’s key to find out where your pension is invested and make sure it’s aligned with how you plan to take your money.

There are options, called lifestyle profiles, which can help make sure you’re in the right type of investments for how you plan to take your pension money.

If you’re not sure what to do, you can get guidance from Pension Wise or the Money Advice Service. Or you could get financial advice to help you decide.

You’ve reached retirement age

Great news – you can finally start taking money from your pension. Now you need to choose how you want to do this.

If you decide to leave your money invested rather than setting up a guaranteed income for life, then you’ll need to think carefully about where to invest it. This can make a big difference to how long it will last. And remember that, generally, we’re living longer these days. There are also different things to think about when you’re taking money out of your pension than when you’re saving into it.

Thinking about all of this at once can feel a bit overwhelming, so we’ve tried to make the decision-making process a bit simpler for you. When it comes to choosing your investments in retirement, there are two really important questions you need to ask yourself:

  • Over what time period do you plan on taking money from your pension?
  • How involved do you want to be in managing your investments?

We look at these key questions in more detail in our article on choosing investments in retirement.

You can get a free personalised report on your retirement options online. You can also visit the Money Advice Service website for more useful information on retirement options. If you’re still not sure what’s best for you, it’s a good idea to speak to an adviser.


Please remember that the value of your investment can go down as well as up and may be worth less than you paid in. Laws and tax rules may change in the future. Personal circumstances also have an impact on tax treatment. The information here is based on our understanding in February 2019 and should not be regarded as financial advice.