RETIREMENT ON THE HORIZON
If you’re within 10 years of retirement, you’ll want to ensure that your savings are working as hard as they can now so that you will have the income you want in the future. At the same time you may also be anxious to protect the savings you have already built up so the dilemma is whether to invest for growth or play it safe but potentially miss out on future investment gains?
Much depends upon your attitude to risk. Past performance is not always a reliable indicator of future performance but it’s likely that stock market volatility of the past ten years will be repeated. The risk is that values could be down just when you want to retire.
There are three investment strategies you could adopt: Stay Invested and try to grow your fund; Reduce Risk by selecting less risky investments that aim to protect your fund; Use Guaranteed Products that promise minimum future fund values and income rates while allowing you to remain invested.
Three main factors tend to dictate your pension income, health, age and the size of your fund. Traditionally, pension funds have been converted into an annuity on retirement to provide a guaranteed income for life. As life expectancy is increasing annuity rates have been falling but if you are a smoker or have suffered from poor health you may be eligible for an Enhanced Annuity, this could increase the annuity rate by as much as 20%. Up to a point, drawing from your pensions at an older age tends to produce a higher income but drawing early gives you extra years of income.
With crucial investment decisions to make and several alternatives to the traditional annuity now in common use, it’s important to take independent financial advice at each stage to ensure your fund is all it can be at the right time and the income options you choose best suit your needs.
For clear, concise financial advice please call me: Nick Hodgetts from Lighthouse Platinum Wealth Management Ltd on 01473 730999. The initial consultation is always free.