More and more people are reaching retirement and choosing to keep at least some of their pension invested to carry on growing their savings and to keep their options open.
By entering into a drawdown arrangement with a pension provider, retirees are able to keep their funds invested and take a regular income from them without committing to a lifetime annuity.
However, the price of that greater flexibility is much more complex.
So if you’re among the growing number of people keeping some or all of their pension invested, how can you go about making sure that you can get the income you need from it while preventing it from running dry?
The biggest challenge for drawdown investors is taking the amount of income they need without risking the sustainability of their fund. If you want your pension savings to last, you need to be realistic about the level of income you can draw.
Ultimately, working out how much income you can safely take is largely dictated by individual circumstances and by the level of savings held elsewhere.
If you’re comfortable with the risks associated with investing, there is one very important concept that will help keep you on track: Diversification.
This is about making sure you don’t have all your eggs in one basket.
By spreading your investments across different asset classes, geographical areas, sectors and funds, you reduce the risk of suffering heavy losses or poor returns in the event of a downturn.
Casting your eye over your pension investments at least once a year will help ensure that they still reflect your risk appetite and objectives and that your portfolio is sufficiently diversified.
A regular review will also help you make adjustments when your circumstances change, as they almost certainly will at some point in retirement.
Factors including investment returns, inflation, income needs and personal and household circumstances should all be taken into consideration when looking over your retirement portfolio.
Investing in retirement can be complex – So speak to a specialist: Now.