Investing close to retirement

Investing is an important part of building up your pension, so as your retirement age draws closer and you think more about how you want to spend this time, it’s wise to review your plans carefully. Small adjustments to your investment strategy now could make all the difference to how you generate and protect your retirement income. 

A lot depends on what you want your retirement to look like and other considerations like helping children onto the property ladder or having enough for later-life care. Our independent Wealth Planners can work with you to establish how best to invest as you near retirement.

How to invest as you near retirement

First, consider how you’ve invested up to this point. For example, what’s your level of investment experience? How much risk are you comfortable with? What sort of assets are you invested in at the moment?

Then think about your needs in retirement and how you might generate an income. There are various options to consider. For example, do you intend to trade in your pension for an annuity so that you can have a guaranteed income? Or do you intend to continue investing in retirement?

If you intend on taking an annuity, it may make sense to start moving money into lower risk assets such as cash, bonds or gilts. On the other hand, if you intend to continue investing, you might want to think about moving some money into investments that drive more income going forwards.

Striking the right balance when it comes to investment risk is an important element of any retirement plan, particularly as you near your retirement age. Too much risk and there is less time to recover any potential losses. Too little and it could mean your savings don’t keep up with inflation. 

Investing close to retirement – how can we help you?

1. Detailed planning

Our independent Wealth Planners will work closely with you to understand your retirement goals and lifestyle wishes. Based on this, they will create a near-retirement investment strategy to deliver your desired retirement income in the timeframe you need it.

2. Rigorous stress-testing

By carrying out a cash flow planning exercise, your personal Wealth Planner can stress-test your plans against various scenarios, such as rising inflation or market dips to ensure you achieve your retirement goals. The good news is that by investing in certain specialist investments, there are opportunities to mitigate inflationary risks.

3. Regular monitoring and reviews

When it’s your own money, it’s very hard not to react to moves in the markets. Our wealth management experts provide that objectivity and are qualified and experienced to make changes to your investments when it’s appropriate. They will continually monitor your investment portfolio’s performance over time, making enhancements when necessary to keep it on track.

Retirement calculator – do you have enough for your retirement?

Use our simple retirement calculator to work out if you have enough for retirement. You can do this by working out how much money you have saved for retirement now across your various pension, investment and savings accounts, and projecting your total retirement savings into the future.

Tips on how to invest close to retirement

1. 10 years from retirement – boost your pension and review asset allocation 

At this stage, the balance and asset allocation of your investments and your pension is going to be critical as it could impact the retirement income you can expect and the lifestyle you’ll be able to achieve. So, if you haven't yet prioritised retirement planning, now is the time to do so.

If you can afford it, consider making additional lump sum contributions into your pension to boost your retirement savings. A word of caution however, as there are potential tax pitfalls:

• The annual pension allowance limits the amount you can contribute into your pension in a single year while still receiving tax relief
• The lifetime allowance is the maximum amount you can save into your pension over your lifetime without paying excess taxes.

Asset allocation will be a critical part of your retirement investment strategy, but the right balance is dependent on many different things, which your expert personal Wealth Planner can advise you on. 

2. Five years from retirement – prepare a retirement budget and reduce risk

Now could be a good time to start thinking about converting your pension savings into retirement income. There are many options around this and your personal Wealth Manager can help determine which approach is right for you. 

With your retirement drawing ever closer, it may also be sensible to start reducing your exposure to higher-risk investments to ensure your capital is protected as much as possible. Your dedicated personal Wealth Manager can help you to balance your assets and manage risk to help you achieve your goals.

3. Near retirement – consider a phased retirement

Phasing your retirement offers the flexibility of continuing to work (perhaps part-time) while enjoying more leisure time.

The benefit of phasing your retirement is that you can continue to receive an income and perhaps put more towards your retirement ready for when you stop work completely. It can stretch out the costs of retirement and ensure that your expenditure demands will be met.

If you’re unsure if now is the right time, speak to one of our personal Wealth Planners who can look at the long-term impact of reducing your working week slowly over time.

Investing close to retirement – how we can help?

If you’re coming up to retirement, knowing exactly how to invest to ensure you can enjoy your retirement can be daunting. Our personal Wealth Managers have the expertise and importantly, the independence to advise you on the best way forward.

Your dedicated personal Wealth Planner can:

• Take you through a cash flow planning exercise to let you know if your retirement date is realistic and achievable based on your current financial situation and retirement savings
• Stress-test their plans against various scenarios such as market falls and rising inflation, so you can feel confident in your retirement plans
• Determine the best investment strategy to help you retire when you want to
• Review your plans on a regular basis and make adjustments as and when they are needed.

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Meet some of our wealth planning experts

If you would like to know more about how our independent Wealth Planners can help you invest as you near retirement, please get in touch. We will be delighted to provide more details of our services.