Have you developed a retirement strategy?

Whether you’re nearing retirement or have many years of your working life ahead, carefully planning for retirement is essential to secure financial stability and peace of mind when you stop working.

Your pension fund will become your employer.

According to a recent report1 people on average, begin actively planning for retirement around the age of 36. At this age, 63% of respondents expressed confidence in their financial decision-making abilities, a notable increase compared to younger demographics where only 56% share the same level of confidence.

With more than a decade of work experience under their belt by 36, the ‘age of responsibility’ arrives for many people, with increasing awareness of the importance of financial planning, including actively thinking about planning for retirement.

Whatever your age, planning for retirement with a well-thought-out retirement strategy is a must!

Younger individuals can afford to adopt a far more aggressive investment approach with their pension pot, embracing riskier assets for potentially higher returns over time.

Although this strategy does involve exposure to short-term market fluctuations, the longer investment horizon allows ample time for recovery from any downturns (during which monthly pension contributions may be invested at cheaper asset prices).

For those on the cusp of retirement, a prudent approach involves creating a smooth, non-volatile investment profile which minimises risk for the first five to ten years of retirement, with the remainder invested in more volatile funds which have the potential to grow over the longer term.

This approach should help shield your pension pot from the unpredictable nature of market volatility, as witnessed during events like the pandemic or financial crashes. Maintaining a stable portfolio for the initial years of retirement minimises the risk, thus safeguarding financial wellbeing.

For those falling between these two extremes, and clients wanting to remain invested using an income withdrawal approach, a blended, balanced and risk-managed approach is advisable. The strategy here is to aim for a balanced mix of stable and more volatile investments, aligned to your risk tolerance and personal financial goals. Diversifying your portfolio across various asset classes helps mitigate risk while providing the potential for growth.

Regular portfolio reviews and rebalancing is vital for a sound retirement strategy when planning for retirement. Market fluctuations and varying asset performances can cause your portfolio to deviate from its original allocation over time. Without intervention, this drift could lead to unintended asset concentration and increased risk exposure.

Get in touch

If you are planning for retirement and looking for help with your retirement strategy, we can help.

Paul has over 20 years of experience in financial planning and services, meeting clients across East Sussex and Kent including Bexhill, Hastings, Brighton, Tunbridge Wells, Lewes, Battle, Crowborough, Uckfield and further afield.

1Standard Life, 2024

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.

It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within the blog is for information purposes only and does not constitute financial advice.

The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.