Pete Hykin, co-founder of Penfold, a pension provider, said those retiring should consider working longer or at least taking less than they initially planned while relying on other forms of income. “In this way, your pension pot can remain invested for a while, giving you the opportunity to weather this period of volatility,” he said.
However, there is no guarantee that the situation will have improved by 2023.
Savers nearing retirement typically need to ensure that their money is invested in safer assets to provide some degree of protection against market volatility, Mr Hykin added, although this strategy has not paid off this year. “Unfortunately, current market conditions affect all levels of risk and so it is extremely important to think tactically about when and how to withdraw,” he said.
Alex Hatfield, of The Private Office, a financial advisor, said there had been a “perfect storm” in which nearly all investments would have failed in value.
“It’s a psychologically difficult year for a lot of people,” he said. “This is the year when those ground rules about investing really come in handy: don’t panic, don’t be a forced seller in a depressed market if you can help it, and wonder if you really should take that money right now.”
Sue Maydwell of Tideway, a financial planner, advised DIYers to take control and buy rising stocks.
“Not all stock prices are collapsing,” she said. “Higher risk-free returns and a change in sentiment put a reality check on many highly valued speculative stocks, but stocks such as banks, energy companies and insurance companies are soaring this year. In general, to make a profit and avoid significant losses, you should consider actively investing and avoid index funds, which track entire markets.”
Finn Houlihan, of asset manager Arlo Group and tax consultancy ATC, said that while this is a “difficult” year to retire, those who have a plan should stick to it — as long as they receive the income they need for the lifestyle they want. they need. want to retire.
Those concerned about budgeting should split their savings into different sources of income, combining an annuity — which offers a low but guaranteed income — with stock market investments, Mr Houlihan said.
“An important step is making sure you don’t have all your eggs in one basket,” he said. “For example, people with a lower risk tolerance may want to take out an annuity and not be too aggressive about taking their retirement in cash.”
*Not her real name