DURING & POST
Suitable investment
strategies and products
It used to be generally accepted that the best course of action in retirement
was to move your investments into income generating funds, bonds or stocks
if you intended not to buy an annuity.
With greater longevity, however, comes a longer
potential investment period to continue increasing
the value of your retirement pot. This helps as we live
longer, extending the period of time we can keep our
money in the markets. Yes, the market has been and
will be unpredictable and your retirement pot may
go down as well as up.
One new strategy that has become relevant in the
drawdown world is maintaining a growth portfolio
coupled with a cash buffer.
If markets are poor, use cash for your income, leaving
your investments time to recover. In the good times,
harvest profits to replenish your cash buffer, so you
never have to sell your holdings cheaply.
Expect to see the investment industry coming up
with a raft of retirement income products over the
next few months to help address some of the
laborious issues that retirees face in drawdown. Also,
check the terms of your pension or SIPP to make sure
you have flexible access to your retirement cash.
You may wish to consider annuities in later life if it
looks like you will last longer than your pension:
these products become better value as you get older.
Key points
With people living longer, you also have more
time to increase the value of your pension pot
Instead of using income-paying stocks and
funds, you may wish to hold growth
investments and sell a small number of them
after markets have risen
This all takes time to manage yourself, so if you really
don’t have the inclination, then heading for funds
and shares that generate an income is a decent
strategy. With a significant retirement pot, you may
be able to craft an income without having to sell any
of your investments, but the majority of us will have
to do this. Think about how and what you will sell
each month, quarter or year to create the cash for
your income.
A raft of retirement income products are likely
to be introduced soon to address some of the
issues you may encounter in drawdown
Growth
Income
R e tir ement
Link here
Cash
Annuity
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