Trustnet Direct Retirement Programme | Page 63

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 Page 63