Retirement Can Be A Risky Old Business!

A look at some of the risks of retiring, and how to plan your finances to protect yourself

Most people look forward to retiring one day. Being able to say goodbye to early starts, commuting, office politics – and being able to look forward to doing exactly what you want – are just some of the attractions of retiring. But, while you can literally have the time of your life in retirement, there are several risks which can upset your finances in what should be golden years.

In this post we’ll look at five risks you need to bear in mind in retirement, and how to plan your finances to help protect your retirement income.

How long you’ll live

How long your life will be is something that most of us avoid thinking about. Even if you do, working out how much money you’ll need for it is a tricky calculation to attempt. You might also need to think about how long your spouse/partner will live, and how much money they will need.

A good general approach is to expect to live a long life and plan your finances accordingly! Individual practical measures to consider might include taking advice on a drawdown strategy to cover at least your minimum living expenses, and making sure you have enough life assurance to protect any dependants.

How healthy you’ll be

Health is another issue many of us would rather not think about. But all of us need to consider the financial risk that a long term or serious health issue could pose.

To help minimise the risks to your finances – and help decide if you need to save or invest more – it’s sensible to think about your current state of health, your family health history and what standard of nursing/personal care you would like if you suffer from ill health in retirement.

Investment market risk

The performance of the investment market, including the performance of stock and bond markets, will directly affect your income in retirement. In turn these depend on many variables including the economy, politics and interest rates. (A decade ago who would ever have thought that world interest rates could drop to virtually zero?)

The very best way to guard against investment market risk is to take expert advice on your investment strategy. Your financial adviser will probably suggest strategies to help minimise the risk of changes in investment market returns.

Unexpected events …. so-called ‘black swan’ events

You’ll probably agree that ‘expecting the unexpected’ is generally a good approach in life. Of course, it’s impossible to expect the unexpected accurately – whether it be something like a world economic crash, a natural disaster, an unfortunate personal accident or just an unexpected major bill.

Good approaches to help you expect the unexpected are to save or invest more than you expect to need as a contingency. Also, to ensure that a portion of your savings or investments are available to draw down at short notice should you need them.

Changes in government and tax policy

Governments come and go and bring a whole new raft of policies and laws as they do. Many of these new policies and laws will affect your savings, investments and pensions and so will directly affect the money you have in retirement.

While even expert financial advisers find it difficult to predict what governments will do a good overall strategy is to spread your money across several different types of investments. This way, if one is impacted badly by changes in tax or government policy it’s possible that the others might be unaffected, or might even benefit from them.


If you would like to find out how we can help you plan for the risks you face in retirement– or just find out more about W1 Investment Group – please contact us.



Important Information

The value of your investment can go down as well as up, and you can get back less than you originally invested.

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