‘Am I on track for the retirement I’ve always dreamed of?’
‘How long will my money last?’
These are questions many investors ask when they think ahead to retirement, and it can be daunting. However, a lot of the uncertainty can be taken away by considering the key risks to investing for retirement and making sure they have the right retirement plan in place.
How does Architas approach investing for retirement?
We believe there are four principal risks when it comes to investing in retirement: longevity, inflation, market volatility and lack of flexibility.
All four can serve as guides in structuring an investment portfolio for the shift from accumulation and building a retirement pot, to the decumulation stages when investors can start to enjoy their investments.
When planning for retirement, it’s important for any investor to think about their retirement goals and how long they have to meet them. Committing to a long-term investment strategy when planning for retirement could help avoid making impulsive decisions and ultimately, mistakes.
Understanding how inflation could affect an investors retirement strategy is essential in ensuring they have enough assets to last them through their retirement years. It’s important to understand the eroding effect inflation can have on cash savings when interest rates are low, and to think about how to keep up with the rising cost of living.
Many investors can feel overwhelmed when markets have large swings. But sometimes the best action may be to take no action. Saving for retirement requires a long-term plan, and making changes based on short-term decisions could have adverse effects.
Lack of flexibility
A big question that investors saving for retirement is what if I need my money sooner than I thought, and will I need a regular income? Flexible retirement is becoming an increasingly popular way to ease into retirement. It allows investors to draw a proportion of their pension and tax-free cash benefits, while you remain working on a reduced salary and fewer hours.