• ONE Ask your pension advisor when they plan to start de-risking your savings under any automatic lifestyle system. Normally this is 10 years before you retire, but it’ll be useful to have a deadline for whether to continue with or halt the process. Even if your pension advisor has already started de-risking your savings, you can still switch back into riskier stock investments with the chance of better returns. And if you have delayed de-risking, you can always start it later.
  • TWO How much money you have put by for retirement should influence your thinking on whether it is more sensible to buy an annuity or to stay invested and gradually draw down from your savings.

Those with less may be better off with an annuity but those with more generally have further options about what you should do with different-sized pension pots.

  • THREE Keep an open mind about what you are doing. If you start de-risking, be prepared to slow or abandon the process if you decide to go for drawdown instead. And even if you think you are definitely going for drawdown, it’s worth keeping an eye on annuity rates as they might improve again if interest rates go up.
  • FOUR If you let your pension advisor de-risk your pension fund don’t be afraid to ask questions about the risks, costs/fees and rational behind his investment decisions
  • FIVE The brutal truth is pension freedom sounds great, but it also means more decisions will be left up to you in future. A free official service is available to offer general guidance, but it won’t give personalised advice. It certainly won’t tell you what funds to put your money in, whether you are de-risking or not. Since sound advice around funding your retirement is so important, you should take professional qualified advice to ensure that your finances on track prior to retirement and during retirement to maintain the required lifestyle for you and you loved ones.

Next Month: Investing for Tax efficient income

To review your retirement planning and/or investments please contact me on 647 681 974 / 965 994 855 or terryexpatpensions@terra.com