How to prepare your pension for retirement

One of the best ways to help keep your pension plan on the right track to support your retirement is to make sure your money is invested in the right way for you and for your goals.

Here are some things to consider when choosing and reviewing your pension investments, if you have just joined a pension scheme, you’re getting close to retirement or if you have already started drawing money from it.

How much influence would you like to take in managing your investments?

If you do not have the time or expertise/confidence to self-manage your investments, you could consider a lifestyle profile.  Lifestyling provides a ready made fund or funds which aim to increase the value of your money in your pension over the long term.  As you move closer to your chosen retirement date, the fund gradually and automatically moves money into lower risk areas in a bid to try and protect your capital.

If you know how you want to invest and you like the idea of being in full control of your pension pot then you can choose your own fund or selection of funds covering different types of investments including Socially Responsible Investments.

However, care should be taken here as you may run the risk of your investments not meeting your retirement goals.  It is important to remember that the value of investments can go down as well as up and you may get back less than what was paid in.

Make sure you regularly review your investments – this applies throughout retirement

However you choose to invest your money, you should take the time to review your investments regularly to ensure they are on track to meet your goals; even if you are already drawing an income from your pension.

How much risk are you comfortable taking?

Understanding investment risk is really important when choosing your investments.  Care should be taken about how much risk you are comfortable with and able to take with your retirement pot.

If you decide to manage the funds yourself then you will be entirely responsible for making sure you are comfortable with the level of risk your chosen investment options are taking.

Completing a risk questionnaire will help you consider your risk tolerance; your pension provider will likely have one available on their website.  Your attitude to investment risk can change and so it is good practice to complete a risk questionnaire at regular intervals, especially if you experience a change in circumstances.

Are your investments diversified?

It is a good idea to balance out the amount of risk you take by spreading your money across a mix of investments types and across different countries.  Further diversification can always be taken by considering currency, property and much more in-between.

Diversification is important so that if things go badly in one area, not all your money will be affected.

If you would like to discuss your pension further, please get in touch with our team.

The value of your investments can fall as well as rise and is not guaranteed.