I’m 55 and fed up!

I had planned to start winding down in terms of my working life at age 60, but the last five years have brought Brexit, Covid and now a ‘cost of living crisis’. All of this continuing uncertainty has meant the value of my pension has fallen considerably - does it mean my retirement plans will have to change?

Well Brian, I’m sure it isn’t going to make you feel better when I tell you that you are not alone – thousands of investors have experienced large falls in their pension values in recent times, and it doesn’t seem to matter which asset class you choose – pretty much all sectors of the economy are having tough times right now, so unlike previous times it isn’t as simple as saying “you should have stayed in cash” or, “you should have been in the stock market”. These are the usual messages from the experts in hindsight, but let’s not look to the past and instead let’s try to answer the question that you’ve posed here…

The first thing that strikes me is, you mention that your pension value has fallen but that, in itself, is only a small part of a bigger story and it doesn’t help me to answer what this actually means in terms of financial planning. We here at Wood & Associates are specialists in cashflow modelling and without my constructing a coherent model for you, I wouldn’t be in a position to be able to tell you the consequences of the drop in value , if any, nor what you ought to do over the next few years until your retirement begins.

Importantly, this is not a cashflow of the type an accountant might mean. These cashflows are far more powerful, and can truly make a difference to a person’s life, so it’s not just about recording and replaying a set of numbers.

Of course, nobody can predict the future, but what a cashflow model does, is set out a range of different and possible scenarios that can help you decide what to do, how to do it and when you should act. This takes into account all the resultant impacts of product charges and fees, performance growth, interest rates, taxation and inflation – much talked about today because of the ‘cost of living crisis’, as you termed it.

What you haven’t considered quite yet is whether you even need to act at all - and this depends completely on your lifestyle aspirations.

Consider this.

You may already have enough in your pension to enable you to live the lifestyle you want to live comfortably, without any fear of retiring too early, or running out of money at some future point.

What you need to do now, before any more time elapses, is really look closely at your income and your expenditure and think what this needs to look like when you arrive at age 60. Ask yourself “what type of life and lifestyle do I really want ?” – what sort of things do you want to be doing throughout your golden years and how much is that likely to cost.

Only when you know these numbers can you plan your own future and that’s what our cashflow modelling service can do for you.

It may be that by using some prudent assumptions, you could discover that you are on track to do all the things you want to, which means you can relax and live a little instead of being down in the dumps about pension values.

It’s time too, to consider carefully your views about investment risk as well as your financial capacity to take knocks such as this when you are so close to retirement.

After all, life’s too short as they say – so you owe it to yourself following a lifetime of work to know ‘what’s what’ and the starting point needs to be one of clarity and nothing brings a clearer vision than a well completed cashflow. Yes, it might mean that you need to save more. It might mean that you have to work on a bit longer, or, and imagine this for a moment – you might be in a much healthier position than you ever knew and could begin to de-risk and start looking forward with confidence to a happy and prosperous retirement.

The starting point is finding out, so get in touch and let’s start talking about your aspirations and future lifestyle without any further delay…

The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.