Covid-19 induced pension jitters? Here's an expert's advice - whether you are aged 20, 70 (or somewhere in between)

Wealth management firm sets out simple steps for 20-30s, 40-50s and those 55+

PENSION pots should not be overlooked when spring clean to-do lists are being created amid the UK’s coronavirus lockdown, a financial adviser has warned.

With power washing, wardrobe clear outs and garden chores all filling the time of self-isolating individuals, a little pension pot quality time should also be of high priority.

The advice comes from Rachael Bell who says that, while the time is not necessarily right for immediate action due to market volatility, pension holders should be making moves to acquaint themselves with their funds.

She added: “Whether you are in retirement, or planning for it from a long way out, market volatility presents challenges and opportunities.

“After more than 10 years of a rising market, investors could be forgiven for assuming that markets would keep marching onwards. But recent volatility sparked by coronavirus concerns provides a powerful reminder that things can change quickly.

“The fact that stock markets have fallen so sharply is, of course, indicative of significant selling pressure. But deviating from your long-term plan in such a febrile market environment is typically an emotional response, not a disciplined one.

“While the pain of short-term losses might leave you feeling anxious, there are some ways that may help you handle the situation, depending on where you are on your retirement planning journey.”

The considerations for pension holders typically vary depending on their stage of life, their requirements and attitudes to risk.

Over the course of the last month, Rachael, the principal of Cumbria-based Rachael Bell Wealth Management, has spent time making welfare calls to all of the business’ clients to ensure any questions they had were answered and to calm any nervousness about the downwards
trend of global markets.

“Market volatility is normal, as is the feeling of being overwhelmed by the value of your investment portfolio moving up or down, said Rachael.
“But it’s worth remembering that market rises and falls are part of investing. No one likes to lose money, but history suggests that selling is usually an inappropriate response to unfolding events.”

Rachael today shares her thoughts on what this means for people of different ages.

20s - 30s
“No one knows how future events will play out, or how markets will react in the coming weeks and months. What we do know is that whether the next move for markets is up or down, it shouldn’t matter to investors who have the time to ride out the peaks and troughs.
It's important to remember that corrections are an inevitable feature of investing, and that markets do recover in time.

“Difficult though it can be, it’s important to sit tight and keep sight of your long-term objectives. At this stage of life, it’s far more important to have a solid retirement plan with a portfolio that reflects your long-term investing horizon.

“It’s also worth remembering that if you are contributing to a pension or ISA every month, you will now be benefiting from lower asset prices and the potential boost provided by pound-cost averaging. So, it might even be a good time to consider increasing your contributions, if you can.

“Keep in mind that contributions into a pension are boosted by 25% on day one, thanks to tax relief. It’s an advantage that applies no matter what markets are doing, and it will give your savings the potential to grow quicker.”

40s – 50s

For many investors, particularly those who have built up significant wealth, current market turmoil could prompt discussions about reducing risk.
“That’s not surprising when you consider that research shows the emotional pain of a loss is twice as powerful as the feeling of making a gain.”

“But while your portfolio may benefit from some healthy rebalancing right now, a wholesale shift towards lower risk assets would crystallise losses and increase the probability of missing the recovery in markets when it comes.

“If you are due to retire in the next five years, then it may be worth thinking about adding or increasing your allocation to less volatile investments.

"But if you’re in good health, you should probably still focus your sights as long term as possible, because retirement could last 30 years or more. Your financial adviser will be able to determine what mix of investments is right for you, based on your priorities and ultimate retirement date.”

Aged 55+

“It can be a worrying time if you need your pension savings to meet living costs. Market swings do disproportionately affect older investors who are taking income from their retirement pots.

“This is because a larger proportion of the portfolio must be drawn to maintain the same income. With progressively less in the pot, it becomes more difficult for the fund to bounce on any market recovery.

“If you can, you should try to avoid taking money from your investments during periods of volatility. If you can reduce your level of pension withdrawals – or even put them on hold for a while – it could be better to dip into cash savings, rather than sell investments you might
hold outside your pension plan. The more you can leave invested, the more time it has tohopefully recover.

“Alternatively, if you are currently taking your annual income requirements as a lump sum, consider changing to a monthly or quarterly withdrawal to reduce the risk of realising capital during this market trough.

“If you’re eligible to start drawing it, your State Pension could also provide some income without the need to sell investments. Next month, the new State Pension will rise from £168.60 a week to £175.20 per week - working out as an extra £343 a year for people able to get the full payment.

“Delaying your retirement is a further option – although it may be a last resort. Continuing to work is a way to avoid withdrawing from retirement assets, and you’ll have more money to add to your pension pot.“
 

ENDS

This press release was issued on behalf of Rachael Bell Wealth Managemeny by James Higgins of 32West. You can contact James on 01229 808 306 or 07553 203234

Editor’s notes

Rachael Bell Wealth Management was officially established in December 2014.

Operating from their office at 3 Parkland Avenue, Parkland Village, Carlisle, Cumbria CA1 3GN, Rachael Bell Wealth Management form part of St. James’s Place Wealth Management Group.

They focus on offering general financial advice and support, including guidance around pensions and smart investing.

More details of Rachael Bell Wealth Management can be found by visiting https://rachaelbellwealthmanagement.co.uk/