Approaching retirement: What should I do now?

Pensions and retirement
Views & insights

If you’re approaching retirement, falls in the stock market make for a worrying time. Here, we consider some of your options.


27 April 2023 | 3 minute read

If you’re approaching retirement, recent falls in the stock market make for a worrying time. You may be concerned about the impact on your pension and wondering what you should do next.


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A financial adviser can help you understand your options but, in the meantime, these are some questions to consider.

Should I delay retirement?

Ideally, you would avoid drawing money from your pension and other investments until they have recovered in value. Unless you have significant cash savings, this may mean thinking about delaying your retirement.

Working for a few extra years might not be your favourite scenario, but it could give your pension pot time to recover. With life expectancy much higher than it was for our parents’ generation, your pension may need to last for around 30 years in retirement, so the bigger your pot, the better. This is especially the case at a time when high inflation is causing the price of everyday bills to soar.

If you can’t face working full-time for any longer, one option is to phase your retirement by working flexibly or part-time for a while. This could reduce the pressure on your pension and help ease you into full retirement.

Is it wise to stay invested?

The run-up to retirement is not usually the time to increase your exposure to the stock market. However, given that your pension may need to last for several decades in retirement, taking no investment risk is unlikely to be wise.

Leaving excess money in a savings account could make it difficult to keep up with rising prices and increase the risk of you running out of money.

On the flipside, saving 12 to 24 months’ worth of essential expenditure in an easy-access savings account would provide a source from which to draw retirement income when stock markets are falling.

In uncertain times, your best course of action is to maintain a diversified portfolio that invests your money across a range of asset classes according to your needs and risk profile. A financial adviser can help you decide on the right types of investments for you and build a portfolio that is robust enough to deliver long-term performance.

What if I need retirement income now?

If working for longer is not an option, you should think carefully about structuring your income. If possible, avoid big withdrawals when the value of your pension has fallen, as this could significantly reduce how long your savings last in retirement. Think about whether you really need the money, as any excess cash could end up in a savings account and be eroded by inflation.

It’s also important to consider how to draw your income in a tax-efficient way. Being aware of your income tax personal allowance, and withdrawing as little as possible from income sources that would be liable to tax, and as much as possible from ISAs, are just some of the ways to reduce your tax burden. There are other tax allowances to use in the run-up to and after retirement, which could help to boost how much post-tax income you are able to draw.

Beware that if you draw an income from your pension pot for a short-term cashflow boost, you risk triggering the money purchase annual allowance (MPAA). If you plan to build up your pension again in the future, this may limit the amount you can pay into your pension to just £10,000 a year. This is a complex area, so make sure you seek advice from an expert.

Next steps

The combination of stock market volatility and rising inflation makes this a particularly challenging time for those coming up to retirement.

The only way to truly understand the impact of market downturns and inflation on your retirement plans is to get some smart advice. By learning about you and what you want to achieve, a financial adviser can help to guide you through your choices, so that you feel confident you’re doing the right thing with your money.

The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy.

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