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Building and protecting your wealth

How Does the COVID-19 Pandemic Affect Your Retirement Plan?

Experts are predicting that we’ll be feeling the economic impact of the coronavirus outbreak for years to come. In particular, those in their prime working years with pensions invested in the stock market will feel their retirement plans greatly affected.

This does not constitute advice and advice should be sought in all instances before acting on it.

Our advice for handling tough times, as usual, is not to panic. It’s worrying seeing your hard-earned pension pot shrink, but the solution is not to sell or switch your investment strategy impulsively. Remember, everything that goes down, must come up, so selling to prevent further losses might mean missing out on an even bigger profit down the line.

Should you rethink your retirement strategy?

For many, retirement seems so far down the line that it’s not really top of mind. While it is normally the end goal for many workers, you’ll need to be prepared for it — and the earlier you start, the better.

Admittedly, younger people have more of an advantage because time is on their side and there will be enough of it to see the economy, the market, and your pension savings turn around. However, if you’re nearing retirement age, your strategy might need to change. You’ll want to stick with safer investments like cash, gifts, or bonds. Anything that reduces risk and provides a fixed rate of return.

Do you have a diverse portfolio?

While the rock-bottom base rate is good news for borrowers, it’s not so great for people who had planned on buying annuities as part of their retirement plan. Normally, as annuities provide a regular income, they’re a great option. But with the state of the market being what it is, it highlights the importance of having a diversified, risk-appropriate portfolio the closer you get to retirement age.

Have you planned your retirement budget?

You should have an air-tight budget once you hit retirement but if you’re already using drawdown, or plan to in the future, living within your means is even more crucial. The more money you leave invested, the better off you’ll be in the long-run.

Can you ramp up your pension contributions?

If you’re still working towards your retirement fund and it’s feasible for you to do so, increasing your pension contributions might be something worth exploring. You may not be able to control the markets, but how much you’re investing is something you can. Any extra you can add to your pot along the way will be beneficial.

Have you considered part-time retirement?

Rather than working until retirement age and giving up work completely as is the traditional path, you might choose to stagger your retirement and continue to work part-time. For many doctors and dentists, this is an easy transition that will help ensure your pension stretch to cover the entire retirement period. For those who may not have planned and saved as well as they should have, or run into costly roadblocks and detours that has affected savings, this could be an effective option.

Talk to a professional

Depending on where you are in your retirement saving journey, your attitude towards risk will undoubtedly shift.

You should be regularly reviewing your savings and investments, but it’s even more important to be in touch with your financial adviser when the economy experiences a rough patch.

We’re here to help you make the right decisions about your retirement plan, so give us a call to schedule time to check in whenever suits you.

Ready to review your retirement plan?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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