If your pension dropped by 30%, how would it effect your retirement?
With many financial institutions anticipating a bear market and/ or recession within the next six to eighteen months, and one leading fund manager claiming it could happen in as soon as five, here are some important statistics that you need to know:
Bear markets average a loss of 30.4%
They last on average for 13 months
Stocks require on average 22 months to recover
Following the last market crash, it took six years for stocks to get back to their all-time high
87% of the people that we speak to haven't altered their pension since they set it up
92% of the people that we speak to have at least 80% of their pension invested in US and UK stocks
“Many of the people that we come across, when dealing with their UK pensions and transferring them, haven't undergone a risk profile assessment since they first established their plan.” Paul Flamini commented, one of the Directors at Loadstone, who deals a lot with foreign pensions.
“Considering that most of these plans were set up when they were in their twenties, for some that are now nearing retirement, a reassessment is very important.,’ he continued, “their pension companies are not in touch with them and make no active effort to ensure that they are still on track whilst for many, their goals have changed in the last thirty years or so.”
If you still have ten or twenty years left until retirement, then exposure to equities will typically offer the best returns over the long term and you can easily ride out a bear market or recession. If however, you are within ten years of retirement, you may want to undergo a risk profile and make sure that you aren't too heavily exposed to unnecessary volatility which can bring undesired surprises when nearing your retirement.
“There are some really good products our there at the moment,” Michael Worth offered, one of the technical associates at the firm, “these products offer a set return of up to 7% a year and have the added benefit of capital protection. We have been gradually reducing peoples exposure to equities depending on their age, portfolio and retirement goals over the last quarter and for those actually in retirement, we have drastically reduced the volatility within their pensions. People don't want to see their retirement savings drop by 10% one month and then go up again the next when they are retired.”
Loadstone Group can offer your a free review of your current pension. If you are nearing retirement or if you just want to check and make sure that you are still on track, contact one of our consultants by completing the form on the pensions page at UK & International Pensions or alternatively email us at info@loadstonegroup.com and insert the subject ‘Pension Review’, if it doesn't do it for you automatically.
