There are steps savers can take to ensure they don’t let their pension pot dwindle, despite the cost of living crisis 💷⬇️
Two years of pandemic and the severe damage it wrought on global stock markets saw the value of investments plummet.
“It looks like ‘back to work’ will be the order of the day for older people who would like to enjoy retirement but can’t because of rises in the cost of living.”Returning to work even part time won’t be an option for everyone though and pressure is mounting on retirement incomes.
A spot survey of AJ Bell customers drawing an income from their self-invested personal pension shows retirees are already changing how much money they take amid the double whammy of struggling markets and the rising cost of living. He adds: “The most important thing is that people who choose to keep their money invested while taking a retirement income are engaged and review their strategy regularly.
Those saving in a Sipp are more likely to stock pick, but the majority of pension savings are invested in multi-asset funds to help protect against inflation over the long term. There are a small number of investment trusts that aim to protect investor capital from sharp and sudden stock markets falls, says Kyle Caldwell, investment expert at ii.“Each wealth preservation trust has a low weighting to equities and plenty of defensive armoury, such as low-risk inflation-linked bonds and small weightings to gold,” Mr Caldwell says.
“If the dividends paid by the trust’s investments fall one year, the manager can dip into the reserve to make up any shortfall. So, the trust can top up dividends in the bad years and smooth out the dividends their investors receive over time.”Global equities have been volatile and although there are signs that inflation expectations may be beginning to calm down in the US and Europe, rising interest rates could weigh negatively on returns.
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