How has 2020 impacted your retirement plans?
Throughout the pandemic, we have seen an increase in some clients who have decided to push back their retirement because of the restrictions’ lockdown has posed whilst others have chosen to retire early as it becomes apparent life is too short.
The most common reason why some adults aged 50+ have delayed their retirement plans is a reduction in household income, mentioned by nearly four in ten (38%). The good news is, if you can delay your retirement, this can provide valuable extra years to help build your pension pot.
Our lives have changed and people are viewing their finances in a different light. There is evidence to suggest some are paying closer attention to their investments than before. Three in ten (28%) of adults who had investments at the end of February paid closer attention to their value because of the pandemic. It’s clear that planning for the future and protecting your wealth and your health has never been so prevalent.
Getting professional advice tailored to you can have great benefits as evidenced by the FCA’s report which stated that, “Those who have had regulated financial advice in the last 12 months are more engaged and have a better understanding of their pension than those who have not.”
Interestingly only 12% of women are taking an active interest in their pensions compared with 26% of men. Women are clearly less engaged and less likely to review their pension pot or performance. This could leave women underprepared financially for retirement. Whilst there are reports of younger women (aged 18-34) taking steps to increase their pension contributions and engage with a financial adviser there is still a concerning disparity between men and women.
For the Self-Employed planning for retirement is even more important as it appears they are less likely to have a pension in place.
Positive outlook
It is gratifying to deliver more positive news to clients in recent months based on the investment rally from April 2020 which was boosted by the good news on vaccines from November and this has carried on into 2021.
As we emerge from lockdown, growth in asset values has to some degree been fuelled by:
- Massive government borrowing funnelled straight into the economy to give it cash flow.
- Released citizens, eager to get back to normality and to spend their accrued savings and more.
- Cheap borrowing, with ultra-low inflation rates… well, for now anyway!
- Central governments in no hurry to control or restrict significant growth following the last year of dramatic falls in Gross Domestic Product.
- Vaccination success for some nations/areas, but not all, notably Europe.
- Accelerating investment markets in many areas, fuelled in part by new money because deposit savings rates are hardly viable.
This is not an exhaustive economic list, with many other financial and political factors adding to the mix; however, there appears to be a consensus for growth, confirmed in part by the IMF in their April 2021 report.
Of course, once COVID is decisively put behind us, the consequences will have to be confronted as central banks deal with the accumulated national debt. That, however, would almost certainly be a consequence of a positive COVID outcome and so should not be feared today. The next 12 to 24 months is going to be fascinating to watch unfold and we fully expect a “bumpy ride”.
Speak to us
If you are concerned about the effects of 2020 on your pensions and investments contact your Financial Adviser to arrange a review meeting today.
Email info@innesreid.co.uk or call us on the usual number 01244 347583
Don’t leave your future to chance. This article isn’t personal advice.
*Source: Old Mutual Wealth, FT Advisor
