Market Falls Near Retirement: What to Do, and What Not To

Aug 27

2 min read

Markets fall. Over any thirty-year retirement they will fall several times, sometimes sharply. A plan that has not accounted for that was never a plan.

Why it feels different near retirement

Because it is different. While contributing, a fall lets you buy at lower prices. Once you are drawing income, a fall means selling units at lower prices to fund withdrawals — which is why the years around retirement carry more risk than the same fall would at forty.

What not to do

Sell into the fall and move to cash, which converts a temporary loss into a permanent one.
Increase withdrawals to compensate for a reduced pot.
Make a permanent change to a long-term strategy based on a short-term move.
Check the value daily. It changes nothing except how you feel.

What actually helps

Having a cash buffer so essential spending is covered without selling investments. Having flexibility over discretionary spending for a year or two. Having a written plan, made calmly, that you can read when you are not calm. And, if you have one, an adviser whose main job in that month is stopping you doing something expensive.

The perspective

Recoveries are as normal as falls. The retirees who struggle are rarely those who experienced a bad market — they are those who reacted to one.

If you'd like these questions answered for your own situation, download our free guide, The Pre-Retirement Pension Review, or book a free no-obligation call at www.dmfinancialplanning.co.uk.

Important information

This article is for general information only and does not constitute personal financial advice. The value of investments can fall as well as rise and you may get back less than you invest. Tax treatment depends on individual circumstances and may change. A pension is a long-term investment; funds cannot normally be accessed until age 55 (57 from 2028). DM Financial Planning is a trading style of Aegis Financial Planning Limited, authorised and regulated by the Financial Conduct Authority (FCA No. 624298).