Whatever your age, whether retirement is round the corner or decades away, you really should be asking yourself this question. You don’t have to search very far on the internet to ascertain that a pensions’ timebomb is ticking in almost all of the world’s developed economies. Economists are predicting a crisis in the US, Canada and Australia but apparently the UK comes top for pension-unpreparedness with the average retiree predicted to run out of money after 7 years even though the average retirement lasts 19.
Government pensions are shrinking yet individuals are failing to compensate for this by making their own arrangements. Some still erroneously believe that the state will take care of them, others simply don’t have anything left over once the basics are paid for. In addition, many of the so-called sandwich generation are stuck between supporting elderly parents who are living longer and children who are dependent for longer with additional challenge of the cost of higher education spiralling ever higher. As a result of all this financial pressure, in contrast to previous generations when most people arrived at retirement with their mortgage and debts fully paid off, many now continue to pay off debts in their latter years.
Even for those who do have a retirement pot, in many cases that money has to last us longer than before as life expectancy is increasing, particularly for women. That is why you need to ensure that you are saving on a regular basis for your retirement and that your savings are working as hard as they possibly can for you.
So what should you do with your money? Many people still put their faith in bricks and mortar by accumulating a portfolio of properties. There are certainly advantages to this approach – you have both an asset and the potential to generate income from it and continue doing so when you retire. The downside of property as an investment is its illiquidity – it takes time to sell property so you can’t get your hands on your capital fast should you need to.
Stocks and shares are another option which have the potential to be both asset and income-generating however you need to be careful that you don’t expose yourself to too much risk and leave yourself with insufficient funds to live off. This is less of an issue when you are younger but becomes more so as you approach retirement age.
In fact, the best approach to investing for your retirement is to take a diversified approach with a mix of assets including property, bonds, equities and cash. This will enable you to weather financial storms as different asset classes respond differently under different economic conditions.
Getting the right help and advice is key. In the current economic environment there are so many factors affecting the value of assets and unless you are have the time, knowledge and inclination to closely follow the markets you would be better off getting an expert to do the hard work for you. I tailor financial plans to suit individual needs and so they work in tandem with our investment partners to help you reach your financial goals.
Real estate advisory firm, Blackfish, provide property investment solutions and have access to the best opportunities in the global marketplace, whilst award-winning investment management firm Tilney Bestinvest will take the very best care of your stock market investments with their extensive range of investment tools, backed by rigorous research. Together we will ensure that you really are on track for the retirement you deserve.