PLANNING
What you should be doing
in your 60s
While this is the decade in which the majority of you will be thinking about
finally retiring (if you have not already been lucky enough to do so), the asset
allocation decisions that need to be made are not straightforward and very
much depend on the circumstances of the individual.
The first thing to consider if you are 60 is that with
the average life expectancy now between 85 and 90,
you are still looking at a 25-year investment horizon.
As such, it is important to look at your overall net
worth and carefully consider the order of your assets
that you want to draw down to get you there. You
may look at drawing this income from your pension
or your ISA, or downsizing your property.
In terms of asset allocation, while no one is the
same in terms of their needs, the rule of thumb is
that you will be looking to move away from the
more risky growth areas and instead adopt more
of an income bias.
This income can come from a variety of sources,
namely income-generating stocks, bonds and
possibly property funds.
As opposed to 15 to 20 years ago when the only
home for equity income was the UK, there is now a
much greater universe of equities from which to
obtain income, with several European, Asian, global
and even emerging market funds to choose from.
However, when investing outside the UK, it is worth
considering the potential currency risk this may bring
with it.
Work
In more normal market conditions, it would be in your
60s that you would shift more of your pension out of
equities and into bonds. However, with interest rates
at historic lows and bond yields also depressed, this
shift may be worth delaying at this stage, and with
drawdown an option, you can pick your moment to
make this change in positive market conditions.
Key points
If you started early, you will be considering
when to retire
If you started late, you will need to work out
when you can afford to retire
Remember, now annuities are no longer
obligatory, you can keep your pension invested
after you retire and take money when you need it
Retirement
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