How financially prepared are you for your retirement?

Men narrow the gap on women when it comes to life expectancy

Thanks to healthier lifestyles and advances in medicine, people are living longer lives. Men are narrowing the gap on women when it comes to life expectancy in England and Wales. Research in the Lancet indicates a predication that by 2030, men will be living 85.7 years on average – just two fewer than women. The analysis did not cover Scotland, but government data suggests 76.8 years for males and 80.9 years for females.

Setting your investment goals or strategy

Many individuals may not feel financially prepared for their retirement. When it comes to setting your investment goals or strategy for your retirement, there are two main options. If you’re looking to build up the value of your investments over time, you’re investing for growth. Alternatively, if you’re aiming to get a regular income from your investments, then you’re investing for income.

Some investors think of cash as a safe haven in volatile times, or even as a source of income. But the ongoing era of ultra-low interest rates has depressed the return available on cash to near zero, leaving cash savings vulnerable to erosion by inflation over time. With interest rates expected to remain low, investors need to be sure that an allocation to cash does not undermine their long-term investment objectives. Cash left on the sidelines earns very little over the long run.

Eighth wonder of the world

Compound interest has been called the eighth wonder of the world. Its power is so great that even missing out on a few years of saving and growth can make an enormous difference to your eventual returns. For example, starting at age 25 and investing £5,000 per year in an investment that grows at 6% a year would leave you with over £400,000 more by the age of 65 than if you started at 35, even though overall you would only have invested an extra £50,000.

You can make even better use of the magic of compounding if you reinvest the income from your investments to grow the starting value even more each year. Over the long term, the difference between reinvesting the income from your investments and not doing so can be enormous.

The lesson is to not panic

It’s important to have a plan for when the going gets tough instead of reacting emotionally. The lesson is to not panic: more often than not, a stock market correction is an opportunity, not a reason to sell. Market timing can be a dangerous habit. Corrections are hard to time, and strong returns often follow the worst returns. But often investors think they can outsmart the market – or they let emotions like fear push them into investment decisions they later regret.

While markets can always have a bad day, week, month or even year, history suggests investors are much less likely to suffer losses over longer periods. Investors need to keep a long-term perspective. The last ten years have been a volatile and tumultuous ride for investors, with natural disasters, geopolitical conflicts and a major financial crisis. A diversified portfolio also provides a much smoother ride for investors than investing in just equities.

Need help to make sense of the pension options available to you?

Retirement can be an exciting time in life as you look forward to spending more time doing the things you enjoy with the people who are most important to you. We can help you make sense of the pension options available to you and how to achieve certainty for your financial future. For more information, please contact Admiral Wealth Management on 01472 357035 or email info@admiral-online.co.uk – we look forward to hearing from you.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.