Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

Risks that could affect your retirement plans

When you retire it is likely that you will be relying on your pension pot as your sole source of income and it is unlikely that you will accumulate any new assets unless you receive an inheritance or similar.

A Financial Adviser can help you to monitor, adjust and maintain your retirement plan with these risks in mind.

If you choose to keep your pension pot invested when you retire and make regular income withdrawals, you are vulnerable to three main risks outlined below.

Sequencing Risk

Sequencing risk is the timing of withdrawals from your pension pot and whether the withdrawals are being made during a weak or strong market. It is more costly to make withdrawals when the market falls in times of volatility, such as from Covid-19. The smaller your pension pot becomes, the bigger percentage of it you need to take to still receive the same amount of income to maintain your lifestyle. If the amount of income you withdraw is greater than the amount that your pension is growing in value then you could exhaust your pension pot.

If your pension pot has dropped in value when you are approaching retirement or after you have just retired, you could consider alternative sources of income while you wait for markets to hopefully recover. For example, you may have cash in the bank that you can use as a temporary source of income.

Find out more about planning for your retirement

Inflation risk

Inflation is how quickly the price of goods and services are rising. Rising inflation can erode your buying power and the real value of your capital at retirement.

If you keep your pension pot invested when you retire you have a greater chance of your assets beating or staying in line with inflation. At Four Wealth Management, a Financial Adviser will work with you to determine investments that are suitable for your appetite to risk.

Longevity risk

Life expectancy is increasing and it is predicted that 160,000 people in the UK will be over the age of 100 in 30 years’ time*. Yet many people continue to under estimate how long they will live and therefore often run out of money in retirement or are forced to withdraw less than they were hoping to from their pension pot and not live the lifestyle they were hoping for.

At Four Wealth Management, your Financial Adviser will work with you aiming to preserve your pension pot and help calculate how much you can comfortably withdraw each month.

If you’d like to understand more about what potential risks could affect your retirement income strategy, contact us today to book a no-obligation meeting.


*Source: ONS, 2017

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Income drawdown will reduce the size of your pension fund and the investment growth may not be sufficient to maintain the level of income you wish to draw. If you withdraw money at a rate greater than the growth achieved by your investments, your remaining fund will reduce in value. The level of income you take will need to be reviewed if the fund becomes too small – this is more likely the higher the level of income you take.

The income you receive may be lower than the amount you could receive from an annuity, depending on the performance of your investments.

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

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Risks that could affect your retirement plans
FourWealth Management