Should I use my pension to boost my income?

Market volatility can also prompt people to dip into their pension savings so they can move their money into supposedly ‘safer’ homes such as savings accounts.

According to research by fund managers Fidelity, almost two-thirds (61%) of investors planning to retire within the next five years have seen the value of their pension investments fall in recent months. If you’re worried about falls in the value of your pension savings, try to avoid making any knee-jerk reactions.

Emma Byron, Managing Director of Legal & General Retirement Income said: “When markets are uncertain, or people see their investments have taken a hit, the urge can be to switch into cash or less risky assets like bonds. This reaction is part of human nature, and while it may feel like a sensible approach, in reality it means there is no chance for your investments to recover and you therefore crystallise investment losses that are currently only on paper.

“If you have time on your side, you should try to ride it out and let your investments recover over time. It’s important when making decisions at this time, to consider your needs thoughtfully and with the long-term in mind; retirement is a marathon and not a sprint.”

If you’re worried, check where your pension savings are invested as the funds you choose could have a significant impact on the income you end up with at retirement. Many pension schemes automatically move investors into lower risk investment as they approach retirement. Find out more in our article Where is my pension invested?

Author: wpadmin

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