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In the latest episode of the Retire Well podcast, advisers Matthew and Joe explore what “low-risk” investing really means for retirees. While many associate risk solely with market volatility, the conversation reveals a broader landscape, including inflation, longevity, and liquidity risks.
“When most people talk about risk, they’re probably talking about the volatility of investments—the ups and downs of the market.”
But retirement planning requires a wider lens. Inflation can quietly erode purchasing power, and longevity risk (outliving your savings) is a growing concern. The advisers emphasise that understanding these risks is key to building a resilient financial plan which could be a more significant risk than market volatility.
Cash savings accounts are often seen as the safest option, but they come with limitations, particularly that cash will not outperform inflation over the longer term.
“Cash at that point is the comfort blanket… For some, it’s psychological rather than financial.”
Matthew and Joe discussed how much cash is right to hold, emphasising that this is personal choice and some people may feel like they need more than others to feel safe.
Large cash balances may also have their own issues. The FSCS protection limit of £85,000 per banking license means savers need to be strategic about where they hold their money, also highlighting temporary protections for large inflows, such as inheritances, and the importance of balancing liquidity with long-term growth.
National Savings & Investments (NS&I) products like Premium Bonds and British Savings Bonds offer secure, government-backed options which may help diversify your cash holdings.
Premium Bonds, which are limited to £50,000 per person can add a fun twist with monthly prize draws instead of a fixed interest, while British savings bonds provide fixed returns without falling under the FSCS cap.
For those willing to take on a little more risk, multi-asset funds offer diversification across equities, bonds, and alternatives. These portfolios aim to outperform inflation while managing volatility.
Annuities, on the other hand, provide guaranteed income for life - ideal for covering essential expenses. The episode also touches on purchase life annuities, which allow individuals to convert cash into income outside of a pension.
Low-risk investing isn’t one-size-fits-all. It’s about understanding your personal goals, time horizon, and tolerance for risk. Whether it’s holding cash, using NS&I products, investing in multi-asset funds, or purchasing an annuity, the right mix depends on your unique financial picture.
As Joe and Matthew emphasise, the best approach often involves a blend of options - balancing security, flexibility, and growth potential.
If you want a better view of what your future could be, we'll have a chat and work out if we make a good fit for you and your financial picture.
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