Where to Invest in Retirement: Building a Strategy That Works for You

Retirement marks a significant shift in financial priorities. The focus moves from accumulating wealth to preserving it, generating income, and ensuring long-term sustainability. But with so many investment options available, how do you decide where to invest in retirement?

You can find out more in the latest Retire Well episode below, or keep reading for more insights.

The answer lies in understanding your goals, risk tolerance, and time horizon. Let’s explore the key considerations that can help shape a retirement investment strategy tailored to your needs.

1. Define Your Retirement Goals

Before choosing investments, it’s essential to clarify what you want your money to achieve. Are you aiming for:

• Income generation to support day-to-day living?

• Growth to outpace inflation and extend the longevity of your funds?

• Legacy planning to pass wealth to future generations?

Each goal influences the type of investment strategy you should consider.  

“It’s about understanding your goals… not just your pensions or investment.”

2. Understand and Manage Risk

Risk in retirement isn’t just about market volatility—it’s about how that volatility affects your ability to draw income. One concept to be aware of is sequencing risk, which occurs when you withdraw funds during a market downturn, potentially locking in losses.

To manage this, consider strategies like:

• Diversification across asset classes (equities, bonds, cash, property, alternatives)

• Bucketing strategies, where short-term income needs are held in low-risk assets like cash, while longer-term funds remain invested for growth

• Multi-asset funds that automatically adjust allocations based on market conditions

“Even someone who falls is comfortable with high-risk investments… if they’re taking a regular income, they want to have an element of security.”

3. Choose the Right Underlying Investments and Tax Wrappers

When deciding where to invest in retirement, consider both the type of assets and the tax wrappers they’re held in:

• Equities offer growth potential but come with volatility

• Bonds and cash in theory can help to provide stability and income

• Property and alternatives can add diversification

Tax-efficient wrappers like ISAs and pensions can enhance returns by minimizing tax liabilities. For example, pensions grow free of capital gains tax, but withdrawals may be taxed as income. ISAs, on the other hand, offer tax-free growth and withdrawals.

4. Active vs. Passive Investing

The debate between active and passive investing continues. Passive funds track market indices and offer low fees, while active funds aim to outperform the market through strategic decisions.

There’s no one-size-fits-all answer. A balanced approach may be best: “You don’t buy the cheapest parachute,” one advisor quipped, highlighting the importance of quality and context in investment decisions.

5. Behavioural Coaching and Long-Term Planning

Investing in retirement isn’t just technical—it’s emotional. Market downturns can trigger anxiety and impulsive decisions. Having a long-term plan and professional guidance can help you stay the course.

“Volatility is okay because we’ve got a plan, that’s going to last their life expectancy”.

Final Thoughts

Knowing where to invest in retirement starts with understanding yourself—your goals, your comfort with risk, and your financial landscape. Whether you’re just entering retirement or reassessing your strategy, the key is to align your investments with your life objectives and stay flexible as circumstances evolve.

If you're unsure where to begin, speaking with a financial adviser can help you build a plan that’s not only technically sound but emotionally sustainable.

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