Fifties
This period should mark the beginning of the “wealth distribution” stage, where you look to enjoy your wealth and extract income from it, particularly if you are planning to retire relatively early.
“By now, you would hope the investments and strategies that were implemented many years ago are prime and ready to provide you with your much needed and deserved income in retirement. Retirement means different things to different people, but whatever your reality is, the careful planning, investments and strategies that were put in place are now serving their purpose,” said Mr Mistry.
This where more defensive investments come into their own, such as income-producing stocks or bonds. The popular £1.5bn City of London investment trust is packed with stocks that return money to investors and also has the ability to pay dividends out of its own reserves, for example.
Ms Morris said: “Many people use their 50s to continue earning and give their retirement savings a final boost. It is also time to start focusing on the level of income you will need in retirement. Once you have a realistic income target you can establish whether your pension pot will provide the income you need – and take action accordingly.”
Sixties and above
Once you reach your 60s retirement is likely to be in sight, which will affect how manage your investments. The focus should shift towards income and capital preservation rather than growth, according to Ms Morris.
If you are retired, you will probably need to access your money to pay for living expenses. This makes it more important that you do not suffer large sudden falls in its value.
A popular fund for those looking to protect their money is the £3bn RIT Capital Partners investment trust. The fund was set up to manage some of the Rothschild family’s money. It takes a “multi-asset” approach, spreading investments across assets ranging from property and gold to shares listed in emerging markets.
However, if you intend to keep much of your pension invested after you retire, continuing to take investment risk for longer will give it more of a chance to grow in your later years, Ms Morris added.
“You could be hit hard by any falls in the market, but if you are taking a long-term approach hopefully you will be able to ride out any losses in value,” said Ms Morris.