Finance
In this feature Paul Brady Dip PFS a partner in
St James Place Wealth management takes a look at
planning for retirement
My son is in his early 30’s and believes he is still too young
to be thinking about retirement planning. How can I
encourage him to start saving as early as possible?
Last year global markets behaved as unpredictably as ever. Bond yields fell to historic lows and equities jumped
from fear to hope in short order, often driven by unforeseen political events.
It was the latest reminder that, over the past three decades, stocks and bonds have not behaved as
traditionally expected, creating significant challenges for members and trustees of Defined Benefit (DB, “Final
salary”) pension schemes alike. Increasing lifespans and rising inflation have made such schemes far more
expensive to run many companies have had to close them.
As a result, a major shift in power has been underway. As more DB schemes have closed, so the responsibility
for generating a retirement income has passed to individuals. Where companies once faced the challenge of
working out how to fund their employees’ retirement years, the onus is increasingly on those employees ensuring
that they have made adequate provision for retirement.
Whether you are the trustee of a pension scheme or an individual investing to secure your own financial health
in retirement, it is important to develop a retirement funding strategy as early as possible.
The strategy should be split into three stages. The beginning requires a ‘save and invest’ strategy; the middle
stage calls for a ‘grow and protect’ strategy; and the end stage focus should be on ‘income and protection’.
At each stage, it is important to understand what you are trying to achieve, the investment risk you can afford
to take, and how much you need to save in order to reach your goal. With that in mind, there are three simple
steps to help you succeed in your aims.
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