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Making retirement savings last

In retirement, investors must balance their need to make withdrawals to live on whilst making sure they don’t run out of money.

Once you have retired, investing can be confusing. There are many variables to consider – life expectancy, the costs of goods and services you will need and interest rates available on accumulated savings are just a few.

If you don’t have enough income to pay your projected retirement expenses, or less surplus income than you expected, you could find yourself facing a very different retirement lifestyle than you envisaged or even working far longer than you intended.

Balancing investing alongside changing demands on income

After retirement, you will need to manage finding safe investments to protect your income while not being so safe that you risk running out of money. Fundamentally, when investing after retirement, you are speculating to accumulate with a pot of money that represents the main body of your financial wealth.

Once in the retirement stage though, retirees often find that their actual costs are lower than expected as many expenses which absorbed a significant amount of income during working years don’t exist during retirement.

Demands on a retiree’s income may have changed or even been eliminated. Even those who retire more gradually, for example by working part-time, the accompanying work related expenses may still be greatly reduced.

Depending on your life stage, taking into account whether you have children and their ages, you may also have finished paying education-related costs. Also, you are simply not having to save for retirement anymore.

Unexpected challenges of a longer life

It’s not a comfortable thought but, you also need to plan for the possibility that you may become disabled or incapacitated during retirement. In reality, increased life expectancy can lead to additional expenses for example the cost of long-term care.

There is a ‘rule of thumb’ that states you will need 70% of your pre-retirement income to maintain your lifestyle in retirement. In practice though, this rule may be too general. This level of income may be adequate for some, but other factors such as the number of your dependents, your levels of debt and your lifestyle aspirations can influence your needs significantly up or down.

Thinking ahead with regard risk

A ‘thinking ahead’ frame of mind is important in your retirement planning. Many retirees have had decades of experience at investing for growth and it can be difficult for them to tone down their appetite for risk when investing in retirement.

A properly diversified portfolio is key to maximising returns over a longer life whilst managing risk appropriately to avoid significant short-term losses. Retirees can take income from the conservative portion of their portfolios whilst allowing others to continue to grow.

 Of course, the risk of portfolio declines can’t be overlooked when investing in retirement but retirees also face the risk of running out of money in retirement. Even though inflation is low today, it’s essential for retirees to keep up with inflation. There is already pressure on the Bank of England to boost the economy and push inflation back to its 2% target and this pressure is expected to intensify.

Retiree investors who take an approach which includes equities throughout their saving years may also need to continue an element of this into retirement. Some retirees might need to moderate the impulse to seek safe investments by also incorporating some growth-oriented ones in their portfolio.


One of the most important aspects of successful investing in retirement is diversification. Whilst holding funds in cash may be suited to some retirees planning to draw down their entire pot over a short period, it is unlikely to be suited to someone planning to draw down their pot over a longer period.

It is important to diversify investments across a number of different assets which may help to reduce the risks of investing during this time of your life. By risk, we mean both that of losing money and that of experiencing volatile returns.

Get in touch

With the right strategy you can make sure your retirement savings last. Whether your retirement is still some time away, fast approaching or you are retired already it’s important to get a clear view of how you ensure your retirement savings last. Email enquiries@cowgills.co.uk and one of the team will be in touch to help you put together a bespoke wealth plan.


The value of investments and income from them may go down. You may not get back the original amount invested.

Wealth Management
Posted by Matthew Bromley
23rd July, 2020
Get in touch with Matthew Bromley