DH retiring in 5 years, pension falling down

[Sunrisingsunsetting]

Posting to get advice. Not sure if there is anything DH can do about it? His pension has dropped 50k with the market uncertainty Trump is creating

Mine is probably dropping too but it is small and I got longer to retire.

DH is 59 and I am 52.

Goodness that's a lot!

You have 5 years. Now is not the time to worry.

Markets tend to recover with 6 months after all the big crashes I’ve read

Just ride it out. It’s market turbulence, that’s all, and the market will have corrected itself within 5 years.

5yrs is time to recover and a properly managed pension fund should ‘de-risk’ before retirement so less susceptible to market volatility. Really it should have been de-risked by now. All he can do is check retirement age is correct if managed by a company/provider and take financial advice if managing it himself.

Thank you all. I just advised him to better not to look at it; there is no much he can do; however is it worth it reducing contributions? And put the money towards mortgage? He will have to pay more taxes though.

Advice is usually to continue to contribute during the downs, it has good potential for growth!
Don't forget, you don't usually withdraw all your pension pot on day one of retirement, you typically just start to access it.
My DH and I retired 2 years ago and haven't started drawing on the DC pot yet, so far we are living off a DB pension, annuity and redundancy payment. Drawing on the DC pot was planned to be the last funding vehicle (but changes to IHT may now change that).

I’m due to retire in July and have a small pension I was going to start drawing down until I get my state pension in 3 years. My pension has dropped £7000 in the last week so a lot less than your DH but still a shock. I’m reassuring myself that I will only be drawing approx £15000 each year and the rest will stay invested and will hopefully recover a bit. It’s taken me ages to decide to finally retire and hand in my notice at work and I don’t want to have to rescind it. I’m trying to stay positive but it is a worry.

£50k is a lot but what percentage is that?

Stocks fluctuate all the time, they’re a long term ride. However the nearer you are to retirement the risk and objectives should change given you’ll be drawing them soon.

About 12%; he is with Royal London, must be a high risk investments? No idea how it works

My DH retired two weeks ago and his pension has tanked. Nothing we can do about it except sit tight and hope it recovers.

It’s down a lot because it’s a big pension. It’ll go up again and 5 years should be plenty of time.

He needs to think about what he’s going to do at retirement and to what extent he should be derisking now. (Well, not now but when things are more normal.)

Mines gone down by £20000 - horrible watching it and I need to stop looking. Fucking Trump. Will obviously ride it out and Im sure it will recover but I hope rots.

There are millions in the same boat! DH has 2 DC pensions and his pot was nearing the previous LTA figure. He’s 55 and still working FT with plans to retire by 60. To date, his total is down £143k 😥 equating to approx 14%! I’m not looking at mine this week although we have both taken mitigating action (imo) a few weeks ago with our general investments. He sold some stock to increase his cash position whereas I have sold US tech stock to buy into defence/metals. I consolidated losses back in March 2020 but this time round, I’m in buying mode (on a small scale in my S&S ISA).

Received wisdom is that this is a good time to invest, as prices are low.

It is crazy. Let’s hope things improve. Apart from saving on it we don’t do much. Royal Londons manage it. Same with mine.

5 years to retirement is a long time. Whilst no one can tell you for sure whether the stockmarket will be higher or lower in 2030 than today, what we do know is that it generally goes up in the long term, and panicking when his retirement is 5 years time is unlikely to be wise. If he were retiring in 5 DAYS then maybe it's pause for thought.

As for reducing contributions ... surely contributions now are effectively like buying in a 15% off sale relative to contributions made last week? Again I can't advise whether he should pay pension contributions or mortgage overpayments - there are far too many variables to know which is better - but certainly a FALL in price of shares seems more of a reason to buy more not buy less, so if that's the only reason making him waiver it doesn't seem a particularly good one?

Ironically, DH & I were starting to think that we should be splurging more because of the IHT changes. However, global stock market turmoil have caused our DC pensions to plunge up to 15% so far which equates to a 2 yr delay to our retirement plans! Yeah, I know it’s a first world problem….

Leave it. Market will eventually recover.

is it in a sipp?

I’m a professional in this area. For anyone in this situation, my advice is:

Don’t look. Don’t log on. Continue to contribute as normal. Don’t change your plans. Don’t worry.

No, he should just keep doing what he is doing. Reducing would be daft. Did he panic and reduce payments when covid hit or during the 2008 crash or any of the many other events that caused the stock market to fall?
Why would he give up free money in the form of tax relief and possibly employer contributions?

My husband retired 4 weeks ago. "Luckily" we crystallised his 25% tax free just before this shit show. His remaining pension has like everyone else's, absolutely tanked, I mean it is terrifying how much it has decreased in a few weeks. And we have no choice but to withdraw soon as the majority of the 25% is to pay off some of our mortgage and we obviously also need to have an income. If you have a few years to go, I agree with the previous pp, don't log on, don't update your spreadsheet, don't panic. This too will pass.

No one who is coming up to an immovable deadline should be investing money in risks S&S that they can't afford to lose. Once you get to 3-5 years away from retirement you should be moving your pension funds into a cautious portfolio.

Unless you need the money next week - don't look!

If youn intend to retire at 55/60 and you are going to put your DC pension into drawdown then it would be foolish to go too cautious with your portfolio IMO. I've modelled mine out to100, which means I will be drawing it down for roughly twice as long as I was contributing. That's a lot of equity growth to miss out on! Instead, I have 5 years spending in cash or cash equivalents (to ride out any downturns) and have left my pension invested in equities in the same proportion as I did when employed.

Having retired last year mind you I didn't expect to nees the buffer quite as soon 😂Though, having put the current situation through my model I still expect to be a lot better off under my approach than a more cautious one, even if this takes 5 years to unwind and is then repeated

Everyone has different risk profiles. Yes, drawdown changes matters, but the more your draw down the more you need to think about the risk profile of the remaining funds.

No one should be wailing about massive S&S losses the day before they need to crystalise.