Retiring in a market storm

It’s been a turbulent time for global markets, with headlines dominated once again by political uncertainty in the United States. As Donald Trump edged back into the spotlight, the resulting volatility in global markets created concern for investors everywhere, including those with UK pensions, and this concern shows little sign of abating anytime soon.

While what happens in US politics may seem far removed from your pension pot, global markets are of course interconnected. A shake-up in the US with the war on tariffs, whether economic or political, has rippled across global stock markets, including those that your pension may be invested in. It’s little wonder that those who are retired, nearing retirement, or even still building a retirement savings pot, are concerned, so it's worth understanding what market volatility could mean for you and what you can do to protect your long-term financial stability.

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For those recently retired: keeping your drawdown plan sustainable

If you’ve retired in the past five years and are relying on drawdown of your pension to provide income, stock market turbulence could present real challenges. When investment values fall and you’re withdrawing from your pension at the same time, you may be forced to sell more units to generate the same level of income. This can quickly erode the long-term sustainability of your pension fund, particularly if markets take time to recover.

One of the most practical ways to guard against this is to ensure you have a cash buffer in place. Rather than drawing from your pension when markets are down, using cash savings to cover income needs can help protect the value of your pension and give your investments time to recover. This is known as sequencing risk.  We generally recommend clients hold between three to five years’ worth of “uncovered expenditure” in cash. This refers to the gap between your annual spending and any secure income you may receive from sources like the State Pension or annuities. Having this buffer not only preserves your pension during downturns but also gives you peace of mind and flexibility in uncertain times.

For those on the cusp of retirement: review, don’t react

If you're planning to retire in the next year or so, recent market instability can be especially unsettling. You might be questioning whether your savings will stretch far enough or even wondering if you need to delay your retirement. These concerns are completely valid, but the most important thing to avoid is making knee-jerk decisions based on short-term market moves.

Rather than reacting emotionally, take this opportunity to review your retirement plan. Assess whether your goals remain achievable given the current market backdrop. We use cashflow modelling to help clients understand how their financial future might look under different economic scenarios. This kind of planning is useful not only during turbulent periods, but also when other life circumstances change, such as spending needs or health considerations.

Continuing to contribute to your pension, if possible, remains a smart move. Despite market dips, pensions are still one of the most tax-efficient ways to save. Higher-rate taxpayers, for example, benefit significantly from tax relief, which helps boost long-term returns. Ongoing contributions also allow you to benefit from pound-cost averaging, helping you buy investments at lower prices when markets fall. Over time, this can enhance the overall value of your pension pot.

It’s also a good idea to review your pension’s investment strategy to ensure it aligns with your changing timeline and appetite for risk. For some, this may mean reducing exposure to riskier assets. For others, especially those with longer-term plans, staying invested in growth assets may still make sense. Either way, professional financial advice can help clarify your options and ensure any changes are based on sound financial reasoning, not short-term fear.

For those around 10 years away: stay focused on the long game

If you’re still a decade or more away from retirement, your pension remains in the accumulation phase, and time is very much on your side. While short-term market downturns can feel unnerving, they’re less likely to have a lasting impact on your long-term retirement goals. The key message for this group is simple: avoid panicking and stay invested.

That said, now is a good time to check the specifics of how your pension is managed, especially if you’re in a lifestyle fund. These funds typically begin to switch from equities to lower-risk assets like bonds in the 10 to 15 years before your target retirement date. While the principle is sound, the automatic nature of this switching process can be problematic if it coincides with a market dip. You could end up selling equities at a loss – not because it’s the right financial decision, but because that’s how the fund is structured.

Understanding when your lifestyle fund begins this transition, and whether the retirement age it targets aligns with your actual retirement plans, is essential. If there’s a mismatch, it may be time to take control and ensure the fund’s timeline matches your own. The same goes for those using Self-Invested Personal Pensions (Sipps), where greater flexibility means greater responsibility. Now could be a good time to reassess your asset mix and make sure it remains appropriate for your long-term goals.

Even though this group is less immediately exposed to market volatility, making the right decisions now can make a big difference in the future. Whether it’s tweaking your investment strategy, increasing contributions, or just ensuring your retirement date is correctly reflected in your fund choices, these actions can help keep your pension on track.

Why advice matters more than ever

Political and economic uncertainty is nothing new, but periods of heightened instability, such as the one we’re currently witnessing, highlight just how important it is to have a robust financial plan in place. Regardless of where you are on your retirement journey, taking a step back to review your situation, rather than rushing into changes, is key.

For many, the support of a professional financial planner can make all the difference. We can help you assess your position, model different retirement outcomes, and ensure you’re making informed decisions that protect and grow your wealth over time. At a time when the headlines can feel overwhelming, having expert guidance tailored to your circumstances can provide much-needed clarity and confidence.

If you’re unsure how recent market movements might affect your retirement plans, or if you simply want to make sure you’re on the right path, now may be the ideal time to get in touch.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.  Your pension income could also be affected by the interest rates at the time you take your benefits

Past performance is not a guide to future returns.

The Financial Conduct Authority (FCA) does not regulate tax advice and cashflow modelling.