Introducing investing through the ages – in your fifties

With the mortgage paid off and the children out of the way your fifties may be a time of changing priorities.

You may no longer want – or need – to put quite so much effort into your career, and instead may be ready to start concentrating on enjoying life, not just now, but planning how you will do so in the future.

Certainly, it will be time to start focusing on the level of income you will need in retirement. Once you have a realistic income target you have time to ensure that your pension pot, and your other investments will provide it.

The traditional answer for accumulating wealth for the future – putting money into a savings account  – now means very poor returns. Low interest rates and steady inflation may mean that the real value of your saved cash will actually fall.

That can mean that making the most of investing needs to be a priority.

Your fifties are a time of consolidation. You may want to start pulling back on risk and making the most of the work your money has done for you over the last decades. It is time to re-evaluate your retirement plans as well as your portfolio, and to make sure you are on target – especially if you are considering early retirement

Your pension in your fifties

It is time to start looking at ways to secure your investment portfolio for the future, and to make the most of your pension pot.

Finalising your pension plans might be your main priority. You need to keep a close eye on the performance of your pension funds, and ensure that they are safe and secure, and capable of providing the kind of income you need for the lifestyle you want.

Remember, currently, you could be looking forward to retiring at just 55  if you wish to do so, but this is only a possibility if you have sufficient funds.

So, check the performance of your company pension scheme, and if you are thinking about retiring early, look at using a personal pension to work alongside your employer’s plan to help bring your retirement forward. Remember, as per tax year 2020/2021, you can make up to £40,000 of total contributions to your pensions each year (assuming you earn more than £40,000 each year).

Thanks to the very attractive tax relief provided by the government, it could be the most rewarding investment you ever make, and even a few years of saving into a personal pension now could make a big difference to your retirement plans.

Your other investments

Your priorities for your investments outside your pension may also be changing.

You will probably want to rebalance your portfolio to include investments with less risk than you did previously and it is important to review your investment objectives and attitude to risk.

With their tax-efficient status, a Stocks and Shares ISA may still be the foundation of your investments.

You can invest up to £20,000 (£40,000 as a couple) in ISAs each year (as per ISA Allowance for tax year 2020/2021) but there is no reason to limit your investments. If you have additional cash to save, there are plenty of other ways to use investments to make the most of them. We can help you select the funds and investments you need.

What should you do?

At Continuum we have prepared an infographic on the different ages of investment here. It shows how your needs and solutions may change through life. We are looking each stage in more detail in this series of articles – but remember, successful investment is about planning, and we can help you create the investment and pension plan that is right for you, whatever your age, and whatever your goals in life.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment or retirement strategy, you should seek independent financial advice before embarking on any course of action.

The value of investments can fall as well as rise and you may get back less than you invested.

Equity investments do not afford the same capital security as deposit accounts.

The Financial Conduct Authority does not regulate taxation advice.

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits.

Accessing pension benefits is not suitable for everyone. You should seek advice to understand your options at retirement.