How rising prices could affect your retirement

14 Sep 2022
Ed Monk, Fidelity International

Important information:

Inflation hurts all investors, but it’s those with an eye on retirement who may be the most concerned right now. This could be because you’ve seen the value of your retirement savings dip, or because the money you have invested in a retirement savings plan might soon be needed to secure a retirement income.

Here’s how inflation is having an impact on retirement plans in the short and long term, and some helpful tips on what you can do about it.

If you’re still saving

Those with some time to go before they retire may be looking on in horror as the value of their retirement savings moves downwards but, in reality, they have the least to fear from inflation. With time on their side, the price falls we’re seeing have time to potentially recover.

During uncertain times, feeling fearful could lead some people to make rushed decisions about their retirement savings, based on short-term circumstances. Some may think about selling or moving investments in the hope of minimising any loss, but this could have significant long-term consequences for their financial wellbeing and retirement, as it could mean missing out on any market bounce-backs.

So, it’s important to think carefully and not to make rushed decisions. If you’re unsure about what to do, think about speaking to an authorised financial adviser.

If you’re close to retirement

If retirement is part of your plan within the next few years, it’s crucial to reassess your retirement options to make sure they’re on track, factoring in the higher cost of living.

Deciding exactly how you plan to take retirement income is important because, ideally, your plans should allow you to cover the cost of essential spending with income that can rise as prices rise.

Where to find help

An authorised financial adviser can help support you with financial decisions from building wealth and savings, to creating an income in retirement. And they can also help with other financial decisions in situations such as bereavement, divorce and passing on wealth. So if you're nearing retirement, or just want some help, speak with an authorised financial adviser to give yourself peace of mind about your financial decisions.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser of your choice. The value of investments, and the income from them, can go down as well as up, so you may get back less than you invest.