The latest T. Rowe Price Global Retirement Savers Survey found that 57% of UK savers say they are already contributing everything they can afford to their workplace pension. Yet despite making these contributions, almost half (44%) remain unsure whether they’ll have enough to enjoy a comfortable retirement*.
It’s an understandable concern. The cost of living remains high, mortgages are more expensive than they were a few years ago, and many households are trying to juggle several financial goals at once. Building an emergency fund, paying off debt and saving for children’s education are all competing for the same pot of money.
The result? Retirement often becomes the financial goal that’s easiest to postpone.
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.
The biggest challenge isn’t always investing
Many people assume successful retirement investing is about picking the perfect fund or predicting which market will perform best over the next decade. In reality, the biggest hurdle is often simply staying invested.
Time is one of the most valuable assets an investor has, thanks to the power of compounding. Even relatively small monthly contributions can build into substantial sums over several decades.
Of course, increasing pension contributions isn’t always possible. If you’re already contributing as much as your budget allows, focus on making the most of what you can control: remaining invested, reviewing your pension regularly and increasing contributions whenever your circumstances improve. Even a 1% increase following a pay rise can make a meaningful difference over the long term.
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Building a portfolio for retirement
For younger investors, a well-designed default strategy can be particularly effective. With decades until retirement, the focus is typically on long-term growth, allowing portfolios to take advantage of the higher return potential offered by equities.
One example is the Pinnacle Life Cycle Global Equity Select fund. The fund provides broad global equity exposure, investing across developed and emerging markets. This diversified approach aims to capture long-term global growth while removing much of the complexity involved in building a portfolio yourself.
Of course, as retirement approaches, however, priorities begin to change. While growing your pension remains important, protecting what you’ve already accumulated becomes increasingly valuable. A significant market fall shortly before retirement can have a much greater impact than one experienced 30 years earlier.
Equity income funds can play an important role here. Rather than focusing purely on companies with the fastest earnings growth, they invest in established businesses capable of paying sustainable dividends. The Aegon Global Equity Income fund is an example of this approach. It invests in high-quality companies from around the world with the potential to grow their dividends over time, seeking to provide investors with both capital growth and a rising income stream.
For much of the previous decade, low yields meant bonds offered relatively little income. Today, however, higher yields mean they are once again providing attractive levels of income while continuing to play their traditional role of helping diversify a portfolio.
The BlackRock Corporate Bond fund offers diversified exposure to investment-grade corporate bonds issued by financially strong companies. For investors approaching retirement, or those already drawing an income, it can provide an additional layer of diversification alongside equity investments.
Every retirement is unique
There is no single solution that fits everyone. The important thing is to regularly review whether your pension remains aligned with your goals, your time horizon and your attitude to risk. Retirement saving isn’t about finding a perfect investment or trying to time markets. It’s about consistently putting money aside where possible, allowing it time to grow and making sensible adjustments as your life evolves. While today’s financial pressures are real, staying focused on the long term remains one of the best ways to give yourself the greatest chance of a comfortable retirement.
