The five financial risks retirees face in 2019
If your retirement is on the not-too-distant horizon, it's important to be aware of risks which could affect your cash pots. Seeking help can make a huge difference. The free guidance body Pension Wise can help over-50s to understand their options. As well as this, people may also want to pay for financial advice, which can help them to take advantage of, as well as be protected from, prevailing market conditions.
Matt Taylor, senior wealth planner at Sanlam, highlights some potential risks to consider as 2019 unfolds:
1. Inflation
If pension savings are not sufficiently invested for growth, inflation can eat away at a pensioner's income in real terms, leaving them poorer as the years go on. For people in their early years of retirement, this can pose a very real threat to the lifestyle they're able to afford.
2. Possible increases in interest rates
For pensioners with a large amount of cash savings, the potential for rising interest rates may sound like a blessing, but the reality in terms of savers feeling the benefit could be somewhat different. With debt in retirement on the increase, rising interest rates could also prove a major setback to retirement wealth.
3. Stock market volatility
Markets are may experience volatility - and it can be tempting for pensioners to "disinvest" their savings in such conditions - an understandable reaction to volatility when sustaining financial loss becomes a tangible threat to their income. But having too much money in cash can also prove risky, when savings fail to keep pace with inflation.
4. A stagnant property market in some areas
Many pensioners rely on property income and growth to fund their retirement. While property can prove to be a good bet over the longer term, current market conditions remind us that nothing can be taken for granted.
5. Increased reliance on the 'bank of mum and dad'
New retirees are finding it more and more difficult to shake off the financial dependency of their children, which could also affect their own plans.