Pension Investment Risk for Over 50s: How to Balance Growth & Safety

Key Takeaways:

• 76% of over-50s say risk is their top pension concern as retirement nears.

• De-risking too early may limit growth, while waiting too long risks market downturns.

• Annuity buyers should reduce risk, while drawdown investors may need equities for long-term growth.

• Life expectancy underestimation is a major risk—many retirees need portfolios to last 30+ years.

Should You De-Risk Your Pension in Your 50s?

New research from Standard Life reveals that three-quarters of over-50s consider risk their biggest pension concern. With market volatility from global trade tensions and economic uncertainty, those nearing retirement must decide: Should they reduce investment risk or stay invested for growth?

The De-Risking Dilemma

• 41% of over-50s expect to lower risk as retirement approaches.

• Too early? Miss out on crucial growth needed for a 30-year retirement.

• Too late? Risk drawing down in a falling market, shrinking your pension.

Claire Altman of Standard Life warns:

“Recent market swings show how vulnerable pension savings can be—especially for those already withdrawing. Major losses could derail retirement plans.”

Old Rules vs. Modern Retirement Strategies

Traditionally, investors were told to “own your age in bonds”—meaning a 50-year-old would have 50% in bonds. But pension freedoms (2015) changed the game:

✔ Most now use drawdown (keeping funds invested) rather than buying annuities.
✔ Annuity sales are rising due to better rates—ideal for those wanting guaranteed income.

Jason Hollands of Evelyn Partners explains:

“If you plan to buy an annuity, de-risking before retirement makes sense. A market crash could slash the capital needed to secure a good rate.”

How to Balance Risk & Growth

1. If Using Drawdown:

• Stay partly invested in equities to combat inflation.

• Gradual withdrawals help sustain funds longer.

• Consider taking tax-free lump sum in stages to keep more invested.

2. If Buying an Annuity:

• Shift to lower-risk assets (bonds, cash) 1-3 years before purchase.

• Lock in higher gilt yields for better annuity rates.

3. Avoid Underestimating Longevity

Ollie Saiman of Six Degrees Wealth warns:

*”Many, especially women, underestimate life expectancy by 10+ years. Over-cautious investing increases the risk of running out of money later.”*

Sample Portfolio for Over-50s

While risk tolerance varies, a balanced approach might include:

Final Tips

✅ Review risk tolerance—don’t de-risk too soon if you need growth.
✅ Diversify—mix equities, bonds, and cash for resilience.
✅ Consider phased retirement—supplement income with part-time work to reduce withdrawals.

Bottom Line: There’s no one-size-fits-all answer—align your pension strategy with your retirement income plan to avoid unnecessary risk or missed growth.