A month into the war in Iran and retired people are feeling the pressure, which is coming from many directions. I put the question out to my Epic Retirement Club on Facebook: how are you faring? <\/p>\n
The responses came flooding in and they told a story of pragmatism tinged with genuine concern for what\u2019s going on and how the war might develop from here.<\/p>\n
The big pain points for those who are already in or on the brink of retirement are different from those affecting the rest of the population. That\u2019s particularly the case for those who had a big date in mind: the sequencing risk problem is real but is not really appreciated by those for whom a specific retirement day isn\u2019t looming.<\/p>\n
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If you\u2019re still accumulating, a market downturn is painful but there is time to recover. If, however, you\u2019ve stopped working and are drawing down to fund your living expenses, selling assets while prices are depressed damages your pot in a way that is not easy to undo.<\/p>\n
Your income doesn\u2019t rise with inflation if you do that and, without reversing your retirement decision, you cannot work extra hours to compensate for the money lost. If you had a retirement date circled on the calendar, the maths of whether you can actually afford to stop just got considerably more complicated.<\/p>\n
This quandary is shared by several people in the Epic Retirement Club. Kate was planning to retire at the end of August. \u201cEverything is so changeable right now that this may be at risk,\u201d she told me. \u201cI can always work a bit longer if required.\u201d<\/p>\n
Simon is down to his last days at work. He is retiring at 56, with his wife, and is watching nervously for signs of stagflation. Karen\u2019s husband, meanwhile, is due to retire in July and she is already planning to continue working for at least two more years to keep contributing to their Sipp. \u201cHoping we\u2019ll be OK,\u201d she wrote. \u201cIf not, I\u2019ll work longer. I\u2019m 55.\u201d<\/p>\n
Then there\u2019s Kathy*, whose situation captures something important about the gap between how retirement is supposed to work and how it is playing out. Her husband was made redundant two years ago and they\u2019ve been drawing down his modest pension pot to live on, supplemented by her part-time wages. She was planning to retire in about two and a half years. \u201cNow we are worried that his pension pot might run out before it has a chance to recover,\u201d she wrote. \u201cI am very stressed about it all.\u201d<\/p>\n
The volatile situation has highlighted the gap between those with defined contribution pensions, which depend on how much is paid in and the investment growth, and defined benefit pots, which pay a guaranteed income in retirement.<\/p>\n
Bini has a state pension increase coming next month under the triple lock, an NHS pension that will not be affected by market movements and savings in Isas. She is, by her own account, relatively insulated. Bob* is retiring this week, drawing on a defined benefit pension that just confirmed a 3.8 per cent inflation increase from April, with the state pension to follow in 2032. He says that he is broadly fine.<\/p>\n
For these people the war is an anxiety, not a crisis that\u2019s going to wipe out their retirement savings. For those relying on defined contribution pots, though, the picture is different. Since the start of the war, the FTSE 100 has fallen about 11 per cent and dropped below 10,000 for the first time since January, wiping out all its 2026 gains.<\/p>\n
Rick recently retired and handed his lump sum to a financial adviser. \u201cI can only presume I have lost money,\u201d he wrote. \u201cI\u2019m just guessing and I\u2019m not comfortable with that.\u201d Lis has watched the value of one of her pensions drop sharply and is leaving it where it is until it recovers. The patchwork of pots, gaps and guesswork that characterises retirement saving is harder to manage when markets are moving like this.<\/p>\n
But the number that matters most isn\u2019t the index fall, it\u2019s the interest rate reversal. Before the war, markets were pricing in rate cuts through 2026. That\u2019s now gone completely. Analysts are warning of up to four rate hikes instead, as the Bank of England tries to contain an inflation shock it didn\u2019t see coming.<\/p>\n
For anyone who was planning their retirement income around a falling rate environment, that\u2019s a significant shift in the ground beneath them. And then there\u2019s the cost of living, which was already causing havoc before any of this started. April will bring broadband increases, energy price rises and council tax hikes.<\/p>\n
As Kathy put it: \u201cReally concerned about the price hikes of basics over the next few months. Those have yet to trickle through.\u201d <\/p>\n
Karen described the cost of food, utilities and diesel as ridiculous. For people on fixed incomes with no salary growth to offset it, that slow creep is its own kind of squeeze. Nobody is going to tell you this is fine, because it isn\u2019t. But the people I heard from this week were mostly doing the right things instinctively.<\/p>\n
Don\u2019t make sudden moves with your pension pot. The worst thing you can do in a downturn is switch to cash and lock in losses at the bottom. Simon is sitting back and trusting the process. Kate is preparing herself to delay retirement, without catastrophising. Bob* is reconsidering an annuity but carefully, not reactively. That measured instinct is right.<\/p>\n
It is worth checking that your investment mix still matches your situation. Most funds offer a lifestyle investment strategy that relies on you to properly declare your target retirement date to manage your risk. If you haven\u2019t updated that lately, it might be worth a look. Just make sure any changes are driven by your situation and timeline, not by where markets are.<\/p>\n
If you have a cash buffer of one to two years of living expenses outside the market, you\u2019re in a far stronger position to ride this out without being forced to sell at depressed prices. If that buffer isn\u2019t there, building even a modest one should come before anything else.<\/p>\n
And if you were planning to retire this year, the most important thing is not to make a permanent decision based on where markets are today. Kate\u2019s instinct to keep her options open, to proceed but stay flexible, is exactly right. A few months either way can make a meaningful difference to the balance you retire on and the sequence of returns you experience in those critical first years.<\/p>\n
The state pension triple lock, Isas, defined benefit schemes: for those who have them, this moment is uncomfortable but manageable. For those piecing together a retirement from defined contribution pots and modest savings, it is much harder. But good preparation and a calm head are key.<\/p>\n
Simon put it best: trust the process, sit tight and don\u2019t let a bad month make a permanent decision for you.<\/p>\n
*Name has been changed<\/p>\n
Bec Wilson is Times Money\u2019s retirement columnist and the author of\u00a0How to Have an Epic Retirement<\/p>\n","protected":false},"excerpt":{"rendered":"A month into the war in Iran and retired people are feeling the pressure, which is coming from…\n","protected":false},"author":2,"featured_media":369187,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,85,46,266,267],"class_list":{"0":"post-369186","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-il","11":"tag-israel","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/369186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=369186"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/369186\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/369187"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=369186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=369186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=369186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}