How to keep building your retirement plan in 2020

By December 4, 2020 No Comments

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.

COVID-19 has overshadowed almost all aspects of life in 2020 – including retirement planning. How might the pandemic affect your plans (and ability) to retire, especially for those looking to start accessing their pension savings within the next 12 years? Undeniably, events this year have presented additional challenges to these people. These will need to be carefully looked at with the help of an experienced financial planner to ensure your retirement plan stays on track.

In this article, our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire will share some thoughts on how to keep building your retirement plan – even in light of the impact of COVID-19 on investments (such as those in pension funds). 

We hope you find this content useful. If you’d like to speak to an independent financial adviser then you can reach us via:

T: 01282 772938



The pandemic & changed retirement dates

COVID-19 had a terrible impact on stock markets – and pension funds invested in them – earlier in 2020. In March, for instance, when equities began reacting to national lockdowns, pension funds fell by an average of 15%. A pension pot of £300,000, therefore, might have shrunk by as much as £45,000 in the first quarter. For many people, the effects of COVID-19 have led them to consider delaying retirement to allow time for their investments to recover. One study hints that at least 1.5m workers aged over 50 are now pondering this decision.

Others, however, felt pressure in the opposite direction as the resulting UK recession took its toll on jobs, businesses and economic growth. Workers approaching age 65 have been particularly badly affected, since many who have lost work believe it is too difficult to find new employment in the current labour market. Indeed, the ONS reports that the number of people under 65 who describe themselves as “retired” rose by 55,000 after the UK went into lockdown. The problem, however, is that many people are retiring with less retirement savings than they wanted – or, in the worst cases, without enough to cover their expenses in retirement.


Putting aspirations first

For those still yet to retire, it may still be possible to achieve your goals. The important thing is to put your aspirations at the forefront of your mind, and to figure out from that point how to realise them. COVID-19 may have affected these two areas, but the manner and severity will depend on the specific financial goal – and where your pension is invested. Most balanced portfolios will not just be invested in stocks (equities) if the owner is approaching retirement. Other, “safer” assets such as UK government bonds should help mitigate the damage from market volatility.

How, then, can older workers keep their retirement plan on track? Here are some ideas:

  1. Avoid impulsive financial choices. Whilst events surrounding the pandemic might appear to move very quickly (e.g. new lockdown restrictions), it’s important to not rush into big financial decisions which you may regret later. For instance, it might be tempting to want to sell your equity positions in your portfolio in light of alarmist headlines about falls in stock market values. Yet all this is likely to achieve is a crystallisation of your losses. If, instead, you stay in the market and ride through the volatility, there is a good chance that your investments will eventually recover.
  2. Keep contributing. COVID-19 has brought extra financial pressures on households across the UK. In an attempt to ease this, it may be tempting to cut or even stop all of your pension contributions. Yet this is almost certainly a mistake. If you can afford to keep putting money into your retirement savings, then we encourage you to keep doing so. Stopping or lowering your contributions could hurt your quality of retirement later.
  3. Check your portfolio balance. At the time of writing in December 2020, many leading indices (e.g. the FTSE 100 and S&P 500) are tentatively recovering. Whilst it is rarely a good idea to tinker regularly with your portfolio, the end of the year can be a good time to check where your capital is invested and speak to your adviser about whether it may be possible to diversify more effectively and appropriately in line with your risk tolerance.
  4. Be wary of your 25% tax-free withdrawal. Under current pension rules in 2020, you are allowed to withdraw up to 25% of the value of your defined contribution pension(s) once you reach age 55. Withdrawing money from your pension(s) may not be too harmful to your nest egg if retirement is still a long way off. For those looking to retire soon, on the other hand, this could disproportionately affect the sustainability of your pension(s) – since you’d likely need to sell off more assets to achieve the same income that you may have wanted in 2019.



If you are interested in starting a conversation about your own financial plan or investments then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire. 

Reach us via: 

T: 01282 772938