Think of your money like a road trip. In the early years, you’re filling the boot, checking the map, and making sure you’ve packed enough for the journey ahead. This is the “savings stage” - you’re working, saving, and letting your investments grow, hoping the magic of compounding will do its job.

Then comes retirement. Suddenly, you’re driving the car and using what you’ve packed. This is the “spending stage”, and it can feel like a big change after decades of careful planning.

On this journey, there are two major bumps in the road - one that people worry about too much, and another that doesn’t get nearly enough attention.

Fear #1: The Market Rollercoaster

We’ve all felt it - the car hits a pothole, and your stomach drops. In investing terms, that pothole is volatility - the market going up and down, sometimes sharply, sometimes without warning.

For retirees, the worry is real: “What if I have to sell investments at a loss just to cover living costs?”

The good news? Potholes are normal. Markets rarely go straight up, but over the long term, they generally move forward.

It’s a factor that needs to be considered, but it can be planned for. Simply keeping a cash cushion for rough patches allows retirees to draw income during market downturns. Think of it like having a spare tyre - you hope you won't need it, but if you do, it keeps you on the road and on track.

Look, volatility is uncomfortable, but it’s manageable - and it’s rarely the biggest risk in retirement.

Fear #2: Outliving Your Money

The bigger risk is living too long.

Thanks to advances in healthcare and healthier lifestyles, people are living longer than ever. Imagine planning for a 15-year journey, only to discover you need enough supplies for 30 years. A retired couple today has about a one-in-three chance that one of them will reach 95. That’s decades of living costs, medical care, and unexpected expenses that need to be covered.

Many retirees underestimate this risk. They worry more about potholes than running out of fuel mid-journey.

The solution is to create an income plan that grows over time and keeps pace with inflation. That sometimes means putting short-term worries - like market dips - aside, so your money can last as long as you do.

Adapting to a Changing Road

Longer lifespans are changing retirement planning. If you’re still saving, you may need to put a bit more aside than you originally thought. If you’re retired, your strategy might need to shift from avoiding market dips to planning for a long, steady ride.

So what’s the key takeaway? Financial planning isn’t a sprint. Regular reviews, careful planning, and a clear view of your real risks are what ensure lasting progress.

With the right plan, you can enjoy retirement without constantly worrying about running out of money - or letting short-term bumps dictate your path.

After all, your future self deserves to enjoy the ride. 🩷

Disclaimer Time:

The content of this blog is for general information purposes only and does not constitute financial advice. It is not tailored to your individual circumstances. Before making any decisions about your finances, investments, pensions, or retirement planning, you should seek advice from a qualified financial adviser. Past performance is not a reliable indicator of future results, and the value of investments can go down as well as up.