If you’re worried about your pension investment account being affected during the Covid-19 outbreak, we understand your concerns. It’s true that almost every asset class around the world has been affected by the coronavirus pandemic. Businesses have stopped production completely, and people are being asked to stay home to stop the spread of the virus. This has never happened before to the world economy and the shock to global GDP will be like nothing we have seen before.
Why is that? Well, stock markets have seen dramatic volatility in recent weeks, being down between 10-20% so far from the highs less than two months ago. Most of the pensions policies – whether SIPP, IRA, 401k or investment savings accounts – are heavily linked to the performance of the world stock markets. Because of the recent plunge, pension values have dropped significantly. That translates to far less available funds to plan your retirement or have available if you are already retired.
We’re seeing many comparisons to the 2008 financial crash which was also a difficult time for those about to retire – with pensions being a sole source of income, protecting yours is in your best interest. Every crisis is different and it is important to understand how you will be affected, how long will the bear market last and what options are available to lower risk to your SIPP, IRA, 401k or Savings and investment accounts.
The first thing we would advise is that you don’t panic. If you are retired, or plan to retire soon, it’s vital that you don’t make any rash decisions with your investments such as withdrawing everything in one go or blindly moving to the next alternative without fully understanding what you are moving to or how will that investment perform for you long term. Will it provide enough income or growth to last through retirement?
Fear is definitely the primary reaction to a crisis like this, but it’s important to consult with an expert on your personal best course of action before making your next move.
What you really need in a time like this is full control and visibility over your pension, your plans, and your money itself. Make it a personal mission to educate yourself on what will happen to your pension and why, and what are your best options available.
Your current plan may be sufficient to ride out this crisis – but you may find that you’ll be financially better off by making an informed move to a different type of plan. Everyone and every circumstance is different and it’s crucial that you make the right decision for yourself and loved ones.
Give us a call today to arrange a discussion with one of our advisers who will talk you through your options and point you in the best direction.