Sunniva Kolostyak: Welcome to Morningstar's personal finance minutes. In this episode, we're looking at the role of stocks in your portfolio after you've retired.
Investing in stocks in retirement is all about one thing – making your savings last. For most people, the days of investing purely in fixed income products are long gone, and the need to keep accumulating savings even after you stop working is growing. We are living longer, our retirement period is longer, and as a result, maintaining living standards is getting harder. So, let's look at an example.
A purse of £60,000 to supplement your pension could last you 10 years if you spend £500 a month but you don't invest anything. But if this was invested with a 5% interest rate, it could last you another five years. So, in theory, it makes a lot of sense for retirees to increase equity exposure. But retirement is also about reducing risk, and you should still be able to sleep at night. Whether or not you invest through retirement depends on your own needs and risk appetite.
For Morningstar, I'm Sunniva Kolostyak.