Lifestyling is an investment option that you may be offered. It is designed to lock in investment growth as you near your retirement age.
Protecting investment growth
Lifestyling is designed to ‘lock in’ accumulated investment growth in your retirement pot as you get closer to your retirement date.
While some providers offer specific ‘lifestyle’ funds, others will have a lifestyle option that uses their mainstream funds to achieve the same process.
Lifestyling involves investing in riskier assets when you have a long period before drawing your retirement benefits. As you get closer to your retirement date, typically 5 to 10 years before, switching from these riskier assets into less risky ones, such as cash or fixed interest, that aren’t as likely to be affected if the investment markets were to fall sharply, helps to keep the investment growth, during the period up to your retirement.
Lifestyling may be suitable for you if you’re intending to purchase an annuity when you retire, to provide you with an income for the rest of your life. It’s unlikely to be suitable if you intend to keep your retirement pot invested and to use income drawdown to provide you with an income in retirement. This is because moving your pension fund to lower risk assets is likely to reduce the investment returns that you will receive.
If you decide to retire earlier or later than you originally stated and lifestyling is an option you wish to use, you should tell your pension provider. This means that they can make changes to the lifestyling schedule so that you don’t miss out.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.