For all sorts of investors, these last few weeks have been a time of extreme anxiety and worry. Despite the ‘technical’ reassurances we get from market history, which shows us that an eventual (and often quite dramatic) reversion to positive returns is inevitable, it can still be very difficult to see beyond current losses and fears that they may be long term and terminal.
The group most affected by market losses of this scale are usually those, ironically, with the most cautious view of risk and often the largest amounts at risk – retirees. In recent years, as most people choose to move away from the Annuity income option presented at retirement and instead opt for the Approved Retirement Fund (ARF) approach, a new generation of long term investors has arrived to the market, often without sufficient guidance about ‘Bomb-Out Risk’ or understanding of what type of ‘Drawdown Strategy’ is appropriate, now and in general. With that in mind, the following is a short Q&A for ARF (and other pension) holders to explain what options you have.