Changes to pensions

dunroving

dunstonh wrote: »

Anyone making long term planning should be including some stock market element as the risks of being cash only can actually be higher over the long term. At 63, she is still young enough to have some stockmarket investments. However, these things are rarely 100% stockmarket. They are normally multi-asset. Certainly, both of those providers offer multi-asset options within them.

You won't get any disagreement from me on that viewpoint (I am personally invested in a variety of types, classes and locations of equities via my US and UK pensions and UK ISAs). I'm afraid convincing her of that viewpoint is difficult, and you really can't push someone to do something they just don't want to do.

If I convinced her to leave at least some in equities and the market threw a wobbler and her portfolio value went down, I think she'd be distraught.

All I can do is present her with her options and then when she makes the decision what to do, help her figure out how to do it.

I have various "dummies" type books but if anyone can recommend a "real dummies" guide that consists of a very brief rationale of why remaining in equities is a decent medium- to long-term investment, I'd be grateful. Anything more than a few pages or even remotely technical will have her eyes glazing over.

jamesd

Pensions can hold:

1. Cash on deposit. Not all pension offer this option and the interest rates are usually pitiful.
2. Money market funds. Not all pensions offer this option and at the moment the interest rates are pitiful

Neither of those has a significant chance of a significant drop in value - it was big news five years ago when one money market fund went down in value by a small amount.

It's possible to combine life insurance with deferring the state pension so that if she was to die before break even on deferring the insurance would ensure that her estate has at least the same value it has now. If she'll go for this it's probably the best way to look after her interests - she'll get the increased safe income with no chance of a drop in income and also the lack of a risk of her estate having less.

kidmugsy

jamesd wrote: »

It's possible to combine life insurance with deferring the state pension so that if she was to die before break even on deferring the insurance would ensure that her estate has at least the same value it has now. If she'll go for this it's probably the best way to look after her interests - she'll get the increased safe income with no chance of a drop in income and also the lack of a risk of her estate having less.

Bravo, jamesd: a suggestion that should both protect her interests and also let her sleep safely.

jamesd

I gave a worked example of the combination of deferring and insurance, probably worth a read.