Saving outside the pension

Albermarle

GazzaBloom said:

Rich1976 said:

GazzaBloom said:

The lifestyling point is spot on. There's a fella at my work who wants to retire early and has this switched on in his pension and has no idea what it's doing. I have taken the time to explain what is happening and that it's really designed for taking an annuity at the point of retirement. After I explain what an annuity is and that rates may drop if interest rates come back down a bit, he says that's not what he plans to do, fogs over and wanders off muttering that he needs to look into it…

He's rotting away in the Aviva default fund, with money being moved over to bonds funds, and, in my view will not have the growth he needs to sustain his required drawdown in retirement.

You really can't help some people.

But the average person doesn’t understand anything about any of that. So if he had stayed and listened to you where would you tell him he needs to be investing?

the vast majority of people are in lifestyle funds ( myself included) because how does Average Joe know or even begin to understand what they should be investing in from the hundreds of funds available to them through their workplace pension?

Self educate and take an interest would be a start. Our future financial life is important and basic concepts and understanding of how the main investment assets of equities, bonds, property/real estate, commodities and cash work with regards to historical returns within investment funds aren't difficult to understand. Nor is just taking enough interest to understand what the historical returns of the default fund you are in.

There is ample free information available at your finger tips, ignorance is no excuse for being unintentional with your retirement planning. This guy in question is a highly qualified professional, but didn't even show much interest in listening. 

If he had choses to ask I would have recommended turning life styling off and switch from the default fund to lower cost index fund with a higher percentage of equities. He didn't even know what the percentage fees he was paying.

Probably for someone with low knowledge, staying with lifestyling is maybe not such a bad idea, as long as they are in the right lifestyle approach.
Your colleague may not be in a lifestyle aimed at taking an annuity, they may be in one aimed at drawdown.
If they are in one aimed at an annuity, it will probably be easier to persuade them just to switch to a drawdown orientated one rather than anything more complicated. That way they may actually at least do something.