Imagine this: you save hard your entire life, putting money aside in the hopes of being able to enjoy a decent standard of living in retirement. By the time you reach your 60s, you have amassed a sizeable pot.
But a month before you’re due to stop working, a devastating crash cripples global stock markets. Shares across the world collapse by 30 per cent or more and that pension nest egg you have been carefully nurturing for decades is wiped out.
Worse still, how badly your pension pot is affected may come down to an investment strategy you didn’t even realise you’d signed up for.
In the Noughties, in a bid to avoid the devastating impact on people’s life savings that such a crash can cause, the pension industry came up with a plan.
“Lifestyling” is a strategy where the mix of investments in a pension starts to shift 10 to 15 years before a person’s planned retirement date.
