Age 40+

If you aged 40 +, now is a good time to review your pension investment strategy as you are almost half way to retirement.  Thats right, almost 45% of your working life is over!

We are all familiar with the statistics which state that  due to medical and lifestyle changes we are all living longer. Thats great news.  However longevity means that we also need bigger retirement funds to sustain us during our retirement.

You are now at the perfect age to give serious consideration to the value of your current fund and consider the steps you need to take to ensure an adequate retirement saving scheme is in place.

How much do I need to invest?

How much do I need to invest?

The simple answer is ‘as much as possible as soon as possible’.  The tax man will help you along the way with tax relief on your pension contribution.  The simple rule of thumb is to invest an amount equal to half your age.  Yes, half your age!  So if you are 40, then your contribution rate should be 20% of earnings.

Here is the tax relief table for your age profile:


30-  39     –  20% of earnings (net relevant earnings)

40 – 49     – 25%  of earnings

Because pensions are designed specifically for retirement, they offer a number of unique saving advantages.

  • The money you pay in benefits from tax relief of up to 41%.
  • You cannot access your savings until at least age 50, so no temptation to dip into them early.
    Your money grows in a tax efficient way as no capital gains tax applied to growth.

We’ve based these details on our understanding of current taxation law and practice. They might be affected by any future changes in legislation.

What range of funds can I choose from?

The range of investment options available to pension fund investors has increased dramatically in recent years.  In addition to the assets classes of property, shares, commodities (such as oil and gas) or fixed-interest funds we now have the choice of  Market Neutral, Currency and Multi-Asset funds.

You can choose which asset class / fund to invest within the range available from your provider.  Life companies now offer a range of funds to suit all investors and appetite for risk.

If you want to remove the risk of an active fund manager underperforming, then ‘indexed’ funds can be used which aim to track  the performance of particular stock markets eg eurostoxx 50, FTSE 100.

What amount of investment risk you are willing to take?

Depending on which fund or asset you invest in, its value can fall as well as rise over the period of investment. By choosing a low-risk investment, you are aiming to protect your initial investment but the potential for large gains is lower than if you choose a higher risk investment. Higher risk investments, such as company shares, do not protect your initial investment but you could gain significantly, especially over the long term. If you invest in these types of investments, or in equity-based funds, you should realise that, in wanting a higher return, you could lose some of the money you invest.

Think about how you feel about the risks associated with investing. Everyone’s situation is different, and everyone handles risk differently. With our help you can decide how much risk you are comfortable with.

How can we help?

At Future we work with our clients over a period of time to help them plan for their retirement.  We carry out regular portfolio reviews to ensure client are getting up to date values on their pension investments.  As retirment approaches we advise on the most appropriate investment stategy.

For advice on Retirement Planning: Contact Future