Dan Kemp is head of investment consulting and portfolio management, EMEA, Morningstar. He shared these views on post retirement on Morningstar’s U.K. website.
Plan through retirement, not for retirement
Retirement these days is becoming a much looser definition. Seldom do people just stop work and start drawing a pension. We have to remember that when we are thinking about a post-retirement pot, it really came from a pre-retirement pot.
So one has to really think about planning through retirement, not to retirement and then starting again.
At Morningstar we have done a huge amount of work on the subject looking at the idea of human capital and how that changes through time and really planning not just for retirement, but through retirement and taking your whole life circumstance into account.
No generalisations
Retirement is an incredibly complicated time with different source of incomes coming from lots of different places at different times. This means that every investor’s requirements will be different.
Post retirement does not mean that an individual’s risk appetite has completely changed. We can't assume that all people post-retirement are cautious or aggressive or rich or poor, it's about finding that mix investment strategies that's right for you.
Keep life expectancy in mind
One must remember that life expectancy has gotten much longer. People are no longer just investing for 5 or 10 years, they might be investing for 30, and even 40 years, in some cases. So it's important to have some long duration assets like equities, as well as shorter duration bonds and cash.
Don’t forget tax
Beyond that, people should also think about tax. So in the background you should be always thinking about the most tax efficient way of investing the money.
