Already taking your retirement benefits and there's a stock market crash?

Investing in shares (equities) is a long-term game and requires an acceptance that the value of your investment can go down in value, sometimes by quite a lot, as well as up. When falls occur, they are often fast and unexpected. 

To cope with market falls, you need to have plans in place before they happen. This short guide is for investors who are in their mid 50s or older, who have already started taking retirement benefits from their pension plans.  Its aim is to help them to manage their portfolios in the event of market turmoil.

When you might need to take action

If your pension is invested in shares, you might need to take swift action in the event of a market crash to help reduce the impact it can have on the value of your investments. If you have stopped working, you will no longer have a source of earned income from which to save a bit more.

You may have a number of sources of retirement income such as state pension and defined benefit pensions, both of which should be unaffected (as far as you are concerned) by a fall in share prices. Also, if you have chosen to take your retirement benefits in the form of an annuity, you may find that, depending on the type of annuity you chose, that your income isn't affected at all.

However, if you have a money purchase pension – such as a self-invested personal pension invested in shares – which you are drawing an income from, it will need careful management. Drawing income from investments, which are falling in value, will cause lasting damage to your savings. As the value falls, there are fewer shares or units left to benefit from a recovery.

You may also have other investments such as ISAs and bank deposits.


Things you might want to consider

  • If you can afford to, you could stop income withdrawals from the part of your pension that is invested in shares. This would allow that part of your investments time for potential recovery. You may be able to draw income from an alternative source - your cash savings such as cash deposits or cash ISAs, for example.
  • You could spend less. Reduce your discretionary expenditure on holidays, going/eating out and so on, until your investments recover their value.
  • The return on shares and share-based (equity) funds comes from two sources: the capital return and the income or dividend return. If you are only drawing the income or dividends (called the ‘natural income’) from these investments, a reduction in the capital value of your shares may be less of a concern. By drawing the natural income only, the capital value remains intact to benefit from any future recovery in market values.
  • Selling shares after the market has fallen is rarely a good idea, unless the market falls further and over a sustained period. Your investments need to be planned so they have the potential to meet your goals, but you shouldn’t be taking so much risk that it makes you feel uncomfortable. Once the market recovers, take a good look at your investments. Check that you still have a range of investments that meet your financial objectives. 
  • You could think about rebalancing your investments to match your investment goals and your personal attitude to risk. This may mean buying more shares and selling other assets, which may feel uncomfortable. However, remember that you could be buying some shares at a discount of X% compared to the market value a few weeks/months/years ago. To understand rebalancing further read ‘Performing the great rebalancing act’. 
  • When the market recovers, replenish your cash-based savings if you have used them to provide income during the market turmoil. If you’re able to, you should consider keeping one year’s worth of income as cash, preferably two, to cover unpredictable events such as stock market corrections.

For more information about managing your finances in retirement, see the I’m retired page on our website. 

If you want personalised advice you should speak to a financial adviser. You can find a financial adviser in your area at

AR01601  01/2016

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