4 powerful reasons why your pension journey is a marathon, not a sprint

Published on April 23, 2024 by Andrew
Blurred marathon runners

The 44th London Marathon took place in our nation’s capital on 21 April. Around 50,000 runners finished the event, cheered on by 750,000 supporters who lined the streets to support the elite and amateur athletes.

A true test of endurance, determination, and willpower, the 26-mile-long course has a lot in common with your path to a dream retirement.

Keep reading to find out why, and what lessons you can take from this year’s field of valiant competitors.

1. Preparation is everything so start early

Very few of us could wake up and decide to take on a marathon without undertaking some serious training.

Building up distance is crucial to training your muscles and improving your stamina, as well as preparing mentally for the psychological challenge.

This takes time, so starting early is key. Ideally, you’ll want to start running up to a year before you start training for a specific marathon. All for an event that only lasts around four and a half hours.

Your retirement, on the other hand, could last decades. That means your preparation needs to start earlier too.

The sooner you begin, the longer your pot will have to grow and the more you’ll be able to take advantage of investment returns and compound growth.

You’ll also be able to put aside a smaller percentage of your monthly income. Generally, we’d suggest taking the age at which you start contributing and halving it to give the percentage of your retirement contribution.

Start contributing at age 20, say, and you’ll only need to find 10% of your monthly income. Start at 50, though, and this figure rises to 25%.

It’s not only the financial preparation that needs to start early. You’ll need to think about what your dream retirement will look like and when you want to give up work. The sooner you have a goal in mind, the easier it will be to work towards, and ultimately achieve it.

2. Pace yourself to manage the risk of burning out

As with any investment, success isn’t managed by how quickly you achieve massive returns.

Investing is about managing risk and reward. That means arriving at your goal – whether that’s a marathon finish line or your retirement date – at the “right” time, having taken a level of risk you’re comfortable with.

As a marathon runner, pacing yourself is key. At a global event like the London Marathon, with huge crowds cheering you on and TV cameras dotted all along the course, it can be easy to head off too quickly. But forgetting your plan can have huge consequences even a few miles down the line.

You know your physical limits just as you know your attitude to risk.

When approaching your long-term pension investment, think about your time frames and end goal. Then factor in your risk profile and capacity for loss.

Managing asset allocation and diversifying your investments across asset classes, sectors, and geographical regions can help to spread risk. Then, all you need to do is focus on running your own race.

3. Focus on your end goal, not the hard times

Sometimes, running is as simple as putting one foot in front of the other, again and again.

When you’re in the zone, focusing on the next step to your ultimate goal might be easy. But what about when times are harder or obstacles arrive?

During a marathon, you might be conscious of physical and mental barriers, and of hitting “the wall”. Or it might be other runners that distract you.

In the context of your investment, periods of economic uncertainty can threaten to trip you up. Market dips are to be expected though. After all, they’re the reason your investment is long-term in the first place.

Staying focused during short-term dips can help you to keep your plans on track. So, ignore the noise of extraneous events like global politics and keep putting one foot in front of the other.

Remember too that you’re running your own race. Don’t be tempted to chase trends (or the runner in front). Your plan is individual to you so what’s right for another athlete or investor won’t necessarily be right for you.

4. The hard work doesn’t stop at the finish line

After 26 miles of running or decades of building a career, you might think the hard work stops at the finish line.

But pension decumulation is as important as the accumulation stage, and a warm-down is vital too.

After a race, you’ll want to wind down gently to allow blood to continue pumping through your muscles, and drink plenty of fluid to rehydrate. Once you start to recover, try some food and then shower to keep your muscles warm. Only then should you think about stretching out.

Once your retirement date arrives, you’ll need to think carefully about your budget and how long your pension pot might need to last. This can be tough, especially if you opt for a flexible retirement option.

Remember too that you might need to factor in later-life costs, for things like care.

Managing decumulation can be tough but expert advice is invaluable so be sure to get in touch if you need help after your marathon effort.

Get in touch

If you need help managing your long-term retirement plans, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

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