Investments are mostly used to help build wealth for later life, leaving some to wonder if there is any need to continue doing so after retirement. The short answer is, for the most part, yes, as you can live for decades after stopping work. Keeping some of your money invested helps combat inflation and prevents your savings from losing their purchasing power over time.
Why investment still matters in retirement
People are living longer than ever, and retirement can last 20, 30, or even 40 years. During that time, inflation can steadily reduce the purchasing power of cash savings. Continuing to invest a portion of your assets can help your portfolio grow and maintain your standard of living throughout retirement.
The risk of being too conservative
Some retirees move all their money into cash or very low-risk investments because they want to avoid market volatility. While this may feel safer, it can create another problem: insufficient growth. If returns fail to keep pace with inflation, savings may lose value over time and potentially run out sooner than expected.
Adjusting your investment strategy
Retirement often calls for a different investment approach than the one used during working years. Rather than focusing primarily on growth, retirees typically seek a balance between growth, income, and capital preservation. This may involve holding a mix of stocks, bonds, cash, and other assets that matches their financial needs and risk tolerance.
Consider your income needs
Your investment decisions should reflect how much income you need from your portfolio. If pensions, government benefits, or other income sources cover most of your expenses, you may be able to invest more aggressively. If you rely heavily on your savings for daily living expenses, a more conservative approach may be appropriate.
Consider goals
Some retirees want to leave assets to children, grandchildren, or charitable causes. If leaving a legacy is an important goal, maintaining a portion of the portfolio in growth-oriented investments may make sense. On the other hand, those who prioritize maximizing their own retirement spending may choose a different strategy.
Review your portfolio
Retirement is not a one-time financial event. Your needs, expenses, health, and goals may change over time. Regular portfolio reviews can help ensure that your investments remain aligned with your circumstances and that your strategy continues to support your long-term objectives.
What the research says
Back in 2018, Schroders Global Investor Study surveyed more than 22,000 investors across 30 countries, finding that 70% of people not yet retired plan to keep investing after they retire. While a few years old, the survey shows that the vast majority of people intend to keep their investments going forward.
Lesley-Ann Morgan, Head of Retirement at Schroders, said: “The survey suggests retirees have to think far more about making their savings work for them in retirement than perhaps they did previously. There are several reasons that may explain why retirees have higher levels of investment than those still in work expect. In many countries, lower interest rates and rising inflation has reduced the value of income that bank accounts and guaranteed products can offer. People are also living longer, giving them more years in retirement that need to be funded. Our study shows that retirees have adapted to this reality by keeping more of their savings invested. For those nearing retirement, it shows that they may need to reconsider how they invest after retirement to meet their income needs.”
