As the year draws to a close, here at Morningstar many of us have been reviewing our pensions, while new employees have been looking at the benefits of joining a company pension scheme. Luckily for us, we have a wealth of information at our fingertips, which means you do too.
Did you know, for example, that if you are 30 years old, receive a monthly salary payment, and expect to retire at 65, that you only have 420 paydays left to save for retirement? A scary thought. And did you know that conventional wisdom calculates that the same 30-year-old needs to put aside 15% of their annual salary each year for the next 35 years to ensure that they have 50% of their final salary available post-retirement? With these thoughts ringing in my head, I have put together a list of Morningstar's top ten pensions and retirement articles, which are aimed at helping both new and seasoned investors make informed decisions about preparing for retirement...no matter how near or far away it seems.
All the articles listed below, and more, can be found by searching Morningstar's article archive, in particular the Portfolio & Money Management category.
1. Morningstar Supports Financial Planning Week: Earlier this year we supported the Institute of Financial Planning's initiative to raise awareness of the need to assess financial goals. This article contains links to plenty of financial planning-related content, daily polls, quizzes and case studies, based around five daily themes of Young, Free & Single, Making Commitments, Young Families, Making Choices and In Retirement.
2. The 80% Myth: Morningstar's John Rekenthaler looks at whether we really "need" to be aiming for 80% of our pre-retirement income to live on and points out that many live happily on much less.
3. Tips for Investors Just Starting Out: An introductory explanation of some of the best ways to begin investing
4. Are You Taking Too Much (Or Too Little) Risk? By assessing your pain threshold early on, investors should be able to improve their overall return records
5. Lessons From the Lost Decade in Stocks: Hidden in the relatively poor returns of the past ten years are some rich lessons for the future.
6. Why Diversification Still Matters: Although tested mightily in the bear market, a diversified portfolio is less risky than one that's concentrated in one area of the market
7. How to Spring-Clean Your Finances: Whatever the weather--or season--it's a good idea to regularly review your finances and investments.
9. Keeping Tabs on Your Portfolio: Make sure you're looking at more than just performance--skewed asset allocation, rising fees and management changes are all important
10. In Retirement? Don't turn a blind eye to the threats that can erode the value of your portfolio over the long term
Don't forget that while most pension providers will automatically direct your contributions to a default fund, each investor's goals and retirement needs are different and it is highly advisable that you assess your risk appetite and adjust your pension fund accordingly. A 55-year-old who is looking forward to spending their retirement years in a quiet country garden will have a very different investment strategy to a 25-year-old who doesn't yet know what retirement will bring but hopes it will include plenty of round-the-world cruises and octogenarian bungee-jumps.
When it comes to digging down into the funds on offer, Morningstar's fund reports provide a wealth of information on thousands of funds. Our fund quickrank allows you to search funds by category, Morningstar Qualitative Rating, performance, and so on, while the fund screener helps you search for funds according to your personal criteria. You can also take advantage of our free Portfolio Manager tool to create and track your portfolio (real or imagined).
