Pretty much the last thing any investor wants is the stock market to crash shortly before they reach retirement.
It means that after a lifetime of hard saving, the value of your pension and investments could plummet, when you need them the most.
Worse, it could force you to start drawing retirement income at a time when its value has been depleted significantly. If you end up withdrawing money at the bottom of the market, you will not benefit when share prices recover.
It is a rotten thing to happen, which means that anybody retiring over the next few years has a lot to worry about right now.
The scale of the damage depends on how you plan to generate income in retirement, Tom Selby, head of retirement policy at investment platform AJ Bell, says.
There are two main options facing retirees — either leave your retirement pot invested and take income as you need it, sometimes called drawdown, or use your savings to buy an annuity that pays you a guaranteed income for life.
Both have their pros and cons. A drawdown lets you benefit from future stock market growth, but with added risk as there is no guarantee your savings will last throughout your retirement.
By contrast, an annuity is guaranteed to pay income for life, no matter how long you live, but you may be disappointed by how much you receive.
Anyone who will use their entire pot to buy an annuity should take investment risk off the table as they approach retirement, Mr Selby says.
“Failure to do this will leave you hostage to short-term market fluctuations. As we have seen in recent months, it can go down, as well as up.
“If you don’t de-risk in this way and your fund drops by, say, 20 per cent in the run-up to buying an annuity, you face the grim choice of delaying retirement or retiring as planned, but on a much lower income,” he says.
Those who opt for drawdown face less of a “cliff-edge” decision, Mr Selby adds.
“Someone in good health in their mid-60s, for example, could have 30 years to live and be perfectly comfortable maintaining their exposure to markets in the face of a crash.”
They can protect themselves by holding enough to fund their retirement income for one or two years, while they wait for the market to recover.
“The last thing you want to do is make big withdrawals in the early years of retirement, at a time when shares are down. This killer combination can be difficult to recover from. Larger withdrawals today will likely mean you need to cut back later, or risk running out of money,” Mr Selby says.
Another option is to carry on working for a bit longer until markets stabilise, says Vijay Valecha, chief investment officer at Century Financial in Dubai.
“Even working part-time could lighten your dependence on your portfolio and give it breathing space to recover. You could even top it up if you earn enough.”
Top 10 global cities for retirement — in pictures
Traditional financial advice has suggested that people move into more cautious investments such as cash and bonds as they grow older, but Mr Valecha says don’t overdo it.
While tempting, these lower-risk assets will pay a lower return, which means they will struggle to keep up with inflation over the course of a retirement that could last for a couple of decades.
“Your retirement savings could lose their purchasing power just when you need them the most.”
You should remain diversified by spreading your money between stocks, bonds, cash, property and commodities, Mr Valecha says.
“Look for a healthy mix of large and small-cap stocks, as well as growth and value funds, and funds investing in different regions of the world. So, when some sectors struggle, others may compensate.”
Investors who planned carefully in the run-up to retirement and gradually moved their money out of high-risk assets such as shares will have been shielded from current volatility, Daniel Hough, financial planner at wealth manager Brewin Dolphin, says.
Some pension funds move into bonds and cash automatically, a process sometimes called “lifestyling”, so check whether yours does.
“If you plan to retire early or later, tell your pension company to ensure your scheme still reflects that. If unsure, seek advice, ideally at least five years before you plan to retire.”
Annuities fell out of favour after the global financial crisis, when returns collapsed as central banks slashed interest rates to about zero.
“We generally advise against buying annuities unless you have a particular set of circumstances,” he says.
“While they provide a guaranteed income, they can’t be passed on to family unless you build in a spouse’s pension and they are also relatively poor value in terms of the expected income versus what you have to put in. Unless you are a single person with no dependents, we wouldn’t typically suggest them.”
Savers approaching retirement should neither be shocked nor surprised by the stock market crash, given that they happen all the time, Sam Ratnage, a chartered financial planner and wealth manager at Tideway Wealth, says.
“A stock market crash is a part and parcel of investing and will happen multiple times during the average retirement, which can last up to 30 years. Protect yourself by building a diversified portfolio, which allows time for stocks to recover before you need to draw from them. This should ensure that you never sell assets at the wrong time.”
As ever with financial planning, the decision will come down to your personal circumstances and personal attitude to risk.
There is always a halfway house, says Andrew Tully, technical director at financial services company Canada Life.
Choosing between drawdown and an annuity is not an all-or-nothing decision. Instead, you could have both.
“You could leave most of your pension invested, allowing it to grow, but use a chunk to buy an annuity,” he says.
As you grow older, you may no longer want the risk and trouble of managing your own investment funds.
“You could steadily lock more of your money into an annuity, taking advantage of any further rate rises as you get older,” Mr Tully says.
Retirement is a long-term process. By planning ahead, you see your way through a short-term crash without suffering too much damage.
Killing of Qassem Suleimani
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
RESULTS
2pm: Handicap (PA) Dh40,000 (Dirt) 1,200m
Winner: Najem Al Rwasi, Fabrice Veron (jockey), Ahmed Al Shemaili (trainer)
2.30pm: Handicap (PA) Dh40,000 (D) 2,000m
Winner: Fandim, Fernando Jara, Majed Al Jahouri
3pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Harbh, Pat Cosgrave, Ahmed Al Mehairbi
3.30pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Wakeel W’Rsan, Richard Mullen, Jaci Wickham
4pm: Crown Prince of Sharjah Cup Prestige (PA) Dh200,000 (D) 1,200m
Winner: Jawaal, Fernando Jara, Majed Al Jahouri
4.30pm: Sheikh Ahmed bin Rashid Al Maktoum Cup (TB) Dh200,000 (D) 2,000m
Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer
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Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
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Profile of Udrive
Date started: March 2016
Founder: Hasib Khan
Based: Dubai
Employees: 40
Amount raised (to date): $3.25m – $750,000 seed funding in 2017 and a Seed round of $2.5m last year. Raised $1.3m from Eureeca investors in January 2021 as part of a Series A round with a $5m target.
UAE currency: the story behind the money in your pockets
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Infiniti QX80 specs
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Specs
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Range: 400km
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Transmission: eight-speed automatic
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Price: Dh649,000
On sale: now
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
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Price: From Dh149,900
Watch live
The National will broadcast live from the IMF on Friday October 13 at 7pm UAE time (3pm GMT) as our Editor-in-Chief Mina Al-Oraibi moderates a panel on how technology can help growth in MENA.
You can find out more here
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