How far away are you from your Target Retirement Date (TRD)? If you are invested in the Lifestyle Strategy, your investments are automatically switched to lower risk funds when you are about 10 years away from your TRD.
If you are invested in the Lifestyle Strategy, your savings are invested in a number of funds on your behalf. Each one of these funds has a different level of risk associated with it. Higher risk funds can provide larger returns, but lower risk funds are more stable, while providing lower growth to your savings.
Let’s imagine a worst-case scenario – if you were to stay invested in higher risk funds right up until your retirement, you could run the risk of losing a large portion of your pension savings but have no time to recover them as you’d be too close to retirement.
For this reason, your investments are switched to lower risk funds when you are 10 years away from your retirement, to avoid you facing a significant reduction in the value of your savings. This is called de-risking and happens during the Lifestyle switching process.
If you’re invested in the Freestyle Strategy, you may want to consider de-risking your savings around the same time.
The Normal Pension Age (NPA) is currently 65.
If you have not chosen your own TRD, you will automatically be switched into lower risk funds at the age of 55.