Four Ways of Managing Your Pension Savings According to Your Age

Past few months have brought unexpected changes to all of us – income has decreased for some of us, some have become uncertain about the future, some are worried about the decline in financial markets, and some of us have lost their income completely. Therefore, the question of individual pension savings has become of great topicality today – should I continue making payments, change my pension plan or withdraw my savings? Experts recommend avoiding hurry and acting according to your age, focusing on your individual wealth – where pension savings take up a significant place.

“Recently stock markets have experienced a significant decline, which also affected pension funds. But it is important to note that disruptions in financial markets are short term and more impact investment values today, and less in the more distant future. Financial markets – just like the economy – are able to stabilize, bounce back and reach new heights. Therefore, unless you are planning to collect your pension savings tomorrow, you shouldn`t worry too much,” tells Anželika Dobrovoļska, Head of Luminor Pension Products.

She emphasizes that to take care of your future pension today, just like before, the most important thing is to follow one’s savings and select the most appropriate investment plan – the longer the time until pension age, the safer risk-taking becomes. If you have less than 5 years until retirement, then it is better to choose a more conservative strategy.

• Young people who are planning to retire after more than 10 years should not avoid risk, as market declines are short-term but in the long-term bigger risk generates bigger profit.
• Those with 5 to 10 years until retirement age also don’t need to worry about their pension – financial markets will have time to bounce back and start making a profit. The most important thing after market falls is actually to continue making payments – when the markets are in decline, prices for financial assets become more attractive.
• If you have less than 5 years until retirement, we recommend evaluating your current pension plan to understand if it is suitable given the current situation. At this age, you should choose a more conservative pension plan, but please consult a finance specialist to select the most appropriate solution for this situation.
• If you are retiring now, consider the option to wait – the government decision of April 2 assumes the option to postpone use of the 2^nd pillar pension savings even until November 2021. This option will allow you to secure a larger amount of pension compared to collecting your 2^nd pillar pension savings now, right after a significant market decline.