How to avoid cashing out when markets are down

10 October 2025

Learn how retirees and advisers can protect investments and avoid cashing out during market downturns. Smart strategies for long-term retirement planning

Article last updated 10 October 2025.

Introduction to retirement challenges in a changing market

By some measures, the generation of Britons currently at or near retirement is the wealthiest and most successful in history. With record levels of home-ownership, some still having defined-benefit pensions, and sustained economic growth through most of their working lives, you might think no previous generation has ever had it so good.

Yet things may not be as rosy as they seem on the surface. A growing proportion pension assets are held in defined contribution schemes, where the investment risk has effectively been passed on from the state and the employer to the individual (though thankfully professional advice is at hand). Is it any wonder, then, that this generation has also become increasingly risk-averse, according to anecdotal evidence from some analysts, economists and advisers? A major consequence of increased risk aversion on the part of these investors is that their portfolios might not be able to sustain their desired lifestyle for as long as they would wish.

Why longer life expectancy increases retirement risk

The positive trend of people being generally healthier and living longer than previous generations unfortunately also increases the risk of such a shortfall. A woman reaching the state pension age today can expect, on average, to live to 88; there’s a one-in-four chance of them living to 94, and a one-in-ten chance of turning 98. For men, average life expectancy is 85 years, with a one-in-four chance of living to 92, and a one-in-ten chance of living to 96_¹. This means, of course, that they will need their investments to perform even better over the long run.

There’s only so much that relatively low-risk investments can do to protect against the corrosive power of inflation, not least when the last few years have seen the Consumer Price Index (CPI) and Retail Price Index (RPI) reach rates not seen since the early 1990s. More to the point, the prices rising the most quickly – gas, electricity, petrol, and food – are the ones that nobody can avoid paying.

Against this backdrop, Rathbones has developed specific retirement-focused products that allow investors and their financial advisers to work together on planning for a long and prosperous future.

Managing risk aversion during market volatility

At Rathbones, we understand why so many people might have become risk averse. We know that having saved diligently and invested wisely over many years, people approaching retirement are perhaps less inclined to risk undoing any of that good work. While volatility and uncertainty are nothing new, with individuals now carrying all of the investment risk, we recognise that the current bout of heightened political and economic uncertainty might make them especially risk averse. We also appreciate that the benefits of compounding returns aren’t always obvious; after all, it took Albert Einstein to recognise compound interest as “the eighth wonder of the world”.

Against this backdrop, Rathbones has developed specific retirement-focused products that allow investors and their financial advisers to work together on planning for a long and prosperous future. With a long history of managing our clients’ wealth and helping them achieve their financial goals, coupled with the depth of knowledge and experience of our analysts and investment committees, we can help balance short-term income needs with long-term goals.

By defining exactly what investors want, selecting the best investment opportunities that meet their objectives, by balancing risks, and by adapting to whatever changes may come our way, Rathbones can help advisers and their clients build and then manage a lifelong portfolio.

Our LED framework

All of this is done within our proprietary ‘L-E-D’ framework for maximising long-term risk-adjusted returns. Recognising the diverse ways that different assets behave in various market conditions, this framework blends low-risk, liquid investments in the highest quality government and corporate bonds and cash (L) with higher returning equity-type investments (E) and diversified assets (D) whose returns tend to be uncorrelated with broader market moves. This helps us manage portfolio risk in line with the specific needs and preferences of the investor. With Rathbones, retirement is no time to slow down.

With Rathbones, retirement is no time to slow down.

Footnotes

Source: www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpect
ancycalculator/2019-06-07

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