A man planning for his retirement asked about when he should access his funds
Martin Lewis has offered his insights on building up savings and investments for your retirement years and later life. He addressed a thought-provoking question on his BBC podcast regarding when to access your funds.
A listener called in with a question about their situtation, having recently started investing through a stocks and shares ISA with Moneybox. The man explained he was contributing £50 a month and had gone for a more adventurous portfolio of investments. He said he also held cash savings which he was faithfully paying into, and was also paying into a workplace pension. His question was about the age at which he should consider withdrawing his investments.
Mr Lewis reminded listeners of his general rule of thumb: “My investment rule is if it’s money that you don’t need and you’re putting it away for more than five years, savings is the poor relation to investing, so you should consider investing.” The caller revealed he was 47 and intended to access his investments when he turns 60.
His query was whether, given Mr Lewis’ five-year rule and his plans to withdraw at that age, he ought to cease contributions at 55 to allow those final investments sufficient time to grow.
‘A bad day to take the money out’
Responding to the question, Mr Lewis elaborated on the reasoning behind only committing funds to investments if they won’t be needed for a minimum of five years. He said: “The reason for saying five years is because markets move up and down, that’s literally the point of them, they are volatile.
“What you’re more interested over the five years is the long-term trend.” Mr Lewis highlighted another reason to allowing yourself a substantial timeframe during which you won’t require the capital.
He explained: “The reason we talk about a long period is to ride out the short term. You don’t ever want to be in a position where you need the money today and today is a bad day to take the money out.”
Mr Lewis confirmed with the investor that since he didn’t require the funds straight away, the notion of withdrawing his investments at 60 was merely a rough guideline. The man verified this was the case, and he had selected this milestone as this was when he planned to retire.
The consumer expert informed the man that his five-year principle is a cautious timeframe, while towards some investment specialists suggest just three years might provide enough time for investments to appreciate.
Different ages to consider
Mr Lewis explained to the novice investor that one possibility available to him is transferring his investments to a less adventurous portfolio as he approached his 60th birthday. He said: “I don’t think there is any blanket moratorium on you continuing to invest nearer the age of 60.”
Outlining the various possibilities, Mr Lewis said: “If you’re going more cautiously and you’re only talking about money that you’re dabbling with, you could push it up to 57 or 58. You might also think, I might not take it all out when I’m 60, I might even put some more in at that point for it to grow later and for me to keep the pot growing.
“See it as a soft guidance concept rather than a hard rule.” The person also asked that should be decide to move some fund into a less adventurous and lower-risk portfolio, how much should he move over.
Mr Lewis told him this decision rests entirely with him and it is “perfectly reasonable” to make this change as you near the date when you intend to withdraw your investments. Mr Lewis share some final words of reassurance for the novice investor regarding those choices at age 55.
He said: “I know you’ve only just started, but I think you will be a lot more educated about the situation then and more confident in making your own decisions at that point, which is why it’s great that you’ve started. Some of this is learning money. You should see it as learning money.”
ISA allowance changes
When purchasing investments via an ISA wrapper, you can invest up to £20,000 annually through these tax-free accounts. The ISA allowance rules are being restricted from April 2027.
Presently, you can utilise the entire £20,000 allowance for contributions into either cash ISAs or stocks and shares ISAs, divided as you choose. But from April 2027 you will only be allowed to use up to £12,000 of the allowance for either account type, while the remaining £8,000 will exclusively be accessible for deposits into investment accounts.
Those aged 65 and above will be excluded from the new rules and will keep the existing allowance.
