If a person is opting for a drawdown product, a review into the investments held and the time to retirement probably goes without saying.
Periods of uncertainty and high inflation have the potential to serve as a catalyst for shifts in risk appetite and capacity for loss.
Muir says ensuring investments are broadly diversified could be an alternative to shifting the risk dial.
He adds: “The primary reason for diversification is that it reduces concentration risk and ensures portfolios are more resilient to market twists, but a broad diversification approach can also deliver more reliable investment outcomes.”
If they are looking to go into drawdown immediately, Sheen stresses that an assessment of their income and expenditure is vital, looking at the income being withdrawn from the drawdown and looking at other assets (cash savings etc) where the income needed can be generated from a number of sources.
Sequential risk will come into play if an individual is continuing to withdraw high amounts from their drawdown in periods of downturn or if their fund is not performing as well as can be expected.
Sheen adds: “Historically pensions have kept up with inflation, however this is not the environment we find ourselves in now.
“I do believe inflation will start to settle, but I don’t think we will see the low levels we have enjoyed over the past years resurface in the near future.”
It is also important to look at the investment and think about the longevity of the product.
According to Ormston, knee-jerk reactions and continuous changes can result in poorer outcomes than if things were left as they were in the first place.
He adds: “It is important to look at it with a longer-term view, assuming people are likely to be in drawdown over many years and possibly decades.
"Like with an annuity, people should shop around, look at past performance and total costs in order to find a solution that they feel most comfortable with.
“Again, it is important to remember that pension income options are not all or nothing. People could look at using a mix of options to help build a robust retirement income portfolio.”
Tim Grey, managing director of Sandringham Financial Partners, says this also comes down to spending habits.
He notes: “We should be able to plan for a rising income over a period of time, but we need to challenge and model what other factors might influence spending needs.
"We also need that open conversation about taking risk over the long term while protecting short-term needs."
