Important information: the value of investments can go down as well as up so you may get back less than you invest.

If your financial plans for the new year include giving up work and moving into retirement, the daily changes in financial markets take on extra significance.

Retirees in the past may have been able to quit work with a high level of confidence about their financial future but if you’re retiring today your income is likely to be less certain and come from sources that are influenced by the ups and downs in markets.

Many of the risks you face are outside of your control. Nonetheless, understanding them will help you mitigate them and up your chances of maximising your income options. Here’s what the financial conditions for retirees look like in 2024.

Pension pot performance

Many approaching retirement will have watched in horror in 2022 as both stocks and bonds - the two assets most likely to comprise the bulk of pension pots - fell in tandem. High inflation and high interest rates combined to push both assets lower - particularly painful if you know you’ll soon need your pot to start generating an income.

As 2023 draws to a close there has been a recovery but retirement funds are unlikely to have regained all the ground lost.

The performance of your pension pots will depend on the precise assets within it but, as an example, a fund made up of 60% equities and 40% fixed income assets lost more than 15% between the market high at the start of 2022 and the market low in October of that year. It has since recovered somewhat but remains around 9% below its peak.1

Annuity rates

The silver lining for those retiring now is that the market falls that have hurt the value of their retirement funds have been accompanied by improving returns on other assets.

Annuities - which take pension savings and pay a guaranteed income in return - are paying more because the yields on some bonds (which are used to price annuities) have risen in line with interest rates. This reverses many years in which annuity rates have been low. Many retirees are now considering annuities as an option once again.

To show the improvement in annuity rates, the average rate for a 65-year-old buying a level annuity in December 2021 was 4.53%. By July 2023 this had risen to 6.92%, and it remains elevated today at 6.53%.2

This gives those retiring more options for their income, including blending annuities with income from investments.


Those planning on using an invested pension to generate an income will have been hurt by falls in the markets over the past two years. However, what really matters now is how markets perform in the future.

We have previously analysed how the timing of when you begin withdrawals from a retirement fund can dramatically affect the value of your pension pot over time, and therefore the income it can generate. The chart below shows the value of a £100,000 pot over history, comparing the value of pots after 10 years of 4% withdrawals, when withdrawals are started at one-year intervals.

The difference in the size of pots is accounted for by the sequence in which returns are made, with those experiencing strong returns at the start of withdrawals then able to retain more assets into the future. It’s a concept we explain in our Principles for Good Investing.

Of course, if you’re retiring soon you simply don’t know what returns will be like from here. However, we can learn from previous periods when markets have suffered the kind of losses we have experienced in the past two years.  We recently examined returns from a blended 60/40 portfolio of shares and bonds, looking for previous periods when investments have suffered a downward ‘correction’ - defined as a 10% or more fall in value.

The chart below shows the average one, three and five year returns that have followed such periods.

The strong returns following corrections reflects the fact that investment losses, though painful, tend to mean lower valuations for shares and bonds. That can often indicate room for stronger gains in the future - although past performance can only be a guide and returns are not guaranteed.

State Pension

The State Pension is an important component in any retirement plan. Even if you aim on generating most of your income from other sources, the State Pension is valuable because it is both guaranteed and protected against inflation - things which are very expensive to replicate elsewhere.

The good news for retirees is that the State Pension has risen significantly recently thanks to the ‘Triple Lock’- the policy of increasing the payment in line with the highest of wages, inflation or 2.5%. This year it’s the wages figure which is highest meaning that the State Pension will rise by 8.5% next April.

It means pensioners will have seen see their weekly payments jump from just £185.15 in 2022/23 to £221.18 in 2024/25 - a rise of more than 19% in two years.

Time for advice?

The overall picture facing anyone looking to retire in 2024 is complicated and recent market movements have only added to the complexity. Market falls have certainly squeezed the income available from investments but other potential sources of income, like the State Pension and annuities have improved.

Blending your income options in the most tax efficient way and monitoring your progress along the way to keep income sustainable, is key. Professional financial advice can help.

The Government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at or over the telephone on 0800 138 3944.

Fidelity’s Retirement Service has a team of specialists who can provide you with free guidance to help you with your decisions. Fidelity’s retirement advisers use cash-flow modelling tools to help you plot a sustainable - but optimised - plan for income in retirement. They can also provide advice and help you select products though this will have a charge.

It’s important to feel empowered about retirement. So, if you’ve got a burning question you want to ask? Why not drop us a line. Click here to ask an expert your question.


1Financial Times, 1 December 2023
Fidelity Retirement Solutions, 27 November 2023

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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