We live in a world where news travels fast and markets can react in an instant. Economic developments, political announcements and global events can all influence investor sentiment, while a constant stream of commentary from the media, social networks and online commentators means we’re never far from the latest market update.
It’s easy to understand how this can create anxiety and a temptation to act. But while market volatility can trigger strong emotional responses, decisions made in the heat of the moment don’t always lead to the best long-term outcomes.
Building resilience when it matters most
Events, whether personal or global, can have a significant impact on how we feel about our finances.
A concept that has gained attention in recent years is the ‘fragile decade’, which you may have heard of. It describes the five years before retirement and the first five years after, when many people begin taking an income from their pension and may become more sensitive to market movements.
This ten-year period is typically the stage of life when attitudes to investment risk can begin to change as retirement savings start to feel less like a long-term investment and more like the income that will support day-to-day life.
Recent research* by M&G found that investors generally become less comfortable taking investment risk as they move closer to retirement.
This matters because poorly timed decisions can have a greater impact during this period. Investors have less capacity to recover from shortfalls once they start accessing their pension.
What is sequencing risk?
During the so-called ‘fragile decade’, one consideration to be aware of is ‘sequencing risk’ – the effect that short-term market volatility can have on your investments once you start withdrawing an income.
More specifically, it relates to the order in which your investment returns occur, especially during the early years of retirement. If you experience a market downturn at the same time as you begin drawing an income, your investments’ value may shrink faster than expected – making it harder for your money to recover, even if your investments improve later.
Even if two people have identical average returns over a given period, the person who initially experiences a market downturn will likely be worse off than the person who endures the same negative returns at a later stage. It’s the timing that matters most – suffering losses early on, regardless of what happens later, could seriously affect the longevity of your money.
Of course, the impact will vary depending on individual circumstances. And the value of your investment can go down as well as up so you might not get back the amount you put in.
Staying focused on what you can control
Periods of market uncertainty are inevitable – it’s how you react to them that matters. Here are three practical tips to help you stay focused.
It’s normal to want to act
Our instincts can tempt us to retreat to safety during market downturns and chase new opportunities when existing ones feel less compelling. That’s where a financial plan, built on a thorough understanding of your needs, your attitude to risk and your longer-term goals can help.
So before making any decisions, revisit your plan, refocus on your long-term objectives and speak to your financial adviser. They can help you filter out short-term ‘noise’ and advise if any changes are genuinely needed.
Spread the risk
Spreading your money across a range of different types of investments, known as diversification, can help reduce the impact of market ups and downs because not all investments are affected in the same way at the same time. Alongside a clear longer-term plan, it can help make it easier to stay on course and keep your focus on what you’re trying to achieve.
Make sure your plans remain on track
As you approach retirement, and the so-called ‘fragile decade’, it’s worth taking time to revisit your plans with your adviser. Reviewing your income needs, investment strategy and attitude to risk can help ensure your plans remain aligned with your goals, while giving you greater confidence to navigate periods of market uncertainty.
Whether you’re approaching retirement or already taking an income, a financial adviser can help ensure your plans remain on track. And if you don’t yet have a financial plan in place, they can help you create one. Having a clear plan for the future can provide reassurance during periods of uncertainty and help you navigate market ups and downs with greater confidence.
* Research conducted on behalf of M&G Censuswide among 500 UK investors who actively keep track of their investments between 6 and 20 February 2026.
