Martin Lewis has shared valuable insights on building retirement savings, addressing a listener's question about managing investments as they approach retirement age. On his BBC podcast, a 47-year-old man who recently started investing through a stocks and shares ISA with Moneybox asked for advice on when to cash in his investments.
Listener's Investment Strategy
The listener contributes £50 monthly to an adventurous portfolio and also has cash savings and a workplace pension. He plans to access his investments at age 60 and wondered if he should stop contributing at 55 to allow final investments at least five years to grow, following Lewis's general rule.
Martin Lewis's Five-Year Rule
Lewis reiterated his investment principle: money not needed for at least five years should be invested rather than saved, as savings are the poorer relation to investing. He explained that markets are volatile, and the five-year window helps ride out short-term fluctuations. "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," he said.
Lewis noted that his rule is conservative; some experts suggest three years may suffice. He advised the listener that there is no strict moratorium on continuing to invest near age 60. Instead, he suggested moving to a less adventurous portfolio as retirement approaches.
Soft Guidance on Timing
Lewis described the five-year rule as "soft guidance" rather than a hard rule. He said, "If you're going more cautiously, 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."
When asked how much to move to a less risky pot, Lewis said it is "perfectly reasonable" to make such moves as the cash-in date nears, leaving the decision entirely up to the investor.
Encouragement for New Investors
Lewis encouraged the novice investor, saying, "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."
He also reminded that investments in ISAs allow up to £20,000 per tax year tax-free. From April 2027, the ISA allowance rules change: only £12,000 can go into cash or stocks and shares ISAs, with £8,000 reserved for investments. People aged 65 and over retain the current allowance.
