How to make your pension bulletproof for life (even when there’s a war on): Financial expert HOLLY MEAD reveals where to put your money for peace of mind – and when it’s best to do nothing

If you are trying to build or protect a retirement nest egg, it can feel like your savings are endlessly under siege.

Global markets have been thrown into disarray in recent weeks by conflict in the Middle East, with stock markets falling, oil prices soaring and concerns about economic growth and inflation. Any chaos on the stock market typically has an impact on your pension.

But the conflict is just the latest cause of turbulence.

In recent years savers have been buffeted by volatility caused by global tariff wars, rising energy costs following Russia’s invasion of Ukraine, the pandemic – the list goes on. 

So how can you build a portfolio that lets you enjoy some gains from the stock market but doesn’t keep you up at night?

Here, investing experts reveal how you can build a nest egg that can withstand whatever is thrown at it – so you won’t have to keep bracing yourself when you check its balance in times of volatility.

Give yourself a quick history lesson

Savers concerned about their retirement pot must avoid panicking or making knee-jerk decisions. Instead take a breath, review your investment goals and think carefully before making any changes.

Remind yourself how often stock markets fall – then recover – to ease your mind. In at least 31 of the past 54 years, markets have dropped by 10 per cent or more at some point, says Duncan Lamont, head of strategic research at Schroders.

The MSCI World Index (which tracks the global stock market) has fallen 20 per cent or more at some point in 13 of those years.

But these dips are often short-lived. Research from investment group Schroders found that someone who had put $100 (£75) in the US stock market in 1990 would have $3,941 (£2,975) today if they had left their money invested the whole time. Had they switched to cash each time volatility spiked, they would have just $1,487 (£1,122).

Lamont says: ‘Cash may seem like a safe investment, but it’s not because it hasn’t historically matched the stock market’s track record for delivering inflation-­beating returns.’

One recent example of market turmoil was in April 2025, when President Donald Trump announced his trade tariffs. The US stock market, the S&P 500, fell by about 11.5 per cent in the week after so-called

Liberation Day and the FTSE 100 by about 13 per cent. But both markets had recovered within a few weeks, erasing any losses. Investors who stayed the course were able to benefit from this recovery.

Consider safe-haven investments

How you should react at times of stock market volatility depends on how close you are to needing to access your money. Those within a couple of years of retirement should consider taking steps to protect their cash.

Brian Dennehy, of financial advice firm Dennehy Wealth, says: ‘Market turmoil is almost irrelevant if you are still young. But it is more serious if you are within ten years of retiring or already drawing down from your pension.

‘A big crash here can materially damage your retirement income. With limited time to recover, you can’t go around the block again and rebuild your pension fund.’

But in a major market downturn, there are few places to hide. Even safe-haven assets such as gold and energy stocks are not immune to ups and downs.

Rob Morgan, chief investment analyst at Charles Stanley, says high-quality, short-dated bonds may be a good choice for those who want peace of mind. Bonds are an IOU issued by a company, which pay investors regular interest (known as the coupon) and their original capital back at the end.

Short-dated bonds are those that mature in three years or less. They are less risky because there is less chance for them to be impacted by inflation or interest rates, or for something to go wrong and cause the company to default on its debt.

Morgan says: ‘These bonds provide stability and income, which makes them particularly useful for those nearing or in retirement who need to protect their withdrawals.’

He points to the iShares £ Ultrashort Bond exchange-traded fund (ETF), which tracks an index of more than 200 bonds issued by the likes of Lloyds, Santander and Royal Bank of Canada. A low-cost option, it charges just 0.09 per cent. The yield of the fund (the level of income it pays) is 4.63 per cent.

Another option is the Axa Sterling Credit Short Duration Bond, which invests in bonds issued by companies including Coventry Building Society and the German bank KfW as well as UK Government gilts. It yields 4.49 per cent and its annual charge is 0.41 per cent.

Spread your money over multiple assets

For those who are still a few years off retirement, protecting your pension shouldn’t mean dialling the risk down to zero. It’s important to balance a degree of caution with the need to keep growing your pot for the long term.

Sudden market falls matter at this stage because there is less time for your pot to recover, but that doesn’t mean you can’t stay invested. Diversification is your best friend here. By spreading your money across a range of different assets, such as equities, bonds, property and gold, the idea is that not everything should rise and fall at the same time.

Those in a workplace defined contribution pension scheme, which is typically offered to private sector workers, are likely to be in a fund that is ‘lifestyled’. These funds automatically move your money to less risky assets as you get closer to retirement, providing some protection from market fluctuations.

Those who are managing their own personal pension may need to do a bit of work. Multi-asset funds can be a good option. Here an expert fund manager decides which mix of assets can help weather the storm. These funds won’t shoot the lights out in good times, but can provide valuable protection during difficult periods.

Morgan likes the Troy Trojan fund, which has almost half of its portfolio in bonds issued by governments including the US, UK and Japan, as well as by companies such as Babcock International. It also invests in gold and the shares of big firms, including Visa and Unilever. It has returned 32 per cent over the past five years.

Another option is Ruffer Investment Company, which invests in the shares of Coinbase, Alibaba and BP, as well as in gold and government bonds. It has returned 19 per cent over five years.

Or you could sit tight and do nothing at all

For those who are ten years or more from retirement, the best course of action may be to sit tight and do nothing. ‘Think in decades, not days,’ says Morgan.

Jason Hollands, of wealth manager Evelyn Partners, says: ‘When markets are rattled by geopolitical crises and the headlines are alarming, as they are now, the instinct to “do something” with your investments is powerful. But reacting in haste can be costly.’

It is important not to make any knee-jerk reactions. Keep an eye on your long-term goals and your own financial situation, rather than trying to guess what world leaders are going to do next and how the market might react. Try not to look at your portfolio too often if you find the dips worrying.

Don’t forget to keep up contributions

Many investors get spooked when markets are in flux and hold off from investing any more until things calm down. But this could be the wrong decision. Continuing to invest while the market falls means you are able to buy shares at a cheaper price. The pros call this ‘pound-cost averaging’.

Set up a regular investing plan – a direct debit to invest a chosen amount each month.

The end of the tax year is fast approaching, and when it comes to your annual Isa and pension allowances it’s a case of use it or lose it. Savers can put up to £20,000 each tax year into an Isa and up to £60,000 or 100 per cent of their earnings into a pension, but this must be done by April 5. Don’t let the market turmoil distract you from this deadline.

Isabella Galliers-Pratt, senior investment director at Rathbones, says: ‘Market volatility can be unsettling, but it shouldn’t derail sensible end-of-tax year planning.’

You do not need to invest the money yet if you are nervous about putting it to work during uncertain times. Instead, make the contribution to your account and leave the money in cash for now.

Using the allowance just means getting your money inside the pension or Isa wrapper, not necessarily putting it into the stock market. ‘This gives you the flexibility to invest gradually once markets settle,’ says Galliers-Pratt.

Dip into your emergency fund

Experts typically advise having three to six months’ worth of outgoings in an easy-access account, in case of an emergency or unforeseen expense. For retirees, having one or two years’ worth may be more appropriate.

Having a cash buffer means you aren’t forced to sell investments in the event of an unexpected outlay.

If you have alternative sources of income, such as a defined benefit pension or rental property, it may make sense to draw on these rather than your pension until the market settles, says Alistair McQueen, head of savings and retirement at Aviva.

Income-paying investments can also help, he says: ‘Natural income is the income that investments generally accrue, typically via dividends. During periods of market fluctuation it may make sense to withdraw only this natural income to avoid eating into the underlying capital.’

Buck the trend and think about annuities

If a guaranteed income is your priority, consider using part of your pot to buy an annuity, where you exchange a lump sum for a guaranteed income.

Annuities have fallen out of fashion, but you could use just part of your pension pot to buy one to cover your essential outgoings.

Emma Walker, director at Just Group, says: ‘Periods of turbulence often remind people that peace of mind has a value, and particularly for retirees who may need the income to pay the bills.’

For someone nearing state pension age, a fixed-term annuity could be a good option. A 62-year-old could secure an annual income of £12,547 (equivalent to the full state pension) for five years with £58,000, according to Just Group.

William Burrows, founder of the Annuity Project, says one option is to take out an annuity where you don’t receive an income. Over five years, you can lock in a rate of 4.5 per cent. That means if you invested £100,000, the plan would pay £125,000 in five years’ time, straight back into your pension. All gains are tax free.

Pensions UK estimates a single person needs an annual income of about £21,333 for a minimum retirement lifestyle. A 65-year-old with a £140,000 pension pot could buy an annuity that would pay £8,786 a year for life, according to Just Group, which, coupled with the full state pension, would bring them to that amount after tax.