Investing for retirement is not as simple as it used to be. Generous final salary schemes – the fruits of which are still enjoyed by many in retirement today – have all but dried up as employers struggle to close yawning pension fund deficits.

Today, people working hard for a living will likely be offered something much less enticing; perhaps a stakeholder pension plan which, while enjoying tax advantages, does little to set the investment world on fire.

Adding paint to this drab picture are periodic savings scandals – occasions in which pension pots mysteriously dry up, leaving savers with a lot less than they were expecting.

Then there’s the state pension, the qualifying age for which rolls out into the future every time the government does a rethink on how long it can afford to pay the average retiree.

But we can’t ignore the need to put something aside.

People are living longer; many 60-somethings look a lot like 40-somethings did 50 years ago. Relative health has improved dramatically and workers should prepare for a significant slice of life after work sans a salary if and when they retire.

Living to the fullest

A longer life also suggests many of us will want to do a lot more in our autumn years: not just dribbling by the fire, but out there, taking up skydiving, writing a novel or even starting a business.

All this means people must give a lot more thought to how, where and when they invest their precious pounds in order to enjoy the full fruits of retirement.

There is no shortage of options. Lifetime savings take many forms beyond the standard ‘pension and annuity’ combo of yesteryear.

And quite right too; people want choices. They might spend big upfront, reasoning that things will get cheaper as they age, and adopt more sedate lifestyles, or drip money gradually as time goes by to ensure they are covered for the long haul.

Then there’s the subject of risk. How much are you prepared to accept? Every investment comes with a measure of it, but of course there are wild bets and ‘dead certs’ as well as everything in-between.

Because of the vast array of options out there, as well as the colourful tapestry of investor appetites, it’s hard to recommend the ‘right’ avenue to take.

Spreading the risk

But if there’s one thing that serves investors well throughout their careers, it’s diversification. Developing a well-thought-out investment plan and spreading money into several areas protects you against some risk and, even better, increases the chances of a big gain.

This piece on CNN Money gives a good appraisal of the reasons not to put all your eggs in one basket – even the apparently sensible strategy referenced in the article.

The retiree quoted thinks investing in the stock market while holding on to two years’ worth of living expenses makes sense. They’ll never be forced to sell stocks for a loss in a bear market because bear markets never last that long.

Sound reasoning, but there are at least two ways this isn’t the best idea. One, obviously, is that ‘never before’ doesn’t equate to ‘won’t in future’.

But perhaps a more rational answer pointed out in the piece is that the constant ups and downs of share indexes can look terrifying to the average investor if most of your money is along for the ride.

So if you want to avoid high blood pressure in old age, spread the risk.

New investment channels are opening up all the time, not forgetting the option to join other investors in a crowdfunding campaign. The tax breaks limit the risk involved, especially when it comes to EIS and SEIS investments, while the chances of a windfall are greater than if you simply track the FTSE.

If you’re heading towards retirement – and even if you’re not – the key is planning. Think what you want out of life after work, how much you want to spend each month and your appetite for risk, then sprinkle those investment pounds gently across your perfectly balanced portfolio.

Then sit back and relax – or don’t, it’s really up to you.