Stock markets would need to fall by 7.5 per cent in a day before the average drawdown investor becomes nervous and moves their money, a study by Canada Life has found.
Research carried out in November showed a third (33 per cent) of drawdown investors would remain steadfast and not make any changes to their investments no matter how much stock markets fell.
For the remaining two thirds markets would need to fall by 7.5 per cent on average in a single day to make them worried enough to review and move their money.
The study questioned 500 respondents aged 55 and over with income drawdown investments.
It found in the event of major stock market moves, 59 per cent of investors would move their money into a mix of asset classes, while 21 per cent would move it into cash.
If faced with market falls, DIY investors were more likely to see cash as a safe haven (25 per cent) and less likely to move to a mix of asset classes (50 per cent).
Of those who have an adviser relationship, 18 per cent said they would move to cash if markets fell, and 66 per cent said they would switch asset classes.
Andrew Tully, technical director at Canada Life, said: "Far from knee-jerk reactions to the latest breaking macroeconomic news, our research suggests most people using drawdown to fund their retirements are sensibly taking a longer term view.
"Dealing with the prevailing headwinds is all part of the game when you continue to invest into retirement.
"It is key though to have the right diversified investment strategy and ensure your essential expenditure is covered through a regular income.
"Only then will you will able to flex and change your investment approach as the economic environment dictates."
He said with global markets currently being quite volatile, consumers were likely to flock to cash. But he warned cash carried its own risks.
He said: "As people move into retirement, it can become increasingly tempting to adopt a risk-averse stance and reduce exposure to stock markets.
"With global markets fairly volatile and continuing Brexit uncertainty, consumers will likely see cash as the safe haven in an increasingly blustery storm.
"But cash also carries its own risks, that being inflation and historical low interest rates, so settling for such poor yields exposes a pension pot in real terms."
Dean Mullaly, managing director and IFA at Mark Dean Wealth Management, said investors who understood the markets would recognise the benefits of taking a longer-term view and staying in equities.
"These investors will be happy to accept the short-term fluctuations. It’s also likely these drawdown investments won’t be the whole of the pension pot so they are less concerned about short-term movements," he said.
Dippy Singh is a freelance reporter for FTAdviser
