Achieving financial freedom begins with defining what it means to you and then creating a roadmap for getting there, which we explored in our previous two articles.

However, even with defined goals and a clear strategy in place, numerous factors can cause you to drift off course.

From inflation and market volatility to unexpected life events, the journey to financial freedom is rarely simple. As such, preparing for potential risks is just as important as setting out your targets and creating a plan.

Read on to discover five ways to help ensure you are prepared for the risks that could affect your progress towards financial freedom.

1. Ensure your plan accounts for inflation

Inflation is one of the biggest long-term threats to your financial freedom because it can gradually and consistently erode the purchasing power of your money over time.

This means that an income that appears sufficient today may not provide the same lifestyle in the future if you haven’t accounted for inflation.

Even relatively modest inflation can have a significant impact over several decades, so it’s important to have a strategy in place that gives your wealth the best chance of keeping pace.

Cash is particularly vulnerable to inflation because its purchasing power can steadily decline over time if interest rates fail to keep pace with rising prices. Conversely, market investments have a much stronger chance of beating inflation over the long term.

Research by Schroders found that over one month, cash and stocks both had around a 60% chance of beating inflation. However, over a decade, cash fell to 55%, while the market increased to 87%. Over 20 years, cash reached 65%, while the market reached 100%.

So, it’s important to account for inflation in your plan for achieving financial freedom and to create an investment strategy to combat it, which is exactly where we can help.

2. Be prepared for market volatility

While market investments have historically offered a reliable way of keeping pace with inflation over the long term, they are also susceptible to short-term volatility.

Although such fluctuations are a normal part of investing, they can still be unsettling. However, investors who remain patient and disciplined have typically been rewarded. The research from Schroders found that staying invested offered the quickest route to recovery after every major market fall between 1877 and 2008.

Because markets typically have higher growth potential than cash and a faster time to recover losses, the greatest risk associated with volatility is behavioural. Sharp falls may tempt you to sell investments and move to cash, but this can turn temporary losses into permanent ones, which may mean you miss out on any subsequent recovery, hampering your progress towards financial freedom.

We can help you prepare for volatility by ensuring your portfolio is diversified. Diversification can help offset losses in one area with gains in another, providing a smoother path to long-term growth while giving you access to a broader range of opportunities.

We can also assess your risk tolerance based on your goals, time horizons, and capacity for loss, and then help you build a plan focused on steady, long-term growth rather than short-term movements.

3. Avoid mismanaging your pension

Your pension will likely play a key role in helping you achieve financial freedom, so it’s important to manage it carefully both before and throughout your retirement.

One of the most common mistakes is withdrawing too much too soon. Taking large withdrawals in the early years of your retirement can increase the risk of depleting your pension later in life, even if your overall investment returns are strong. Indeed, people are living longer than previous generations, which means your pension may need to provide an income for 30 years or more.

At the same time, being too cautious with your investments as retirement approaches can also be costly. “Lifestyling” strategies, which gradually shift pension funds into lower-risk investments, may not always be appropriate, particularly if your pension is likely to remain invested for several decades after you stop working.

Another important consideration is sequencing risk. This refers to the danger of experiencing poor investment returns during the early years of retirement while simultaneously withdrawing an income. If markets fall and you continue taking withdrawals from your portfolio, you may lock in low returns.

We can help you develop a sustainable withdrawal strategy, maintain appropriate cash reserves, and regularly review your pension investment approach. This can all help to reduce sequencing risk and improve the likelihood that your pension will continue to support your lifestyle throughout retirement.

4. Make sure your “number” remains aligned with your circumstances

The amount you need to achieve financial freedom is known as your “number”, and it forms the foundation of many of your decisions.

For example, a key part of your number is defining your income needs, and you may calculate that you need £2,000 a month to maintain your lifestyle. But then, due to changes in your family life and the effects of inflation, you may later require £3,000.

This could mean you believe you have achieved financial freedom earlier than you truly have, which could leave you facing difficult choices, such as returning to work or making lifestyle changes.

On the other hand, overestimating your needs can also create problems. If you assume you need £5,000 a month when £3,000 would comfortably support your desired lifestyle, you may continue working unnecessarily and delay enjoying the freedom you have already achieved.

Health concerns, changes in family circumstances, or unexpected life events can all alter your financial needs over time.

We can use tools such as cashflow modelling to help you test different scenarios and understand how changes in investment returns, spending, inflation, or life events could affect your number and your path to financial freedom.

5. Review your plan regularly

Achieving financial freedom is an ongoing process rather than a one-off exercise.

Your goals, personal circumstances, and the wider economy will inevitably change over time. Regular reviews can help ensure your plan continues to reflect these changes and remains aligned with your circumstances.

Get in touch

Finding financial freedom requires creating a financial plan that can adapt to whatever life brings. We can help you do just that.

If you would like to talk to us about this further, reply to this email or call us on 0117 959 6499.

Risk warnings

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Any links will direct to a third-party website and (firm name) is not responsible for the accuracy of the information contained within linked sites.

The Financial Conduct Authority does not regulate Cashflow planning or tax planning

Approved by Best Practice IFA Group 06/07/2026