Why does share market performance matter in retirement?

Font Size:

Poor share market performance can reduce the value of your super or retirement savings. Making sure you’re comfortable with your level of investment risk is important in retirement.

Even if you don’t have a direct investment in shares, a portion of your money in your super or account-based pension is generally invested in the share market. Shares are considered to be a higher risk investment because share markets can be volatile. While there is the potential for greater gains, there can also be greater losses.

When the share market goes up, the value of your investments should increase. But when the share market falls, you earn negative returns and your investments (the money in your super for example) fall in value.

A fall in the value of your super or savings could mean you outlive your savings or your money runs out sooner than planned. Falls in the share market can have a bigger impact in retirement because:

  • Later in life you have less time to recover from poor share market performance or take advantage of lower share prices.
  • Negative returns coupled with withdrawals for pension payments make it harder to recover the value of your investments.
  • The timing of share market falls also matters due to sequencing risk. Sequencing risk is the risk that the order and timing of your investment returns is unfavourable, resulting in less money for retirement.

 

Share market performance and COVID-19
The global economy has been impacted by COVID-19 and the first quarter of 2020 has seen significant falls and volatility in both domestic and global share markets. You may be feeling concerned about the impact of share market performance on your retirement income.

The first step is not to panic. We know from the Global Financial Crisis (GFC) that many investors made decisions driven by fear rather than necessity. Talking to a financial adviser can help you understand the facts and give you clear guidance on your best next steps. If you need help finding an adviser, we can assist by providing you with a list of financial advisers that are experts in retirement income.

If you have a Challenger lifetime annuity, your income payments are guaranteed and won’t be affected by share market performance.

Managing share market performance in retirement – what are the options?
Retirees have less time to recover from poor investment returns and may not be able to take advantage of lower share prices. So what can you do?

  • Check in with a financial adviser to make sure you are comfortable with your current investment mix.
  • Consider complementing your existing retirement income with income that’s not linked to the share market, such as a lifetime annuity. Challenger annuity payments are guaranteed for life and will not change regardless of how the share market performs.

 

Navigating a changing environment
With less certainty in the world’s financial markets, Challenger has created an information hub to help you navigate these uncertain times. Access the hub.

Challenger is a YourLifeChoices preferred partner.

Have you sought financial advice on how best to manage your super or account-based pension during and post the pandemic?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

Tax on retirees likely to repay coronavirus debt, say analysts

Super taxes, rather than a rise in GST, touted as the way forward post COVID-19.

Innovative plan to ensure income for life

Worried about running out of money? This concept could ensure income for life.

If you’re preparing to retire, you might need to think again

Older Australians must work for longer for a sustainable economy, says the Treasurer.

Written by Challenger Group

4 Comments

Total Comments: 4
  1. 0
    0

    Sounds like a big advertisement for Challenger to me. I whacked my super into cash early in this pandemic and so far I see no reason to change. Most things going down at the moment except super fees and Challenger are another authority that takes fees in an non increasing investment market.

  2. 0
    0

    It won’t ever affect me.

  3. 0
    0

    Wont affect me either !

  4. 0
    0

    Market share is affected due to all opportunities for the themes and enduring tips for the individuals. The document of the share and help with https://www.edugeeksclub.com/ in the mid of the market for the turns. Humour is followed for the share of the market in the mid of the sciences.


FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Age Pension

Age Pension increases: 20 March 2021

In accordance with indexation, Age Pension payment rates will increase as of 20 March 2021, but today, we can help...

Age Pension payment rates

Rent Assistance rates payable from 20 March 2021

Rent Assistance rates and thresholds will increase on 20 March 2021. Find out what the new payment rates and limits...

Age Pension payment rates

Age Pension update: increases and changes from 20 March 2021

Changes to income and asset thresholds will take effect from 20 March 2021. Below are the new limits that will...

Centrelink – Services Australia

Low Income Health Care Card

Even if you’re not eligible for any benefits from Centrelink, you may qualify for a Low Income Health Care Card...

Age Pension payment rates

Changes to JobSeeker rates and thresholds

From 20 March 2021, JobSeeker rates and thresholds will be indexed. Find out if your payment will be affected. JobSeeker...

Age Pension payment rates

Age Pension and supplements set to increase this month

More than five million Australians have received welcome news with an increase to their social security payments from 20 March...

Finance News

Financial planners know they need to build trust with retirees

Financial planners know they must win us over. They know they must find new ways to help retirees sustain an...

Health

The 'big O' and ageing - what to expect

A client recently told me that she "always had ripper orgasms, but they seemed to be getting more intense" as...

LOADING MORE ARTICLE...