Is it too late to save your super?

This is a trying time for everyone. And while your health should be your biggest worry, the outcome for your retirement will, for many, still be a concern.

Should you be shifting your super into cash, or is it too late to take action? Should you be shifting some or all of it into cash holdings? What should you be doing with your retirement savings?

YourLifeChoices asked SuperRatings executive director Kirby Rappell for his predictions for how coronavirus will affect retirement incomes, as well as any tips he may have for our members.

Q. This is a challenging time for superannuation and investors. Should our members be taking any action to safeguard their retirement savings?
We have been looking at this, and have tried to add some context.

It has been a challenging couple of weeks for superannuation fund members. The reality is that the pullback in markets has been sharp and has impacted member balances, on paper at least.

Overall, there remains a need to keep the current market conditions in context. For most members, while there may be a fall on paper, the only time the loss is crystallised is if you sell out. If you’re in your 20-40s, your super will stay invested for another 30 to 50 years, so it’s all about a long-term plan and having the confidence to stick with it.

Q. Is it too late to switch to cash holdings?
Older members are more likely to be in more conservative options, which have been less impacted. But be careful if you consider switching to cash, as you will be locking in the fall in performance. We suggest members talk to their fund or an adviser who they trust to help ensure any decision is aligned with a long-term strategy.

Q. What asset mix should retirees be considering right now?
In general, to reach retirement goals, you need some exposure to shares and shouldn’t get caught up in short-term noise. Even members in their 50s are likely to need to rely on their super to draw down for the next 20-30 years. Often, members will have a cash bucket setup that provides for two to three years of cash payments. This is sometimes a default offered by funds. This allows greater certainty for short-term income needs, while leaving medium/long term exposure to the market. However, for those members who have ridden the market down to date, historical experience suggests that switching to cash has not worked out well.

Q. What are your predictions for retirement savings? Should older people be worried right now?
Over the past 10 years, we have seen events including SARS, MERS, swine flu and Ebola. Markets have worked well and delivered good returns to members.

It is likely that the average balanced-style option is down around 9.5 per cent this year. However, this number is rapidly evolving and needs to be viewed in context.

Last word?
Markets and super fund members struggle to deal with uncertainty. At the moment, this is the only thing that is certain. Long-term strategy remains key to realising the long-term outcomes super fund members will rely on for their retirement.

Are you worried about your retirement savings? Have you checked your balance? What will you do to see your savings through this crisis?

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Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.
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