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.


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


Sign-up to the YourLifeChoices Enewsletter

continue reading


Podcast: Banishing winter blues with cold water companionship

COVID lockdowns can do funny things to people, but last year Melburnian Belle Galloway decided to do something she had...


Soothe your soul with these stunning images of Japan's cherry blossoms

It's sakura season, the perfect opportunity for locals to indulge in hanami, the traditional Japanese custom of 'flower viewing'. On...


Discover New Zealand's best winter attractions

To mark the start of the trans-Tasman bubble, here are some of the best things to do in New Zealand...


Check your passport's expiry date before booking

International travel seems to be slowly but surely returning. With the trans-Tasman bubble and talks of another bubble opening with...


Tips for getting a good night's sleep on holiday

Travel can seriously mess with our sleep. The jet lag that disrupts our body clocks may be the most obvious...


Tasmania's top spots for shopping and markets

The Margate Train offers shopping with a difference at Margate, southern Tasmania. Margate is 20 minutes south of Hobart (19km)...


What will it take for travel to get restarted again?

Maraid is encouraged by the travel bubble with New Zealand opening up and wonders what needs to happen before we...


The unbelievable software flaw that led to a major flight incident

When it comes to flight engineering, you would hope that every possibility has been factored in to perfection, but a...