Retirement dos and don’ts in the face of rising inflation

retirement do's and don'ts

Cost of living and inflation have been front and centre for months now and will remain a concern for many Australians for the rest of the year. With inflation rising by 6.1% over the past year, the biggest jump since the introduction of the Goods and Services Tax (GST) in 2000, many concerns and questions are being raised around personal finances – specifically around retirement savings.

Tim Wedd, executive director of financial services firm Crystal Wealth Partners, offers the following dos and don’ts on how you can fortify your retirement savings from rising inflation.


Diversify your investment portfolio. Portfolio diversification is of utmost importance, especially in a tough financial climate. Ensuring that you have a wide variety of investments across multiple industries can protect you from market volatility as a result of rising inflation. 

Invest in stocks/shares that can benefit from rising inflation. Shares in the consumer goods and healthcare sectors can be a good option to invest in. They are more likely to thrive in a higher inflation environment as higher costs can be passed on to the consumer.

Read: Why are older Australians delaying retirement?

 Re-evaluate any property investments. Generally speaking, real estate thrives during periods of high inflation. Property values can increase resulting in higher rents to align with rising inflation. If you have a longer-term time horizon, then investing in real estate could be an ideal way for you to maximise your investment opportunities and capitalise on rising inflation.


Be reactionary. Don’t make sudden changes to your portfolio. Markets tend to overreact to daily newsfeeds meaning sudden portfolio changes can be a very expensive strategy. A ‘knee-jerk’ reaction rarely produces a good investment outcome. Taking action is best when driven by a change in longer-term fundamentals.

Neglect your savings. It may seem like a no-brainer, but rising costs can put your savings and financial goals off track. Budgeting and having an emergency fund for a rainy day can counteract this potential neglect. Mapping out your purchases and cost-cutting where applicable can also help slow down the impact of inflation, while also allowing you to save more. 

Read: Common retirement mistakes and how to avoid them

Keep excess cash on hand. If you have money that goes beyond an emergency fund, don’t keep this on hand as it will become worthless over time. It might be worth investing the excess as it is possible to earn a much higher return on shares ahead of a standard savings account, though it does come with higher volatility.

Mr Wedd says superannuation tends to dominate planning and be at the forefront of long-term financial goals. But as a result, other important aspects of your personal finances and portfolio construction in retirement can be neglected. He has five tips to help you look at the bigger picture and make your portfolio more sustainable during retirement.

1. Reassess your risk tolerance

Be proactive, not reactive. As you settle into your retirement, you may need to reassess your level of investment risk. If you have concerns about your current allocation to more risky assets such as shares, it may be worth minimising these and thus lowering your risk profile. Remember that readjusting your appetite for risk needs to be done at the right time, not necessarily when there is a significant market boost or crash.

2. Reconsider your asset allocation

Your financial plans are never just a ‘set and forget’. Keeping your portfolio diversified allows you to both manage your appetite for risk as well as give you flexibility when you need it, in the event of a change in circumstances. As a result, it’s important to maintain a dynamic and flexible portfolio throughout your retirement.

Read: How much do you really need to retire?

3. Ensure your principal lasts

This sounds simple but is something that can get lost among discussions of growth and income. Track your spending and ensure that you don’t overspend, especially during your first few years of retirement, as this will set you up for the long term. Monitoring your expenses and investment returns is especially key when there is market volatility and sustained periods of lower investment returns. Remember that it is also okay if your spending and income fluctuates from year to year. 

4. Consider an annuity

Annuities produce income for retirement. This can help future-proof your retirement and bring stability to your personal finances. However, they can also be expensive, generate low returns and lock away access to your capital. As a result, you should discuss with a professional adviser to determine if this is the right strategy for you and continue to look at your needs over time. 

5. Review your property portfolio

Sometimes, retirement can be viewed in a narrow lens, with superannuation dominating the discussion. However, the role of the age pension and housing are equally, if not more, important. Income from investment properties, or deciding to downsize, can have a major impact on your overall wealth. It is important to consider your entire portfolio of assets, along with tax and pension implications.

Are you confident that you have a sound financial plan retirement? Why not share your thoughts in the comments section below?

Tim Wedd has more than 35 years’ experience in specialist SMSF, technical, consulting and financial planning roles for major organisations including MLC, AXA, AMP, Colonial/CBA, ING/ANZ and HSBC.

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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