Retirement
Panic selling to wipe 8 years off retirement income
Australian retirees who sell their equities and flee to cash amid market volatility could decimate income by eight years, an industry expert has stated.
Panic selling to wipe 8 years off retirement income
Australian retirees who sell their equities and flee to cash amid market volatility could decimate income by eight years, an industry expert has stated.
According to Allianz Retire +, retirees who respond drastically to market corrections by reducing their exposure to markets could have long-term implications for their portfolio longevity in retirement.
Allianz Retire + head of product and customer experience Jacqui Lennon believes selling after a market fall is a common investment error when markets start behaving erratically.
“We know black-swan events like these can be incredibly scary and damaging for retirees and we also know retirees fear a loss 10 times as much as they value a gain, compared to the average person who fears the loss only twice as much,” Ms Lennon said.
“It’s completely reasonable, but after a lifetime of accumulation, their next move is the one that matters most.
“Similarly to the GFC, we’ve seen that many retirees have been flocking to cash in an extreme risk-off response.
“But what we need to instill is that fleeing to cash or cash-like investments has the potential to severely deepen losses in the long term.”
“For those in a balanced fund, in the context of meeting goals and expenses for an ever-increasing lifespan, that’s the equivalent of wiping eight years off your retirement income,” Ms Lennon started.
In addition to avoiding a sell-down of equities as markets continue to fall, Ms Lennon urged self-directed investors to look at their exposure to defensive assets, highlighting that while a degree of risk is inherent in equity exposure, risk should also be questioned when showing up in defensive allocation.
“There really is nowhere to hide in this scenario. If investors have taken on defensive assets in the hunt for yield, and those assets are starting to look a lot less defensive under pressure, they need to ask the question, should you be seeing significant negative returns in your defensive portfolio? Is that really the place that considerable risk should be showing up?” Ms Lennon said.
RELATED ARTICLES
About the author
About the author
Retirement Planning
New digital platform revolutionises retirement planning for Aware Super members
A groundbreaking digital platform by Aware Super is transforming the way retirees plan and manage their pensions, with significant results already seen in the pilot phase. The tool, named Retirement ...Read more
Retirement Planning
The retirement mortgage squeeze: how one bank turned a demographic risk into a strategic edge
An increasing share of Australians are entering their 60s still paying off mortgages, just as living costs and interest charges stay stubbornly high. For banks, super funds, retailers and ...Read more
Retirement Planning
The retirement mortgage crunch: what it means for banks, retailers and policy in Australia
A growing share of Australians are carrying mortgages into their 60s and beyond, colliding with persistent cost-of-living pressures and a “slow grind” macro outlook. This isn’t just a social story; it ...Read more
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
Retirement Planning
Simplified retirement advice: Key to overcoming behavioural biases, experts say
In a bid to enhance retirement outcomes for Australians, a recent whitepaper by Industry Fund Services, in collaboration with Challenger, has highlighted the importance of simplifying retirement ...Read more
Retirement Planning
Rest launches Retire Ready digital experience to empower members approaching retirement
Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled a new digital experience aimed at making retirement preparation simpler and more personalised for its members. Read more
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
Retirement Planning
New digital platform revolutionises retirement planning for Aware Super members
A groundbreaking digital platform by Aware Super is transforming the way retirees plan and manage their pensions, with significant results already seen in the pilot phase. The tool, named Retirement ...Read more
Retirement Planning
The retirement mortgage squeeze: how one bank turned a demographic risk into a strategic edge
An increasing share of Australians are entering their 60s still paying off mortgages, just as living costs and interest charges stay stubbornly high. For banks, super funds, retailers and ...Read more
Retirement Planning
The retirement mortgage crunch: what it means for banks, retailers and policy in Australia
A growing share of Australians are carrying mortgages into their 60s and beyond, colliding with persistent cost-of-living pressures and a “slow grind” macro outlook. This isn’t just a social story; it ...Read more
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
Retirement Planning
Simplified retirement advice: Key to overcoming behavioural biases, experts say
In a bid to enhance retirement outcomes for Australians, a recent whitepaper by Industry Fund Services, in collaboration with Challenger, has highlighted the importance of simplifying retirement ...Read more
Retirement Planning
Rest launches Retire Ready digital experience to empower members approaching retirement
Rest, one of Australia’s largest profit-to-member superannuation funds, has unveiled a new digital experience aimed at making retirement preparation simpler and more personalised for its members. Read more
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
