Retirement
What older Australians can do in a low-interest environment
Older Australians looking to preserve their wealth will struggle in a falling interest rate environment, as members reposition their drawdown rates, a wealth manager has suggested.

What older Australians can do in a low-interest environment
Older Australians looking to preserve their wealth will struggle in a falling interest rate environment, as members reposition their drawdown rates, a wealth manager has suggested.

During the HLB Mann Judd lunch, wealth manager Jonathan Philpot is predicting that non-risky assets will return 3 per cent over the long term, while shares will grow at 7-8 per cent.
“When you put that together for the balanced investor, they are likely looking at returns of between 5.5 and 6.5 per cent for the next five years – significantly less than previous years,” Mr Philpot said.
The wealth manager believes many people are invested in the balanced superannuation option, meaning they have 70 per cent in risky investments such as equities and 30 per cent in secure assets such as bonds.
While highlighting the benefit of this strategy in the past, Mr Philpot questioned whether this will continue to work in a low-yielding environment.
For retirees, if they are drawing out the minimum pension and drawing out 5 per cent and want their earnings to match their drawdown rate, lower returns are fine.
However, investors looking to preserve what they have in super are going to “struggle” in this environment, the wealth manager said.
“The choice is either cut back on what they are drawing down or seek higher return, and really the only way to achieve a higher return is to decrease that secure part of the portfolio,” Mr Philpot said.
“One solution to increase the investment returns is to increase the allocation to the risky part of the portfolio.
“An extra 10 per cent allocation is likely to produce a 0.5 per cent higher return to the portfolio, which doesn’t sound like a lot, but in a low-return environment, that per cent is important,” Mr Philphot concluded.
About the author

About the author


Retirement Planning
Retirement time bomb requires complex thinking
The majority of Australia’s super assets now sit in the hands of retirees and pre-retirees, but many require more nuanced investment strategies to achieve the lifestyle they want in retirement, a ne...Read more

Retirement Planning
Why some Millennials are struggling to save for retirement
Millennials are struggling to save for retirement as they face challenges that are different from other generations. What are these reasons? ...Read more

Retirement Planning
Retirement Income Review cornerstone ‘not for everyone’
Despite being the cornerstone of the Retirement Income Review, an expert has highlighted that downsizing and withdrawing equity from a property might not be the solution for all older Australians. ...Read more

Retirement Planning
Effective tips that can help Millennials retire faster
Millennials have changed the cultural and societal landscapes of the world. This is unsurprising, given the fact that they are the best educated and most diverse generation in history. ...Read more

Retirement Planning
What you need to know to get ahead financially
Australians looking to get ahead are being advised to analyse their financial situation, set financial goals and reduce debt whenever possible. ...Read more

Retirement Planning
How to adjust your wealth strategy during COVID
Investors are being urged to be conservative about spending, reduce debt and be careful of assets that are supported by government spending, as they look to adjust their wealth strategies during the f...Read more

Retirement Planning
Should older Australians downsize their property?
Older Australians face the dilemma of not being confident about their retirement outcomes, but are among the wealthiest retirees in the world due to a large proportion of their wealth being tied up i...Read more

Retirement Planning
Self-funded retirees ‘hung out to dry’ by 2020 budget
The Association of Independent Retirees has slammed last night’s federal budget release, accusing the government of overlooking older Australians in its post-COVID-19 recovery plans. ...Read more

Retirement Planning
Retirement time bomb requires complex thinking
The majority of Australia’s super assets now sit in the hands of retirees and pre-retirees, but many require more nuanced investment strategies to achieve the lifestyle they want in retirement, a ne...Read more

Retirement Planning
Why some Millennials are struggling to save for retirement
Millennials are struggling to save for retirement as they face challenges that are different from other generations. What are these reasons? ...Read more

Retirement Planning
Retirement Income Review cornerstone ‘not for everyone’
Despite being the cornerstone of the Retirement Income Review, an expert has highlighted that downsizing and withdrawing equity from a property might not be the solution for all older Australians. ...Read more

Retirement Planning
Effective tips that can help Millennials retire faster
Millennials have changed the cultural and societal landscapes of the world. This is unsurprising, given the fact that they are the best educated and most diverse generation in history. ...Read more

Retirement Planning
What you need to know to get ahead financially
Australians looking to get ahead are being advised to analyse their financial situation, set financial goals and reduce debt whenever possible. ...Read more

Retirement Planning
How to adjust your wealth strategy during COVID
Investors are being urged to be conservative about spending, reduce debt and be careful of assets that are supported by government spending, as they look to adjust their wealth strategies during the f...Read more

Retirement Planning
Should older Australians downsize their property?
Older Australians face the dilemma of not being confident about their retirement outcomes, but are among the wealthiest retirees in the world due to a large proportion of their wealth being tied up i...Read more

Retirement Planning
Self-funded retirees ‘hung out to dry’ by 2020 budget
The Association of Independent Retirees has slammed last night’s federal budget release, accusing the government of overlooking older Australians in its post-COVID-19 recovery plans. ...Read more