Why an income stream could lessen your superannuation anxiety

By Grace Ormsby

June 15 2020
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Has your superannuation taken a nosedive recently and left you concerned? There are options available to you to lessen the financial blow, according to the CEO of Industry Super Australia.

income stream could lessen your superannuation anxiety

Speaking on a recent episode of the nestegg podcast, Bernie Dean acknowledged that older Australians would be more likely experiencing heightened levels of anxiety around their superannuation as a result of the COVID-19 downturn, and that this is understandably so.

For individuals who are “closing in on retirement”, who might be anywhere between the ages of 57 and 60 to 65, Mr Dean conceded that many of them would have “seen a bit of a hit on their savings in the last six months or so”.

“They have started to wind down. [Maybe] they’re thinking about finishing work partially or completely,” he said.

Highlighting that while “there’s no one-size-fits-all for Australians when it comes to their anxiety and what’s driving their behaviour towards superannuation in an economic downturn”, Mr Dean said that the best way to combat such fears is through accessing advice.

“The best thing that those people can do is take advice from somebody independent, or with their super fund,” he offered.

That adviser “can take them through options that they’ve got to preserve their nest egg so that when they do start to draw down on it, that they are minimising their losses”.

The CEO pointed out that “more and more, Australians are not taking the lump sum” of their superannuation savings when they reach retirement age.

“We’re seeing a real trend – with Australians recognising that when you get to the end of your working life – [that] one of the best things you can do is convert your nest egg into an income stream.”

An income stream will combine your superannuation savings with the pension, or whatever part of the pension a retiree is eligible for.

Mr Dean highlighted how such a strategy will see an individual’s super “continue to deliver the types of returns that it was earning” while in the early years of retirement.

“And that actually helps sometimes build your nest egg during the early years of retirement, even as you’re drawing down on it,” he explained.

While conceding that such a scheme may not work for everyone, the CEO said more and more Australians are taking up such plans.

“Out the other side of this downturn, I think you’re going to see a lot more people interested in how they can maximise the kind of buying power of their nest egg, and it’s probably more so in drawdowns than taking it out as a lump sum,” he indicated.

As for younger Australians whose super has also taken a recent hit, Mr Dean’s more placated offering is that they’ve “got plenty of time”.

“What we’d like to see is some ‘let’s detach ourselves from our savings’,” he stated.

Even then, he’s “encouraging [of] all people, especially over the age of 40, to start thinking about getting some independent advice about how they can set themselves up for a time”.

“Not just [to] protect their nestegg, but continue to grow it.”

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About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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Retirement