Call us on 1300 794 893

Your Money

Should I play it safe until retirement?

| More

I am in my late 50s and will retire at 65 years of age and our combined super is pretty good – close to $800,000 but this stock market worries me.

I have seen ads talking about the benefits of safe annuities that pay around six per cent plus. Would I be making a mistake taking my money out of the market and just playing it safe? I would hate to see another crash and see my super chopped in half.

I have seen those ads and they exude comfort as well as low anxiety. I can see why you might think, ‘let’s play it safe’. I have had experts on SWITZER say they think the market will rise 20 per cent over the next 12 months and so as long as you won’t kick yourself about playing it safe and missing out, then annuities are a safe play.

By the way, super funds are not all in the stock market and while share indexes dropped 50 per cent or so, super funds, which invest in other assets such as annuities and bonds, might have fallen 17 per cent and most of them are back in the black for the three-year period that covered the GFC era.

What you have to do is work out how much you will spend in retirement and whether your nest egg will be big enough to support you if you lived well into your eighties.

Playing it too safe too early could prove to be a dangerous strategy, especially if you like holidays, new cars and great restaurants. Safe players might have a plan to sell a valuable home and trade back over time but I guess what I’m saying to you is to create a plan that tells you just how safe you can go and how much risk you need to take on to ensure you don’t run out of money.

I have to say that I think super funds are for pretty cautious investors but at the end of the day you know your appetite for risk. And remember, you can tick the box on your super fund for the most conservative approach to investment if you want cut out the anxiety of watching the market.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Monday, July 04, 2011

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

Related articles

Super changes in the Budget

Segregation anxiety – how to split assets

Is your business prepared for MySuper come 1 January?

Is it time to fix now?

Can I access my super without retiring?

blog comments powered by Disqus
Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300