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November 10, 2008               

FUTUREPROOF YOUR RETIREMENT

If you are planning to retire soon or are already retired, recent events in the global economy have probably left you concerned about how best to protect and enhance your savings to maximise your retirement income.

While history has shown that in time, markets will recover and your investments are likely to be restored, there are things you can do now - and plan for in the future - that can maximise your income in unpredictable times.

A diverse investment portfolio is important regardless of your age, but for those who have or are about to retire, it's even more critical.

A place for cash
When heading towards retirement, consider holding four years of income in a cash investment option.  For example, an annual retirement income of $25,000 could be drawn down over a four-year period from $100,000 invested in cash.  Retirees with an account-based pension will then avoid crystallising any paper losses on investments in balanced or higher risk options.

While there is a place for cash, an appropriate mix of defensive and growth assets such as shares should be considered to allow long-term growth opportunities throughout retirement.

Stay the course
Also, try to resist the urge to sell other assets and investments in the current climate which is inconsistent with your investment strategy.  Financial markets move in cycles and those who stay the course are likely to reap the most benefit.

Transition to retirement
If you are planning to retire soon, consider reducing your working commitments instead so that you can continue accumulating superannuation.  Again, by including shares in your superannuation portfolio you will be in a better position to recover any paper losses when markets rebound.

Review finances to soften impact on retirees
Unfortunately,  retirees face a difficult situation.  A long-term perspective, balanced with the need to preserve investments, remains vital.  Retirees should check whether they now qualify for the Aged Pension; they should review and reduce their spending'; draw from other assets or reduce their account-based pension payments to minimise crystallising losses.

My best advice, however, is to speak to a financial planner.  Some funds, such as Statewide have financial planners who can help members structure their investments to better weather this volatility.   

The information provided above is of a general nature. It does not consider your specific needs nor is it intended to be financial product advice. You should obtain independent financial advice, and consider the applicable Product Disclosure Statement before making an investment decision.

Visit us at 99 Gawler Place, Adelaide
Telephone us on 1300 65 18 65
Email us at sasuper@statewide.com.au
Visit our website at www.statewide.com.au