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Investing in Retirement

Keep your super working

Just because you’ve retired, it doesn’t mean your super should stop working hard for you. In fact, it’s often a smart idea to keep a focus on your investment options within super, so that they match your retirement needs and preferences. This is especially important now that Australian retirees are living longer, and inflation of just 2.5% can significantly reduce the value of your money over a few decades.

What’s more, once you retire, the earnings on your super investments are generally tax free.

Change in needs. Change in focus. A case study

Joe has just retired and predicts he’ll need to rely on his super income for another 25 years or so. Of course, now that he’s no longer working, his approach to investing has changed a bit. Instead of aiming for strong growth as he did when he was younger, he’s now more focused on preserving what he’s got and keeping ahead of inflation.

So, he decides he’s going to tilt his investments towards more conservative options, while still keeping a little bit in managed growth. That way, his super can benefit when the stock market is good, but not face a great loss if things go downhill.

As the years go by, his invested super balance keeps up with inflation, and even exceeds it in good years, meaning he can splash out occasionally now, without worrying so much about the future.

Best retirement investments: understanding risk and benefits.

Of course, every person is different, which is why the best retirement investment plan for one person, won’t necessarily be the same for another.

That’s why it’s always wise to chat to an expert in retirement investing before making any big decisions. One of the first things they’ll probably ask about is your attitude to risk.

As with any type of investment – even the really conservative ones – there’s always some element of risk, however some carry more risk than others.

Growth vs Risk

Generally, when dealing with the most common investment assets, it can be said that the higher the potential for growth, the higher potential risk. So for instance, shares and, to a lesser extent property, are often regarded as higher risk. But the potential for growth over the long term is also greater than ‘low-growth/low-risk’ assets such as cash (e.g. term deposits) and government bonds.

Your goals in retirement, your current assets and your comfort around risk are all factors that will probably influence your overall investment decisions.

A bit of this, and a bit of that.

One of the few ‘golden rules’ that almost all successful investors agree on is the benefit of diversification. In short, it means not putting all your investment eggs in one basket.

By diversifying your options you spread the risk, so if one asset’s value plummets, it doesn’t take your entire savings with it.

The type of diversification you choose however, will often change over your lifetime. But even if you’re leaning towards conservative (also known as defensive) investments, it’s still possible (and often wise) to have diversification within that choice, and around it.

In the example above, Joe diversified by keeping some growth assets in his investment plan. But even purely within a defensive strategy, Joe could choose to put some of his balance in Prime Super’s Conservative option, some in the Cash option and the rest in Fixed Interest .

In fact, many of our options are strong performers in the long-term. It’s why Prime Super is consistently amongst the top-ranked super funds in Australia, as voted by Canstar, Rainmaker, and WeMoney.

How to invest in retirement.

Step 1: Assess your current financial situation

Your other investments and income (such as share portfolio and rental income) as well as whether you own your own home or not, will play a major role in shaping your investment choices. As will any big expenses you think you’ll need to plan for in the near future.

Step 2: Set financial goals

Only you know what your ideal retirement looks like, and so, it’s up to you to decide how to achieve it. A good place to start is to set your financial goals for the next few years... do you want to travel the globe, or settle back into a relaxed retirement, or a bit of both?

Step 3: Evaluate different types of investments

Take a moment to look at the different types of investment that Prime Super offers to retirees. Each one includes an overview (including optimal timeframe, and the risk level), a history of returns, and an outline of the individual types of investments within the option.

Step 4: Understand risks and evaluate benefits

Read up on the risk levels within each option and weigh them against your own comfort around risk and volatility.

Step 5: Seek advice if you want a strategy

For most people, seeking advice is one of the most valuable pieces in the super investment puzzle. Prime Super offers two levels of financial advice: General advice on superannuation and investment options – not taking into account your personal objectives or circumstances, and Limited advice from a qualified financial planner to help you make decisions about investing in retirement as it relates to super. Both are available at no additional cost to members and can be conducted via video chat, over the phone, or in person.

Step 6: Open an income stream account (if necessary) and start investing

When it’s time to retire (if you’re not there already) you simply create your account and choose how you want your super balance to be invested, so it keeps on working long after you’ve stopped.

Open a retirement account.

Retirement investment options

Retirement investment options through super can offer an array of choices. They can be single asset type, such as Australian shares or cash, a growth-oriented mix where up to 90% may be in growth assets; conservative options that may have up to 70% in defensive assets; and balanced options somewhere in between the two.

Prime Super offers 11 different investment products, from property and international shares, to diversified mixes, including growth, sustainable and responsible investing, balanced and conservative. It's worth taking a look at the different choices, objectives and history of returns.

Change your investment options at any time.

Needs and preferences change, which is why Prime Super makes it easy to change where and how your super balance is invested. You can do it through your MemberOnline account, via our app, or by filling out an investment choice form.

Do you have more questions?

Retirement investing can seem complex, but our team are here to help make it easier and straightforward. Book a chat with a super specialist.

*Past performance is not a reliable indicator of future performance.