Now you are in retirement, what will recession mean to you?

For the first time in 29 years, Australia has officially fallen into a recession.  Although many of us remember our last one, it would be hard to find someone who retired in one.

You have worked hard all your life to be as self-sufficient in retirement as possible.  You have saved and contributed to your superannuation to provide for you when you stop working. And then, 2020 rolls around with the inevitable  Covid-driven recession. But what does this recession mean to your retirement?

Recession itself is unpredictable in nature.  Couple this with the unknown progression of the Corona Virus and we can only be certain of one thing…. Uncertainty.

Uncertainty brings market fluctuations and it is these ups and downs which you, as a retiree, need to manage.  There are a few easy things you can do to manage through these next few years.

1.       Review your budgets

You want to minimise the amount of drawdown on your superannuation as possible, especially drawing down on assets that have decreased in value. 

The one thing that you have complete control of is your spending.  Take the time to review all your outgoings. The government’s money smart website has an easy to use budgeting calculator. Our tip is to be as meticulous as possible – it’s amazing where you can find savings.

 2.      Review your portfolio and stick to it

 As a part of putting together a financial plan, we take the time to construct a portfolio not only around your goals but also the amount of risk you are comfortable to take on in your investments. 

 Just as markets fall, they will rise.  Timing the market is near impossible and simply crystallises losses and misses outs on potential gains. 

Although there maybe intraday or intraweek fluctuations, as Vanguard’s Robin Bowerman set out in his article (1) the “equities markets tend to price in the future rather effectively.”  Even with movement up and down, in the long term, financial markets tend to perform ok during recessions.

3.      Review your entitlements

Chances are the market correction earlier in the year affected your superannuation balance. This may have reduced your assets so that you may now be entitled entitlements you were not previously. It is important to continually review your assets and speak to a specialist to make sure you are receiving all the Centrelink entitlements available to you. 

This recession will be unpredictable. As governments throughout the world spend more to stave off the effects of the recession, there will be some movements in the markets, as we have seen over the past 6 months.  But you can do a few things to make you prepared.

 The first thing you need to do is to review your financial situation,  confirm you are taking all the steps you can to live the most comfortable retirement you deserve. Schedule a no-cost, no-obligation Discovery Meeting with Louella Jorge – We’ll help your review your current situation, your aspirations, and identify the simple steps to get you where you want to be.

 Discovery Wealth – The Hills trusted name in financial advice.  

1. Bowerman, R. (30 June 2020) Investing in a Recession [online] Available at: https://www.vanguardinvestments.com.au/retail/ret/articles/insights/research-commentary/investment-principles/investing-in-a-recession.jsp

The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. Louella Jorge is an Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser before you act.

Discovery Wealth Advisers

Author Discovery Wealth Advisers

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