Choosing the right investment mix for you is just as important in retirement. It can help continue to grow your super even once regular contributions into your account have stopped.
Key points:
- When you retire, you will need to decide how to invest your super. You have a range of investment options to choose from, just as you did while you were working.
- The right investment choice is a balancing act. You will generally want to keep growing your super savings while at the same time preserving what you already have.
- Around 30% of the income paid from your super comes from investment earnings you make in retirement. So it pays to keep your savings invested.
We invest differently for our lower risk Retirement Income diversified options (specifically Conservative Balanced, Conservative & Defensive). In these options, our share and liquid alternatives investments have a greater focus on investments that are more stable, and in some cases may even perform well in falling markets. This is designed to reduce the impact of large sharemarket falls and help what you have worked hard to save, last for you in retirement.
Investing through retirement will help your money last
It’s difficult to know exactly how long you’ll need your super to last, or how much more expensive life will become. But staying invested in the right mix of investments can give you the best chance of achieving your retirement goals.
This is important because:
- A dollar tomorrow will buy you less than a dollar today. Your super needs to keep up with the rising costs of goods and services (inflation), and
- Your retirement could span more than 30 years1 - you want your super to provide an income for as long as you need it to.
1 Australian Life Tables 2015 - 17, Australian Government Actuary
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- Retirement incomes are rounded to the nearest $100 and are stated in today's dollars, deflated using CPI at 2.5% p.a. Based on a member aged 67 with $300,000 at the start of FY24 and planning to age 95. Retirement income is derived by targeting a constant total real level of income to exhaust their balance at age 95. Investment returns for the Conservative Balanced option are assumed to be CPI +3.25% p.a. which equals 5.75%. Investment returns for the bank account are 3% per year. No admin fees and earnings tax are modelled as investment returns are assumed to be net of fees and tax. Based on September 2023 Aged Pension rates, indexed with Average Weekly Ordinary Time Earnings (AWOTE) at 3.5% p.a.
- This example is for illustrative purposes only and is not intended to provide a forecast or guarantee on outcome.
- The case study is based on current regulatory requirements and laws, including tax rates, which may be subject to change. Investment return assumptions are for illustrative purposes only. Actual returns year on year may be negative and may vary materially. If investment returns/inflation are higher or lower, final balances will differ.
How much risk should you take on?
The best thing to do is take the time to understand your circumstances, retirement goals and risk appetite, create a plan and then stick to it.
In retirement, you generally won't have the benefit of regular contributions going into your account. You’re also withdrawing an income from your super - so when markets fall, it can be much harder to recover your losses.
To help your super last, investing for growth and limiting risk are some of the things you'll need to consider.
graph risk vs return
Aware Super’s Conservative Balanced option for retirees
If you don't make an investment choice, you’ll join 60%* of our retired members invested in our Conservative Balanced option.
The Conservative Balanced option has been designed by our experts with the needs of retirees in mind. It aims to:
- provide a balance between capital stability and capital growth
- protect against the effects of inflation, and
- reduce the impact of large market falls on investment returns.
Find out more about Aware Super investment options
*As at April 2024
The right investment choice is different for everyone
Your investment choice will depend on:
- your age,
- your investment timeframe,
- whether you have other sources of income (for example, the Government Age Pension or investment properties)
- your lifestyle goals,
- your attitude to risk, and
- how dependent you are on your super savings for your retirement income.
Where to next?
Attend a webinar
Join our experts as they break down super and finances into easy-to-understand topics through our live webinar education series.
Speak to a financial planner
A financial planner can work through complex financial matters and help you create the right strategies to achieve your financial goals in retirement. They’ll explain any next steps, fees and charges before progressing.
Make an investment switch
It’s simple to switch the investment options your retirement savings are invested in. All you need to do is log into your account online.