Feb 19, 2021

Our Insights

There have been many and major factors impacting the retirement plans of many Australians in the wake of the pandemic.

In 2020, many faced financial pressures, job losses and even pulled out money from their super fund, impacting their future. Those who had their plans on cruise control, in particular, would've paid a significant price. 

So now as we head into the recovery phase, it's time you put your hands back on the wheel, regain control over your plan and become proactive to get your retirement goals back on track.

But how? And where do you start? Here's some key tips. 

Review the state of play

You need to sit down and take stock of your current situation and your retirement plan, especially if you've been on autopilot for a long time. Are you still on track towards your wealth and retirement goals, or have you deviated from your timeline? Has your income been affected? Where are your investments at, especially your superannuation? How is your budget looking? Don't sugar coat it. Get some help from your financial adviser who will truly understand your position and won't be affected by the same level of emotion that you may be.

Re-adjust your goals

Depending on how badly COVID-19 hit you, you may have to adjust your strategy to ensure that you still get to where you want to be in retirement. The pandemic may have shifted your retirement vision altogether, or your goals may just need a new timeline or slight adjustments if you're still recovering financially from the pandemic. But beyond the pandemic, other life events will come your way, whether it be family or career orientated, that could see you take a new course. 

Either way, the quicker you re-align your goals based your current situation, calculate an updated figure of how much you'll need for retirement, and work out with your adviser a new way to get there, the quicker you'll be heading in the right direction again. 

Offset risk and diversify

COVID certainly taught us about risk. And while the peak pandemic is behind us for now, we're still seeing how quickly our worlds can be locked down. If you're a young investor who still has plenty of time before retirement, you'll be able to manage higher risk assets and weather the market downfalls - although you'll still need to have a strategy and establish your risk profile. However, if you're close to retirement, you'll likely want to protect the savings you have and play it safe.

If you haven't reviewed your retirement plan in a number of years, you may find the risk tolerance you once had has changed. So to understand how much risk you need to offset, evaluate the current level of 'risk and return' in your portfolio. If the high-stakes investments just aren't worth the potential gains, then it's time to make some adjustments. 

By adopting a long-term mindset, you'll also be able to act rationally without emotions and avoid making panicked decisions that jeopardise your plan. 

Playing the long-term game and diversifying your assets will help you minimise any future risks and provide you more security with your retirement investments and savings. 

For example, with a good mix of investments in your portfolio, you ensure that a downturn in one area doesn't take down your whole strategy. You should look to obtain a mixture of assets, such as property, shares, fixed interest and cash, while also trying to stick with what you know.

Currently in Australia, the property market has particularly strong predictions, with regional areas thriving and supermarkets, industrial, storage warehouses and convenience-based commercial real estate booming. Pharmaceutical, health tech and other shares also continue to stand out. 

Another way to offset risk is also to tackle your debts now and not have that stress hanging over you in retirement. 

Make contributions

Particularly if you're closer to retirement, now is a great time to try increase the amount you contribute to your super at each instalment (if it's within your means). If you're a younger investor, you should strive to gradually increase these contributions as your income increases.

And for those who withdrew up to $20,000 from their super, you'd want to reinvest that amount and more, as soon as possible, to ensure you don't lose out on thousands by retirement. 

Remember the more contributions you make now, the more flexibility you'll have in retirement.

Review regularly

This shouldn't be a once off ordeal you're doing now just because of the pandemic. Keep involved in your retirement strategy by regularly assessing your situation and finding ways to improve your position. Just as our lives are constantly changing, so will your goals and retirement vision, so it's important you always stay on top of your plan.

Get advice

Your future depends on your retirement savings, which is why you shouldn't do it alone. Eliminate risk and make the most of your investments by seeking out a professional financial advisor who will ensure your retirement goals are well within reach. 

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Ben Calder at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.