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Tariff uncertainty and what this means for retirement income

One of the keys drivers of happiness in retirement is the peace of mind that comes from financial security. However, US tariff announcements since the start of April have added uncertainty to financial markets, adding an extra layer of complexity for many retirees.

Policy positions have fluctuated as tariffs are paused, reversed or adjusted, leaving markets prone to volatility with sharp drops and rebounds. So, what can this market volatility mean for retirees and their retirement income?

How does market volatility affect retirees?

Market volatility refers to the ups and downs in financial markets due to the size and frequency of changes in investment prices. Many retirees rely on their superannuation for income in retirement, which can fluctuate with financial markets.

A fall in the value of your super or savings could mean you outlive your savings or your money runs out sooner than planned. Drops in the market can have a bigger impact in retirement because:

  • Later in life you have less time to recover from poor share market performance or take advantage of lower share prices.
  • Negative returns coupled with withdrawals for pension payments make it harder to recover the value of your investments.
  • The timing of share market falls also matters due to sequencing risk.

A more stable option for retirement income 

If market volatility is causing worry, there is another income option designed for predictability and peace of mind. Guaranteed lifetime income products can offer the stability of guaranteed regular income for life, that continues regardless of market conditions.

Whether the market is up or down, your income from these products remains unaffected, providing confidence that you can meet your financial needs in the future. For retirees, this reliability is invaluable, providing peace of mind that a portion of your regular income won’t be affected.

Combining the best of both worlds

Having a mix of income sources can allow you to experience both financial stability and growth opportunities. Combining a guaranteed income option like a Fixed or CPI-linked lifetime annuity with an account-based pension (from your super fund) provides flexibility when dealing with unpredictable market conditions.

  • Guaranteed lifetime income for stability: Fixed or CPI-linked lifetime annuities can act as your financial safety net, ensuring that essential expenses like groceries, utilities and healthcare are always covered, even during volatile times.
  • Market exposure for long-term growth: Allocating part of your retirement income to market based options like account-based pensions allows you to reap the benefits of long-term growth once market volatility normalises. Market-linked lifetime annuities can also allow you to enjoy the growth potential of market exposure whilst providing guaranteed regular income.

By blending these options, you can maintain a strong financial foundation while also leaving room for future growth.

Making the right choice for your retirement 

US tariff uncertainty and market volatility highlight the importance of building a well diversified income strategy that fits your unique retirement needs. The right mix of options can help you weather periods of economic uncertainty while still enjoying the benefits of market growth.

Talk to a financial adviser today to discuss your individual objectives, financial situation and needs.

 

Source: Challenger

Hardik Gupta

Senior Paraplanner

Education: Master of Business Administration (Finance & marketing) & Bachelor of technology (B.tech)

Hardik is a financial professional with an MBA in Finance and extensive expertise in financial planning. As a Senior Paraplanner, he brings a wealth of knowledge and a deep commitment to helping clients achieve their financial goals.

With significant experience in the financial industry, Hardik excels in creating detailed financial plans, performing comprehensive financial analyses, and supporting financial advisors with client portfolio management. His strong background in finance provides him with a robust understanding of market dynamics, investment strategies, and risk management, enabling him to deliver tailored solutions that align with each client’s unique needs.

In his free time, Hardik enjoys spending quality time with his family, biking, playing snooker, and exploring new culinary delights through cooking.

Mayank Manta

Team Leader

Master’s of Commerce & Bachelor of Commerce

Mayank has 8 years experience in the Financial Services industry, with extensive understanding and in-depth knowledge of Financial Planning.

Mayank enjoys systems and numbers, ensuring that every step that needs to be followed gets done and every step that is unnecessary be removed from the process. Being an open, honest and naturally empathetic person, Mayank goes out of his way to ensure that clients, family and friends are happy and content. In his free time, Mayank enjoys spending quality time with my family, creating lasting memories with the people who matter most to him.

Another activity he enjoys is travelling – exploring new places and experiencing different cultures is something that excites him.

Jack Wyer.

Financial Adviser

Bachelor of Business – Major, Financial Planning

Jack Wyer is a Financial Planning Graduate who has recently commenced his Professional Year with Verity Wealth Solutions. With a Bachelor’s Degree in Business, Majoring in Financial Planning, Jack has demonstrated high achievement, receiving merit awards in both 2021 and 2022. Jack’s passion for helping others and his desire to see others succeed financially have been the driving forces behind his chosen career pathway.

Driven by his passion for financial well-being and his innate ability to connect with others, Jack is dedicated on making an impact on the lives of others. Through his expertise, empathy, and commitment, he strives to empower people to achieve their financial goals.

Alongside his financial planning endeavours, Jack finds joy in spending quality time with friends and family and wants to slowly visit new countries along the way. Jack is also an avid Soccer player, actively playing for a local team. When it comes to supporting a team, Jack goes for Tottenham in the English Premier League.

Jack Wyer’s Adviser Profile