Retirees urged to postpone retirement until after the market recovers
The downturn is not good news for retirees who are looking to live off their retirement funds and proceeds from other sources of income.
“Typically retiring during a downturn is less than ideal if it can be avoided,” Jamieson said.
“In reality retiring during a downturn will likely reduce the longevity of your retirement income stream. This is not good news for retirees looking to enjoy a minimum level of income over a period of time.
“You should wait until the markets have recovered if this is possible. If one was to retire during a downturn then this has the risk of reducing the longevity of one’s retirement income stream.
“The benefit of waiting until after the downturn to retire is that you are also adding to your super fund portfolio whilst the market is low and the fund is not being drawn upon whilst the markets are depressed.
“We often find people are mentally fatigued from work and despite warnings from time to time still want to retire regardless of the financial consequence.
“This is a fairly emotional topic and COVID with all the issues around work has probably pushed people to exit the workforce in larger numbers than normal if they were close to retirement age.
“Retirement age typically occurs for most people at around 67 years old which is in line with the Centrelink Age Pension qualifying age. The amount one needs to retire on really comes back to what your daily living costs might be. As a general rule of thumb if you look at your annual living costs and divide this by 8% this should give you a good starting point on how much you might need in retirement.
“If you are finding that your capital is well short, then you may need to look at what opportunities might be with Centrelink for additional income sources or other alternatives.
“We often find with the clients that we work with that are living an active life in retirement in a large city, that the figure of around $80k p.a. for a couple, comes up fairly regularly. That being said, the government statistics, however, are showing much lower figures.”
