Risks Involved When Investing As A Retiree

Most Australians want to achieve the retirement dream of living comfortably and being financially secure for their retirement.

Some may think that by securing a stable job and receiving a regular income will be enough to attain a comfortable retirement. However, it’s important to consider additional strategies that will help you grow your wealth and achieve your long-term financial goals.

It’s called investing!

It’s important to remember that you can gain financial stability and freedom by simply placing your money in the right places. A good investment portfolio is one way of ensuring this and in return, can help you build your wealth even after you retire.

Investing is an excellent way to get ahead financially and potentially provide you with a safety net if you were to fall into any financial mishaps. No matter your age, you will likely be able to enjoy the benefits of investing as long as you know how to diversify your portfolio and know which places to invest in.

Investing as a Retiree

The benefits and appropriate strategies of investing can vary depending on your age and financial goals. Different stages of life usually entail significant changes to yourself and your financial situation.

For example: Your financial goals during your time in the workforce may be completely different to what your goals could look like as a retiree.

The average 30 year old usually doesn’t have the same concerns a retiree would have, as they have a longer time frame to invest. This likely means they are not as worried about market fluctuations compared to someone in their retirement wanting to gain steady investment returns.

Reaching the retirement age can have a significant impact on you as an investor.

You may look and sound the same even after retiring, but your approach to investing may have a total 180-degree change. As such, you may relate and respond to various risks differently, which affects your investment decisions.

Here are three investment risks that you should consider as an investor, especially as a retiree investor:

1. Market Risk

Regardless of your investment choices, there is always risk associated with investing.

Younger investors may be able to recover from market losses due to the length of time they have until their retirement. However, for a retiree, market risk can be fairly daunting, as their capital losses may be harder to recover.

Without a regular source of income, experiencing significant losses in investing could be the difference between a comfortable and financially challenging retirement!

It’s important to choose an investment strategy that aligns with your risk tolerance and financial needs. Seeking retirement planning advice can help you maximise your savings for retirement and prepare you for any market related risks.

2. Longevity Risk:

With the average life expectancy on the rise for Australians, it can become more complex for people to properly financially plan ahead for their retirement.

Life expectancy is often underestimated by Australian retirees which can be problematic for them in managing their retirement.1

According to the ABS, the life expectancy of an Australian male is 80.5 years and 84.6 years for a female, based on data from 2018 to 2020.2

Since Australians are living longer than ever before, it has become increasingly more important to be financially self-reliant in retirement. To prevent the risk of running out of money in retirement, seek financial planning for retirement.

3. Inflation Risk

When planning for retirement, it’s important to consider the inevitable risk of inflation.

The increase in cost for goods and services may dry up the money you’ve saved faster than you expect. To maintain a level of consumption that supports your lifestyle, you must factor in inflation when investing.

Seeking ongoing financial advice can help you make sure your retirement savings are still on track for your entire retirement.

Financial stability is essential but becomes even more crucial when you reach retirement.

Investing has proven to be an excellent way of securing income even after retirement, but you must be aware of the investment risks associated. Make sure to ask for retirement financial planning advice so that you can mitigate the risks and successfully finance your dream retirement lifestyle!

Are you in need of retirement financial advice?

Then, our team of financial experts may just be who you need to guide you toward financial stability! Novo Wealth are the ethical financial specialists in Adelaide helping more ethically-driven retirees secure their perfect retirement.

If you’re looking for ethical retirement planning, advice on responsibly managing your super, or ethical investment advice, Novo Wealth can help.

Connect with us today to get started!

References:

IMPORTANT; This information is general in nature only. It does not take into account your individual circumstances. We recommend that you seek professional advice before making any investment decision.

The Risks Involved When Investing as a Retiree