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Retirement value loss in stock market crash may not be cause for panic, experts say

Retirement value loss in stock market crash may not be cause for panic, experts say

There is heightened anxiety among some Australian retirees amid a recent slump in the Australian stock market.

Margaret and Doug Walsh knew their grocery store would take a hit from the latest recession. Doug, a former teacher who has retired for 20 years, says his fund is down seven percent so far.

But the couple isn’t too worried, having weathered previous financial storms, including the GFC.

“It’s not something I worry about because they always come back, in fact the market gets better with every dip,” said Doug, 77.

It’s an attitude that financial experts say is healthy. His advice is for other retirees to follow Walsh’s example.

Margaret Walsh is in her 11th year of retirement and says her retirement balance is higher than when she started.(ABC NewsRebecca Trigger )

“While the value of the shares may have fallen, the quality has not. And eventually the values ​​will rise again to reflect the quality of the assets,” said independent financial adviser Nick Bruining.

Since the RBA raised rates earlier this month, and amid fears of rising US interest rates, some $270bn has been wiped from the Australian stock market.

Since retirement is closely tied to the stock market, that means retirees face huge losses on their savings.

Close up of man smiling sitting in front of computer
Financial adviser Nick Bruning says some key companies, in which many Australians own shares, are not in danger of going under at the moment.(ABC NewsRebecca Trigger)

In fact, this fiscal year will be only the fifth time in three decades that workers will see losses in their retirement funds.

“There are going to be some people who are going to be very concerned. I’d like to think that most people in our age group aren’t completely and exclusively dependent on the stock market,” said Ron de Grunchy of the WA Self-Funded Retirees Association.

“I don’t see it as a big catastrophe yet. Having said that, who knows where the bottom will be,” he warned.

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Perth retiree Ron de Gruchy says he expects some people his age to be quite worried about their retirement losing value.(ABC News: Glyn Jones)

But Bruining is encouraging retirees to hold their own, no matter how low the ASX falls.

“We’re talking about companies with real assets, Woolies, BHP, Commonwealth Bank. The Woolies stores are still open, BHP still has their iron ore reserves in the ground, the quality is still there and ultimately the price will reflect the quality”. Bruining said.

Margaret Walsh, who is currently the National Vice President of the Association of Independent Retirees, believes that knowledge is power.

She says many of her members have raised concerns about the current situation, but she encourages them to learn more about how their super is run.

“The reality is that the super goes up and down during cycles and we just have to be patient,” he said.

“After 11 years of retirement, I have a higher balance than I started with, even after withdrawing and even after the impact of COVID,” explained Ms. Walsh.

But that can be hard for people to keep in mind while watching his super slide.

Experts say the Australian stock market could experience further declines, amid the risk of a US recession.


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