Safeguard your super

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If you're already retired or getting close to retirement, the $40 billion of superannuation that has been wiped off the markets last week has probably left you quite panicked.

That’s understandable, but also the worst thing you can possibly do - so take a big, calm breath. 

Firstly, let’s take stock of what’s happened, and remember these are not real losses (yet).

Those who have chosen a “growth” investment option for their super have lost about $6000 for every $100,000 this financial year. The “shares only” option is down about $10,500.

Remember though, the knee-jerk reaction of mass investor pull-outs compounded the share market problems during the GFC, and the same is true again. 

Attempts to cash out of shares or switch to another investment option while the market is down is likely to turn these so-called “paper losses” into very real losses.

Analyst Dale Gillham from fund manager Wealth Within assures that the time to exit shares has passed, and the worst thing you can do is get out of the market at the wrong time. With that advice in mind, Your Money Magazine advises where to go from here with a guide for those who are:

Already retired

  • You should not feel an immediate impact of the market losses.
  • All managed super funds keep enough cash reserves to pay out pensions
  • You are advised to contact your fund manager and review your pension if you are looking to slow the withdrawals

About to retire

  • No immediate impact
  • Don't switch out of shares and into cash: this could yield large losses
  • Increase your super contributions to help make up the losses

Those who self-manage their super funds

  • Always keep at least 2 years' worth of pension payments in cash
  • If you've started taking a pension, reduce your pension to minimum draw down
  • If necessary, stop your existing pension and restart it at a lower level

Not approaching retirement

  • No action required- remember that the markets will bounce back

David Whiteley, chief executive of Industry Super Network said people should get professional advice before making any decisions about their savings.

“A lot of people are concerned, I know. But the best advice is to seek financial advice and contact your super fund or a financial planner,” Whiteley said.

National Seniors Australia chief executive Michael O'Neill also suggested sitting out the current turmoil and looking towards long-term plans.

"Panicking in this market is unhelpful and only contributes to all the symptoms that we're now seeing," he said.


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