How to make your pension last

Australians are living a lot longer these days. This means your super savings need to last longer than ever before. It’s tough to think about how much money you’ll need in retirement, but the prospect of outliving your savings is a significant risk. In order to manage this risk, it’s important to review your investment strategy.

There’s a popular belief that you should invest conservatively in retirement to help protect the money you have. But it’s worth considering your specific income requirements, as well as factoring in an investment strategy to manage the effects of inflation or a market downturn.

Having a mix of growth and defensive assets can help you achieve a balance between protecting your money against inflation and market fluctuations .*

Your income requirements

Everyone’s different - you should consider what a comfortable retirement looks like for you, and the level of income you’ll need to support your lifestyle. Playing it safe with your investment strategy may not generate the level of income you need to live comfortably for the rest of your life. This means you may need to withdraw some of your savings earlier in order to meet your preferred level of income.

The effects of inflation

By investing conservatively, you run the risk that your returns don’t keep up with inflation, which can potentially affect how long your retirement savings last. That’s why it’s important to consider investment options that have the potential to grow above inflation over time, particularly if your pension is going to stay invested for many years.

Not necessarily. Investing all your hard-earned retirement savings in a highly aggressive strategy, such as international shares, could significantly erode retirement savings if share markets had a significant fall over a sustained period.

Growth assets like shares generally have the potential for higher returns, but are also generally subject to higher market volatility, which can have a negative impact on your balance in the short term.

A diversified approach

You’ve heard the advice countless times— “don’t put all your eggs in one basket”. The same approach (known as diversification) can help you manage the longevity of your pension.

Diversification simply means investing in a mix of investment types or asset classes.

Different types of investments tend to perform differently from one another at various times. Therefore, if you diversify your investment portfolio, any poor performance in one of your investments may be offset by the better performing investments.

You can diversify your portfolio by choosing investments across a range of growth and defensive asset classes, e.g. shares, property, fixed interest and cash.*

All our Pre-Mixed investment options are diversified across a range of asset classes. If you're looking for a low maintenance investment and prefer to have investments chosen and managed on your behalf, our Pre-Mixed options are designed to offer a diversified blend of investments to suit varying levels of comfort with investment risk, personal super and retirement savings goals. Sector investment options are less diversified and are designed to be combined with other investments to build a diversified portfolio—they’re not intended to be used in isolation.

Get advice

Our financial advisers can help you with strategies to manage market risk, while giving your growth assets time to grow.

Find out more about UniSuper Advice, or call 1800 823 842.