One of the greatest sources of happiness in retirement is knowing your finances are secure. Yet, global events can sometimes disrupt that sense of security. In recent months, shifting U.S. tariff policies have unsettled financial markets, with sudden changes leading to sharp rises and falls. For retirees who depend on stable income, this kind of volatility can create real concern.
Why volatility matters in retirement
Market volatility is simply the frequent ups and downs in investment values. While this is a normal part of investing, it can feel much riskier once you’re retired. That’s because:
- A drop in your retirement savings could shorten how long your money lasts.
- There’s less time later in life to recover from downturns or take advantage of opportunities.
- Drawing income from your super while markets are falling compounds losses, making recovery harder.
- The order and timing of market declines—known as sequencing risk—can significantly affect outcomes.
These challenges mean retirees often experience market turbulence more keenly than those still working and contributing to super.
Seeking stability with guaranteed income
For those worried about unpredictable markets, one way to create peace of mind is by locking in a portion of retirement income through guaranteed products. Lifetime annuities, for example, provide regular payments that don’t fluctuate with the market. Whether markets rise or fall, this income continues, ensuring you always have money to cover essentials like bills, groceries, or healthcare.
This type of income acts as a safety net, offering confidence that your core living costs will always be met, no matter how markets behave.
Balancing certainty with growth potential
Of course, not all of your retirement savings need to be tied up in guaranteed income. Many retirees prefer a combination:
- Stability through guarantees: Lifetime annuities, whether fixed or inflation-linked, provide predictable income to cover the basics.
- Growth through markets: Keeping some funds in an account-based pension or market-linked products allows you to benefit from long-term market growth, while still drawing a steady income.
This blended approach means you can enjoy both financial security and the potential upside of market recovery over time.
Making choices with confidence
Periods of uncertainty, such as the current tariff-driven market swings, underline the importance of diversification in retirement planning. Relying solely on market-based income may expose you to unnecessary risks, while relying only on fixed income might limit growth.
By carefully balancing stability with opportunity, you can create a retirement income strategy that helps you withstand short-term disruptions while safeguarding your long-term lifestyle.
