Are world events hurting your retirement savings?

From time to time the world’s share markets become volatile, moving up and down. It’s a natural part of the market cycle and happens for a number of reasons, including as a response to economic data, political events and even company announcements.

A world event that took everyone by surprise in June was the United Kingdom’s decision to leave the European Union. It was an unprecedented move and you might have found yourself questioning what, if any, impact this would have on your retirement savings.

The fact is this, share markets are likely to experience some volatility as a result of Brexit, which means any allocation you have in your superannuation fund, be it Australian or international shares, could be affected.

While plans start to form so that the exit can be managed with as little impact as possible on the rest of the world’s economy, it might be some time before the share markets settle and the full impact is known.

How does this affect your nest egg?

“World events can have an impact on your super every year – both positively and negatively,” Mark Delaney, AustralianSuper’s chief investment officer, says.

He says that this year has been more challenging for investments than others, with uncertainty around the stability of Chinese and United States markets in addition to the UK.

The good news is that while there have been many ups and downs in the markets over the last 10 years, those who have “stayed the course” have been rewarded, according to Delaney.

If your money is in superannuation there is a high chance the investments will be spread across cash, property, infrastructure, cash bonds and local and overseas shares. Often when shares fall, bonds will rise and this in turn creates a buffer on your nest egg.

What to do if you have concerns?

The general advice from super industry experts is that you should not panic. You don’t want to sell stocks at the bottom of the market and miss out on the next growth cycle.

While there is some divide on the long-term impact of global events, like Brexit, now is a good time for those of you managing your own superannuation to identify your income needs and any upcoming expenses, comparing that to your cash reserves and what you’re likely to get from investments so that you know your financial position.

If you rely on your nest egg income you need good long-term planning.

If you have questions about your superannuation it’s best to talk to a qualified professional who can guide you through the process and offer advice on such a course of action. Click here to learn more about your options.

This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788. The views expressed are those of Starts at Sixty and the interviewee, and not necessarily those of AustralianSuper. For more information, please visit the AustralianSuper website.