“I’m not chasing big returns. I just want something steadier.”
This is a sentiment many retirees share. After decades of saving and investing, the focus often shifts from maximising growth to seeking reliability and confidence.
The challenge is that retirement investing can feel like a balancing act between pursuing returns and protecting what you’ve built, particularly in an environment where markets, inflation and longevity can feel unpredictable.
For many retirees, market volatility can create stress and lead to second-guessing. Sharp movements in share markets or interest rates may not just affect portfolio values; they can also influence confidence in day-to-day financial decisions. When income needs to be drawn from superannuation regularly, uncertainty around investment performance can feel especially uncomfortable.
As a result, some retirees look for investment approaches designed to provide consistency and predictability.
More certainty over your returns in retirement
Hostplus’ innovative pension investment option, CPIplus, is designed for retirees who want more certainty over their returns, without giving up the opportunity to stay ahead of rising living costs.
Unlike growth investments like shares, which can rise and fall with market movements, CPIplus aims to deliver long-term returns that are more consistent and stable. At the same time, CPIplus generally provides higher returns than defensive assets such as Cash or Bonds, which may struggle to keep pace with inflation.
Returns from CPIplus are set in advance at a level above the Consumer Price Index (CPI). This means retirees returns are not affected by the performance of the underlying investments. Importantly, returns are protected by a daily return floor of zero, so investors do not receive a negative return.
This design is intended to reduce some of the stress associated with market fluctuations. Rather than reacting to daily movements or worrying about timing withdrawals, retirees benefit from knowing their target return ahead of time.
Balancing ‘all risk’ or ‘all safety’ with investing
Another common challenge in retirement planning is the perception that investors must choose between extremes. On one hand, growth investents such as Shares offer the potential for higher returns but can come with greater volatility. On the other, more defensive options like Cash may provide stability but struggle to keep pace with rising living costs over time.
This perceived all-or-nothing choice can increase stress and lead to regret, particularly if market conditions change after a decision is made.
CPIplus can be used alongside other superannuation investments, allowing retirees to construct a portfolio that blends different characteristics.
Such an approach can also support more confident income planning. When part of a portfolio is designed to deliver returns set in advance, this can help retirees manage withdrawals, budgeting and long-term financial goals better.
Gaining confidence when everything feels uncertain
Retirement can come with a unique set of unknowns. How long savings need to last, how inflation will affect purchasing power, and how markets will perform over time are all variables that can influence financial wellbeing.
By setting returns in advance at a level above CPI, CPIplus is designed to remove the impact of these unknowns. The protection against negative returns is also intended to help shield retirees from the emotional and financial effects of these downturns.
For those transitioning from accumulation into a pension or drawdown phase, the focus typically shifts from maximising portfolio growth to creating sustainable income and supporting peace of mind throughout retirement.
Comparing outcomes in the pension phase
When considering different investment options in retirement, it can be useful to compare how various strategies may perform over time. For example, investing in CPIplus compared to Cash or Australian Shares options in the pension phase may highlight the trade-offs between stability and variability.
Shares can deliver higher returns, but these may come with short-term declines. Cash may offer capital stability, but over time it might struggle to keep up with inflation. An option designed to sit between these may appeal to retirees seeking a more predictable investment journey.
A different way of thinking
Ultimately, retirement investing doesn’t need to be framed as a choice between growth and stability. For many Australians, the goal is to achieve both, maintaining the potential for growth while reducing the likelihood of disruptive volatility.
Innovative pension investment options that prioritise consistency may help retirees feel more confident about their financial future. By addressing common concerns around market swings, inflation and income sustainability, approaches like CPIplus aim to support a retirement experience that feels steadier, more predictable and better aligned with changing priorities.
As retirement moves from a distant goal to a lived reality, more certainty can become just as important as strong returns.
*Though returns above inflation are predetermined annually, Hostplus can shorten the return period. Hostplus may also adjust the rate of return with at least 30 days’ notice. You must have a Hostplus Pension account. General advice only. Consider the Hostplus Pension PDS and TMD available at hostplus.com.au, and your objectives, financial situation and needs, which have not been accounted for, before deciding. Past performance is not a reliable indicator of future performance. Issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Superannuation Fund ABN 68 657 495 890.