Investing for Retirement


The two main assets held by people when they retire are their home and their superannuation. For most people, their home tops the list.

Home ownership is an important influence on a person’s standard of living in retirement. A $2 million dollar retirement home for example with all the luxuries and modern conveniences does not put food on the table and may reduce the availability of funds for other activities one may enjoy in retirement. This is a lifestyle decision, and one has to consider the pros and cons of such.

The principal home is an asset that can be drawn on to boost retirement income via a downsize and lump sum contribution of funds into Super, although few people elect to do so.

Favourable treatment of a person’s principal residence under the Age Pension assets test may also encourage people to over-invest in their home. There are also strong incentives outside the retirement income system encouraging property ownership.

Many people take little interest in the investment returns being achieved by their superannuation fund. The exception is people approaching or in retirement, who are sensitive to fluctuations in their superannuation balances when there is an economic shock such as the one caused by the COVID-19 Pandemic. More generally, the complexity of the system may deter people from taking an interest in the investment performance of their superannuation. This is also influenced by SG payments being compulsorily made by employers and as such, superannuation is outside a person’s area of focus. However, the investment performance of a person’s fund can have a major influence on their superannuation balance at retirement.

Even when one is relatively young and retirement seems a lifetime away, one’s superannuation should be reviewed accordingly. Please contact us today to setup a time to discuss your superannuation options. Remember, it is NEVER TOO EARLY!