How retirees can adapt their finances to a coronavirus climate

Being forced to stay at home is giving Australian retirees a chance to reassess their spending and other financial goals – and potentially save some money.

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A double-whammy of health and wealth worries is hitting Australian retirees as the impact of coronavirus spreads.

Senior Australians are at greater risk of COVID-19 complications and many have watched their nest eggs shrink dramatically in recent weeks amid turmoil in financial markets, but there are opportunities to become better money managers.

Allianz Retire+ CEO Matthew Rady said retirees should focus on health before wealth at this time, and protect themselves by following government advice. They should not be afraid to ask for help from their support network of family, friends and health professionals, he said.

Mr Rady said once health needs were addressed, retirees could then focus on finances.

“Fear, a powerful investment emotion, can lead to retirees making rash decisions that permanently destroy their wealth,” he said.

“We saw this during the GFC: retirees switching entirely out of shares into cash after the crisis, at the worst possible time. They crystallised losses and missed out on the sharemarket recovery.”

Matthew Rady, CEO of Allianz Retire+

Planning for Prosperity senior financial adviser Bob Budreika

Concerned seniors should seek financial advice – by phone or video call – and expect a challenging year ahead, Mr Rady said.

“The economy and sharemarket will eventually recover to its previous peak and surpass it,” he said.

“It may take months or years, but giving up on investing near the market bottom is a sure-fire way to damage your savings and permanently reduce your retirement lifestyle.”

Planning for Prosperity senior adviser Bob Budreika said seniors should keep focused on their longer-term financial objectives.

“We always say don’t get hung up on the noise that’s out there, but I have got to say the noise is pretty noisy,” he said.

The virus crisis keeping people at home gives retirees and others a chance to examine their current financial situation and perhaps spot some unnecessary spending.

Mr Budreika said many people did not realise just how much money they spent on activities away from home.

“Now they can’t go out anywhere,” he said.

“This is a good time for people to re-evaluate. Maybe they can see a change of habit that might save them some money.”

Mr Budreika said retirees should speak with their adviser or seek financial information from quality websites, but avoid monitoring news headlines on TV continually because that could breed unnecessary fear.

@keanemoney