Retirement worries hit hard by cost of living, volatile financial markets

Global economic and financial markets fear is adding to worries that are already eating into the minds of older Australians.

Donald Trump’s tariffs have turbocharged Australians’ anxiety about their retirement savings, as weaker returns in February and March prompt some to consider going more conservative.

Several superannuation funds and financial advisers have seen a rise in calls from concerned clients and members, but super experts say now is not the time for knee-jerk reactions.

It comes as new research from Aware Super found that almost two-thirds of over-45s are anxious or concerned about retirement as high living costs hurt many people’s plans.

Aware Super’s State of Retirement report says 88 per cent of Australians worry about running out of money in retirement, one in 10 retired later than expected, and 21 per cent of retirees have returned to work.

Many older Australians are rethinking retirement as the rising cost of living reduced the buying power of their nest eggs, and volatile financial markets add to the stress.

Financial market turmoil adds to retirement worries of middle-aged Aussies. Picture: iStock

Australian and US stock markets hit official correction territory this month – a 10 per cent fall – and the average super fund has a majority of members’ money in growth assets such as shares.

Tribeca Financial CEO Ryan Watson said he had seen “a significant increase in client concern and uncertainty as a result of the Trump tariffs”.

Their key worries were instability and uncertainty across investment markets, he said.

“Markets thrive on consistency and certainty – Trump and his tariffs provide the complete opposite of this.

“Cost of living is certainly a concern across all walks of society, especially across pre-retirees and retirees. Once you enter retirement, you only have a finite amount of investible funds.”

The CEO of the Association of Superannuation Funds of Australia, Mary Delahunty, said she was hearing of more people contacting their funds.

“It’s not great that they’re feeling anxious, you never want people to feel that way, but it is really good that they know who to call,” she said.

“Super funds are making more of their teams available to take calls, knowing that this could go on for a bit.”

Ms Delahunty said now was the time for calmness and making good, guided decisions.

She said it “really broke my heart” during the global financial crisis in 2008 when people panicked and reacted by switching investment options and locking in their losses.

Aware Super CEO Deanne Stewart super funds were long-term investors that looked beyond short-term market fluctuations.

“Our investment approach spans a wide range of investments and asset classes – not just markets,” she said.

“It’s important to keep your long-term goals and objectives in mind and not make decisions in the moment that mean you could lose out in the long run, without seeking guidance first.

“We know that the increased cost of living is having a big influence on people’s decisions around retirement but there are always choices you can make.”

Aware Super CEO Deanne Stewart says a long-term approach is vital. Picture: Toby Zerna

MBA Financial Strategists director Darren James said he had dealt with a “few calls” from clients asking if their super was OK.

“Some are not too concerned because they have been through stuff before,” he said.

“We are still seeing above-average returns over the last 12 months and a lot of this is noise, with no fundamental changes at this stage. Some people are concerned it’s going to be a bumpy year even if you take Trump out of it.”

AustralianSuper general manager retirement Shane Hancock said there had been a slight increase in members providing performance feedback this month, but overall levels of calls coming in were “largely as expected”.

“Members are expressing some concerns about market volatility and short-term declines in balances, with some referring to the US and others seeking guidance from the fund,” he said.

When markets go down, members may think cash is a safer place to be, but they could be locking in investment losses that may be harder to recover from when markets bounce back.

“We know that members who stay invested in diversified portfolios can end up in a better position in the long term, compared to those who switch investment options.”