What sort of questions can help you determine your strategy for investing super?

One of the first questions to address is what’s your investment timeframe? You need to be looking at how long you might continue to work before you retire as well as how long you can expect to live. We encourage people to be optimistic about their life expectancy so they can make sure their income from super and other sources doesn’t run out. Knowing your investment timeframe can help you calculate how much you need to be contributing to super before retiring, how much you’ll need to withdraw when you stop working and the level of return you’re going to need from your super to make it all balance out for a long and comfortable retirement.

The next question is how much risk you’re willing to accept to increase your potential returns. Eliminating risk altogether isn’t possible but you do want to manage your investment risk so it passes the “sleep at night” test – enough risk to boost your super savings without causing you anxiety about your finances.

Keeping tabs on your super investments

Knowing how much and how often you’re going to be adding to and withdrawing from your super is also important. You might be expecting an inheritance you’ll be using to give your super savings a significant boost or you may have a large sum you need to withdraw during retirement. Having a schedule and a target in mind for your contributions and withdrawals is going to help you choose suitable investments.

Finally, you should consider your level of investment knowledge and experience and who you’re relying on for advice and guidance on your investment decisions. If you’re taking your cues from a chat with your uncle over the BBQ or the latest hot story from the AFR, you may not be making the right choices for you and your circumstances.

What are some of the key life stages and events that should trigger a review of how your super is invested?

There are a whole range of life events that can potentially impact on your income, financial position, investment profile and super strategy. Changes to your family situation, including divorce or bereavement, or your income – losing your job, adding a new source of income, buying or selling a property and inheriting money – all have the potential to ring the changes for how you invest your super and plan for retirement.

Once you’ve retired, you still need to bear in mind how these life events can have an impact on your finances. Adding an inheritance windfall to your assets could mean losing your age pension, so you might plan to invest that money to offset your income loss instead of spending it. And as your health declines in later years, you could need extra income to cover your aged care or medical costs.

What are the other changes or factors that could have an impact on your super investment strategy?

Taxation and superannuation rules are going to change from time to time and sometimes it’s not clear how your investments and income are going to be affected. That’s why we encourage clients to have a face-to-face meeting with us annually to look at how their financial plan should be adjusted for these policy and legislative changes, plus any other tweaks that may be needed because of changes in the value or returns from their investments.

However, if your goals haven’t changed, it’s unlikely that you’ll need to make major changes to your asset allocations. It’s best to stay focused on your long-term strategy rather than having knee-jerk reactions to changes in the financial markets. When you try to time the market to get the best outcome, it rarely ends well and can end up eroding your wealth quite significantly. So while a financial planner acts as a guide and the client is in control of their money and their future, we would generally advise them to avoid making wholesale changes or shifting their risk profile from one extreme to another.

What should you bear in mind when it comes to investing your super to last throughout retirement?

You’ve worked hard to accumulate your wealth and retirement should be your chance to enjoy it. But you should also bear in mind that retirement is going to last a long time, probably longer than you expect. So you need to focus on the long-term outcome for your investments too. In the 5-10 years before and after retirement, your super balance reaches it’s peak and that’s exactly when you need to stick to your strategy. As you shift from contribution and accumulation to drawing down from your super, it’s more important than ever to get the balance right between risk and return. Good advice can be really critical to making sure you steer a course that maximises your chances of healthy returns on your super without being too aggressive and jeopardising your income, in the short or long-term.

Whether you’re getting into your 40s, 70s or somewhere in between, advice from a CERTIFIED FINANCIAL PLANNER^® professional can help you determine your super investment strategy and make changes as you move through different life stages and events.