War in Ukraine: Implications for your retirement
War in Ukraine: Implications for your retirement
Russia’s invasion of Ukraine is first and foremost a human tragedy. The images we’re seeing on the news are just terrible. But if we turn our minds to the economic impact, we can see that there have been immediate consequences. Sure, they’ve been felt most acutely on the other side of the world, particularly in Europe. But there are economic consequences of the war in Ukraine being felt right here in Australia as well.
So, what does it mean for Australian retirees in the short-term and should we be doing anything now to protect ourselves?
Economic update: Market ups and downs
The share market has started 2022 with a fizzle, falling more than 8%. It’s on the back of some concerning economic data. Inflation is higher than expected, which means interest rate increases this year now seem likely, and it appears omicron has dented business confidence.
So, what does this mean for retirees?
Hope is not an investment strategy
With local and International share markets at record highs, now might be the time to check in on your investments.
This time its different
Retirees are right to be concerned about the economic impact of the lockdown in Greater Sydney. But that doesn’t necessarily mean we’ll see a repeat of the devastating market freefalls of March 2020.
Dumb things we do
Human beings are hardwired to make poor decisions when it comes to investing. Our natural tendency is to buy at the top of the market cycle and sell at the bottom. Unfortunately, that quickly destroys wealth.
The good news is that financial planning advice can help. Advisers provide structure and discipline that can overcome our natural inclinations and emotions.
Wealth effect: Future’s so bright, I gotta wear shades
We have some good news. The International Monetary Fund (IMF) has upgraded its global growth forecasts for 2021 to record levels. This news, combined with rising share markets and booming local house prices, should have a positive impact on the confidence of retirees.
Lower for longer: Outlook for interest rates
Despite a bigger than expected economic rebound, interest rates are likely to stay at record lows for the foreseeable future. So, what does that mean for retirees who are trying to live off their retirement savings? And what should they be doing right now to make the most of the economic conditions?