One of the keys drivers of happiness in retirement is the peace of mind that comes from financial security. However, U.S. tariff announcements since the start of April have added uncertainty to financial markets, adding an extra layer of complexity for many retirees.   
 

Policy positions have fluctuated as tariffs are paused, reversed, or adjusted, leaving markets prone to volatility with sharp drops and rebounds. So, what can this market volatility mean for retirees and their retirement income?   

How does market volatility affect retirees?

Market volatility refers to the ups and downs in financial markets due to the size and frequency of changes in investment prices. Many retirees rely on their superannuation for income in retirement, which can fluctuate with financial markets.  

A fall in the value of your super or savings could mean you outlive your savings or your money runs out sooner than planned. Drops in the market can have a bigger impact in retirement because:

• Later in life you have less time to recover from poor share market performance or take advantage of lower share prices.
• Negative returns coupled with withdrawals for pension payments make it harder to recover the value of your investments.
• The timing of share market falls also matters due to sequencing risk. 
   

A more stable option for retirement income  

If market volatility is causing worry, there is another income option designed for predictability and peace of mind. Guaranteed lifetime income products, such as Challenger's Liquid Lifetime annuity Fixed and CPI-linked income options, can offer the stability of guaranteed regular income for life, that continues regardless of market conditions.  

Whether the market is up or down, your income from these products remains unaffected, providing confidence that you can meet your financial needs in the future. For retirees, this reliability is invaluable, providing peace of mind that a portion of your regular income won't be affected. 

Combining the best of both worlds

Having a mix of income sources can allow you to experience both financial stability and growth opportunities. Combining a guaranteed income option like a Fixed or CPI-linked lifetime annuity with an account-based pension (from your super fund) provides flexibility when dealing with unpredictable market conditions.  

• Guaranteed lifetime income for stability: Fixed or CPI-linked Lifetime annuities can act as your financial safety net, ensuring that essential expenses like groceries, utilities, and healthcare are always covered, even during volatile times.
• Market exposure for long-term growth: Allocating part of your retirement income to market-based options like account-based pensions allows you to reap the benefits of long-term growth once market volatility normalises. Market-linked Lifetime annuities can also allow you to enjoy the growth potential of market exposure whilst providing guaranteed regular income.

By blending these options, you can maintain a strong financial foundation while also leaving room for future growth.  
 

Making the right choice for your retirement  

U.S. Tariff uncertainty and market volatility highlight the importance of building a well-diversified income strategy that fits your unique retirement needs. The right mix of options can help you weather periods of economic uncertainty while still enjoying the benefits of market growth. 

Talk to a financial adviser today to discuss your individual objectives, financial situation and needs.  

Learn more about Challenger annuities - Lifetime Annuity | Build A Resilient Retirement Portfolio

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