Managing share market volatility
Volatility in share markets and the unpredictable sequence in which investment returns occur can make a big difference to your account balance once you start spending your retirement savings to live.
If you enjoy strong investment returns in the first few years of retirement, your savings will be more likely to ride market slumps without eating into your capital too much. However, if market returns are negative early in your retirement, more capital will be needed to pay for ongoing living expenses. This reduces the potential for future growth and your money will run out earlier, even if later returns are good.
Strategies and products exist which can minimise market risk, while giving your growth assets time to grow. Your financial adviser can provide guidance in this area.