Experts say losing pension value in stock market crash may not be cause for panic

There is growing concern among some Australian retirees amid the recent downturn in the Australian stock market.

Margaret and Doug Walsh knew their super team would be hurt by the recent downturn. Doug, a former teacher who retired for 20 years, says his fund is down 7 percent so far.

But the couple aren’t too worried, having weathered previous financial storms, including GFC.

“It’s not something that worries me because they always come back, in fact the market gets better with each fall,” said Doug, 77.

It’s a position that financial experts say is healthy. Their advice is for other retirees to take a leaf out of Walsh’s book.

A man and a woman sitting at a dining table talking in front of a laptop
Margaret Walsh is in her eleventh year of retirement and says her pension balance is higher than what she started with.(ABC News: Rebecca Treasure )

Nick Bruening, independent financial advisor, explained, “While the value of the shares may have gone down, the quality hasn’t. Ultimately, the values ​​will come back to reflect the quality of the assets.”

Since the Reserve Bank of Australia raised interest rates earlier this month, and amid fears of higher US interest rates, about $270 billion has been wiped off the Australian stock market.

Because superannuation is closely related to the stock market, this means that retirees face chunks of their nest eggs.

Close-up of a smiling man, sitting in front of the computer
Financial advisor Nick Browning says some major companies – in which many Australians own shares – are not in danger of collapse at this time.(ABC News: Rebecca Treasure)

In fact, this fiscal year will be only the fifth time in three decades that workers will see losses in pension funds.

“There are going to be some very anxious people. I would like to think that most people in our age group are not entirely and solely dependent on the stock market,” said Ron deGranchi, of the Association for Self-Financed Pensioners.

“I don’t consider it a major disaster – yet. Having said that, who knows where the bottom will be,” he cautioned.

Close-up of a gray-haired man and a motosh
Ron de Grouchy, a retiree from Perth, says he expects some in his age group to be very concerned about losing the value of his retirement pension.(ABC News: Glenn Jones)

But Bruining encourages retirees to stick with their stance, no matter how low the ASX index gets.

“We’re talking about companies with real assets, Woolies, BHP, Commonwealth Bank. The Woolies stores are still open for business, BHP still has iron ore reserves in the ground, the quality is still there, and the price will eventually reflect the quality,” Bruening said.

Margaret Walsh, who is currently the national vice president for the Association of Independent Retirees, believes that knowledge is power.

She says many of her members have expressed concerns about the current situation, but she encourages them to learn more about how their retirement accounts are managed.

“The reality is that super speed goes up and down over laps, and we just have to be patient,” she said.

“After 11 years of retirement, I have a higher balance than I started with, even after the withdrawal and even after the impact of COVID,” Ms Walsh explained.

But it can be hard for people to keep it in mind as they watch their super slip.

Experts say the Australian stock market could see further declines, amid the risk of a recession in the US.

published And the updated