30 August 2016

Rollercoasters aren't for retirees

When we’re young we seek out thrills. Crazy adventures and wild rides are a perfectly valid way of having fun. Risks are just a distraction.

It’s the same with investments.

In early adulthood, we can easily stomach the ups and downs of the share market. We can chase high returns and opt for speculative punts, secure in the knowledge that retirement is a long way off. There’s plenty of time to make good any losses in the years ahead.


This is perfectly rational. When you have decades until retirement, it makes sense to build up your nest egg with investments in the share market. These offer the potential of higher returns over the long term, so you can ride out the peaks and dips of the rollercoaster.


Eventually it’s time to lock in those gains and eliminate the risks. No more rollercoaster rides – now you’re looking for a steady, gentle journey into retirement.


Conventional wisdom: Take no chances and accept low returns.

Most people aged 60 or over know that saving is all about security. So they opt for bank term deposits and accept, rather grudgingly, that the interest rate is nothing to write home about. Their priority is to avoid the risk that one day their capital will be worth a lot less than they thought it was.

However, there is a price to be paid for choosing this ‘safe’ option.

 You are probably going to be retired for a long time. Forget about your grandfather who signed off work in his 60s and didn’t hang around too long afterwards. These days, the average 65 year-old male can expect to live another 18 years. And if you’re a woman, get ready for a retirement that lasts fully 21 years after the age of 65.

They can be expensive years, too. You’ll want to enjoy some of the good things in life, such as travel and holidays, when you no longer have to work. You might also face increased costs associated with healthcare.

When you look at it this way, the conventional wisdom of safety-at-all-costs-and-never-mind-about-the-income starts to look decidedly unwise.

Perhaps you’re going to need to make your nest egg grow faster than a bank Term Deposit can offer.

The unconventional wisdom: Take no chances – but get a higher return.

As we said, rollercoasters aren’t for retirees. Unless you’re a very daring individual, you won’t want to be exposed to the risks of a slump in the markets.

But you do want to be exposed to the upside. So how do you achieve that?

The answer lies in the unique retirement plan offered by Lifetime Retirement Income. This is designed to give you access to higher returns than bank Term Deposits can offer, by investing in reputable stocks and shares. However it locks in any gains and insulates you from losses, so the income from your savings will never be less than the amount you originally invested.

 On top of that, Lifetime Retirement Income includes longevity insurance. This kicks in if you are fortunate enough to enjoy a very long retirement – long enough to outlive your original capital. You’ll have the peace of mind that your guaranteed income will arrive every month as long as you live.

 This kind of investment hasn’t been available in New Zealand until now, although it’s well proven in Australia and the UK. Lifetime Retirement Income is a new way of ensuring Kiwis can enjoy the fruits of their hard work in retirement, without the thrills and spills of the share market rollercoaster.

Find our what your income will be using the Lifetime Income Calculator.

Want more? Get a quote.

If you have funds invested in the share market, a Term Deposit about to mature – or if you’re just interested to see how much you could receive every month with Lifetime Retirement Income – the first step is to get in touch.

Call us on 0800 254 338 or click the button below to get a personalised quote on your investment.