Time to read : 5 Minutes
If you’ve had your eyes and ears glued to the finance news lately, you’ve no doubt heard about the stock market volatility. It’s caused many people to become jittery, especially retirees as superannuation balances take a hit.
But volatility is an unavoidable part of the investment lifecycle. It has happened before and will happen again. It is the one certainty in an otherwise uncertain world.
So how worried should you be about your super given the current bout of turbulence? And what can be done to safeguard your retirement nest egg?
Consider what’s causing the volatility
When you spend a bit of time looking into what is driving market volatility, you can have a clearer idea of how long it could last. It can also help you decide your next move.
For example, the 2008 Global Financial Crisis (GFC) caused massive upheaval worldwide and its effects lasted for years. A cyclone, by comparison, creates uncertainty in a particular region in the days before making landfall and things largely return to normal once the clean-up is complete.
The current volatility is being driven by US-led trade barriers. This has global implications, both directly (to share markets and affected industries/countries) and through indirect flow-on effects (inflation and interest rates, foreign exchange rates, supply chains, tourism and immigration shifts etc). It is also unlikely to disappear any time soon – instability is our new normal.
When you’ll retire or did you retire?
Next, think about how the timing impacts your personal situation.
If you’re in your 20s and 30s, it is essentially a blip on the radar: you still have decades of working life to bounce back from any losses.
If you’re 55 plus or approaching retirement, the implications can be far greater if you do not have defensive investments such as cash, term deposits, bonds or gold – to name a few.
Defensive investments are not as volatile as growth investments like shares, so are generally less risky. Drawing from defensive investments when the market is down means you may not need to sell growth investments that may have devalued in the market downturn.
If a good part of your investments are not allocated to defensive investments, with little time to recover losses, you may be forced to keep working or work part-time instead of making a clean break.
Meanwhile if you’re a retiree, you may need to make lifestyle adjustments to temporarily reduce expenses. You could also consider downsizing to unlock equity from your home. Talk to a financial professional if you want to understand your options better.
What are the impacts of reacting to market volatility on finances?
When the market is volatile, it can be tempting to take immediate action, but knee-jerk reactions could have adverse consequences to your finances in the following ways.
Limited returns
Selling assets in a hurry means you’re unlikely to achieve the optimal price. You could even make a loss.
Increased tax liabilities
Selling your assets may be taxable, such as through Capital Gains Tax (CGT) or higher income taxes. An unexpected tax bill could hit your cash flow or eat into money that otherwise could have been used for voluntary super contributions or other investments.
Barriers to re-entry
If you sell an asset in turbulent times, you may find yourself priced out once markets stabilise again.
You may (or may not) remember the 1990s Dotcom Bubble? Once the bubble burst, investors were faced with two options: sell to try and minimise their losses or hold tight.
While some tech companies folded, others not only survived but are now among the world’s most valuable. For example, on 29 September 2000, Apple shares crashed 51.9% to $US25.75. As of 6 May 2025, the shares are worth $US198.89.
Investors who held tight may have suffered some losses, but their overall holdings have since recouped those losses many times over.
Those who abandoned technology stocks were left with little gains, if not heavy losses. Plus, they’re very unlikely to be able to afford to buy back the same volume of shares in those companies at today’s prices.
With risks come opportunities
Volatile cycles create opportunities to buy during the lows. This can potentially deliver greater returns than buying during periods of relative calm.
During the pandemic some shares (like airlines, tourism and hospitality) plummeted: Qantas shares slumped to $3.05 in April 2020. Fast forward to May 2025 and they are worth $9.24 – tripling in just five years, to say nothing of the dividends.
On the other hand, some shares soared during lockdowns such as the supermarket giants.
Be aware: fluctuations in your super balance will affect your pension eligibility, which could actually work in your favour. Many self-funded retirees found that, when COVID-19 struck and hit their super balance, they suddenly qualified for a part or full pension – covering their living expenses until their super recovered again.
💡 Consider talking to a financial professional to help you navigate your options.
Bottom line
So, with all this in mind, should you be worried about your super during stock market volatility? Worried – no. Cautious – yes. Prepared – absolutely.
The current fluctuations provide an opportunity to diversify your investments and look at new opportunities, backed by a strong investment strategy.
In a nutshell, your strategy should cover:
what you invest in
how you invest.
Your strategy should also include some options to address market volatility. Remember to include risk mitigation plans as well as safeguards like insurances and an emergency fund to fall back on. You never know when you may need these funds.
With this in place, you’re much less likely to feel the pinch if the market takes a dive, or be forced into knee-jerk reactions that may cost you and your retirement a small – or large – fortune.
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Disclaimer
The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
