Should I Go to Cash in My Super?

Question


Dear Barefoot,

I am a single working woman, 61 years old, planning to retire in five years. I am now wondering if I should be concerned about my superannuation reducing with the recent share market losses. If it is going to crash again, should I be moving to cash rather than shares?

Susan

Scott's Answer


Hi Susan,

I totally get how stressful it must be.

The truth is that — if a share market crash coincides in the years leading up to or proceeding your retirement — it can have a devastating impact on your plans.

Right now, your super contributions are most likely going into a share investment option.

However, I’ve always said that in your last few years of work you should divert some of those super contributions, into a cash or fixed interest option within your super.

How much?

Well, that’s up to you (and your advisor). However a good rule of thumb is having a minimum of two years’ living expenses (less any age pension you’ll receive).

Now, let me be James Blunt: the biggest risk you face isn’t the short-term wobbles of the share market — it’s running out of money before you die. I see people who find themselves in this situation all the time, and if they’ve given up working there’s nothing they can do.

Susan, right now you have the power to change things. It’s not too late. So make an appointment with your super fund’s financial planner and work out how much you need to retire on. Get a figure to aim at. And hit it.

Scott