Retirees warned to diversify lifesavings
(1 May 2015 – Australia) Reserve Bank of Australia (RBA) governor Glenn Stevens has warned soon-to-be retirees that there will be tough times ahead.
As interest rates are lowered to record lows, yields on safe investments such as term deposits fall, meaning retirees will need to take risks with their lifesavings to ensure adequate future income.
"Those seeking to make that purchase now - that is, those on the brink of leaving the workforce - are in a much worse position than those who made it a decade ago," he told a banking summit on 28 April.
"They have to accept a lot more risk to generate the expected flow of future income they want."
Industry experts such as Stevens and David Murray, the head of the Australian government’s financial system inquiry, have advised those nearing retirement should consider allocating more of their superannuation to high risk options like shares in order to get a better return.
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