![\"Retirement](\"https:\/\/www.europesays.com\/ie\/wp-content\/uploads\/2026\/03\/690fb9e0-2719-11f1-9f5d-9d71cf8e4148.png\")
Longevity risk is the risk of outliving your savings. But ‘more conservative’ doesn’t mean ‘less risky’ when it comes to your response. (Source: Getty) <\/p>\n Longevity risk is the risk of outliving your savings. But ‘more conservative’ doesn’t mean ‘less risky’ when it comes to your response. (Source: Getty) <\/p>\n
Another day, another volatile day for markets<\/a>. If you\u2019re feeling a sense of unease with your investment portfolio<\/a>, you\u2019re not alone. The waves of unsettling news<\/a> we\u2019re waking up to each morning are impossible to ignore, and it doesn\u2019t look like stopping anytime soon.<\/p>\n For those in or nearing retirement, in particular, any current compulsion to step back from growth and protect the investments and savings you\u2019ve worked hard to build is entirely understandable. Many Australians still carry vivid memories of the GFC, when markets fell hard and confidence took years to recover.<\/p>\n And when you\u2019re relying on savings rather than a pay cheque, stability matters.<\/p>\n RELATED<\/strong><\/p>\n But during times of volatility, it\u2019s worth keeping in mind the simple truth that AMP chief economist Shane Oliver often points out<\/a>: markets have proven over time to \u201cclimb the wall of worry\u201d, rising even when sentiment is fragile and the news flow feels relentlessly negative. That doesn\u2019t mean risks aren\u2019t real, or that downturns can\u2019t be sharp. But it does mean reacting to the noise, or retreating too quickly into what feels \u201csafe\u201d, can come with its own cost.<\/p>\n Sometimes short\u2011term protection is exactly what\u2019s needed. But for many retirees, the bigger risk isn\u2019t a volatile week or quarter. It\u2019s the quieter risk of being too conservative for too long, and later discovering that spending power hasn\u2019t kept pace with a long retirement.<\/p>\n Australians have become strong retirement savers through compulsory super<\/a>. What hasn\u2019t always kept pace is how we think about the retirement phase itself. Retirement isn\u2019t a short chapter funded by a nest egg and a pension. For many people, it can last 20, 25 or even 30 years, long enough for inflation, health costs and everyday expenses to make a real dent.<\/p>\n RELATED: <\/strong>Retired couple hit with $5,200 insurance cost as rising premiums wipe 25 years off superannuation plan<\/strong><\/a><\/p>\n That long horizon changes the investment challenge. A portfolio built mainly to avoid short\u2011term discomfort may struggle to deliver the growth needed to support a lifestyle over decades. This is where the conversation about \u201crisk\u201d needs to broaden beyond market falls. In retirement, several risks matter, and some are less obvious than volatility.<\/p>\n Inflation risk is the gradual erosion of purchasing power<\/a>. Even relatively modest inflation compounds over time. Cash can feel comforting, but over long periods it may struggle to keep up with rising living costs, quietly reducing what your money can buy.<\/p>\n Story continues <\/p>\n Longevity risk is the risk of outliving your savings. As life expectancy increases, portfolios still need to work well into retirement. For many retirees, the goal isn\u2019t simply to avoid ups and downs, but to sustain a lifestyle with enough flexibility to adapt as needs change.<\/p>\n Sequencing risk is also real. If you\u2019re drawing down on investments during a market downturn, you can be forced to sell more assets at lower prices, making it harder for a portfolio to recover. This concern often drives people away from growth assets altogether.<\/p>\n The good news is retirees don\u2019t have to choose between growth and peace of mind. There are practical ways to keep growth in the picture while reducing the chance that market swings disrupt day\u2011to\u2011day living.<\/p>\n One helpful approach is a version of the bucket strategy. In simple terms, it separates money needed sooner from money intended for later. A near\u2011term \u201cspending bucket\u201d holds lower\u2011risk assets, such as cash, to cover the next couple of years of expenses. This buffer can provide breathing room, reducing the need to sell growth assets when markets are down. A longer\u2011term bucket can remain invested in diversified growth assets, with the aim of supporting spending power later in retirement.<\/p>\n This approach helps in two ways. First, it can make volatility easier to live with because near\u2011term needs are covered. Second, it gives longer\u2011term investments the time they need to recover from a downturn, particularly important for people who may be retired for decades.<\/p>\n It also puts past market shocks into perspective. The enduring lesson isn\u2019t that growth assets should be avoided. It\u2019s that markets can fall sharply and unexpectedly, so portfolios should be structured to avoid being forced into decisions that lock in losses at the worst possible time.<\/p>\n Staying invested in growth doesn\u2019t mean taking reckless risk. It\u2019s about resilient growth, diversified across asset classes, regions and styles, and not overly dependent on any single outcome. It also means being mindful of concentration risk, or sitting too heavily in cash simply because it feels safe.<\/p>\n It\u2019s worth gently challenging a common assumption: \u201cmore conservative\u201d doesn\u2019t automatically mean \u201cless risky\u201d. A very conservative portfolio may smooth returns in the short term, but increase the risk of falling behind inflation over a long retirement. That risk tends to creep up quietly, and by the time it\u2019s obvious, it can be harder to fix.<\/p>\n So the question isn\u2019t how to eliminate volatility. Volatility is part of investing. The more useful question is how to structure a portfolio so volatility can be tolerated without derailing long\u2011term plans.<\/p>\n For retirees, that means not being derailed by daily market swings, but maintaining a portfolio with enough stability for peace of mind today and enough growth to support the years ahead.<\/p>\n Anna Shelley is Chief Investment Officer for AMP Australia, with circa $80 billion in funds under management across its super and platform businesses.<\/strong><\/p>\n Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.<\/p>\n Get the latest Yahoo Finance news – follow us on <\/strong>Facebook<\/strong><\/a>, <\/strong>LinkedIn<\/strong><\/a> and <\/strong>Instagram<\/strong><\/a>.<\/strong><\/p>\n Anna Shelley is the Chief Investment Officer for AMP Investments. (Source: Supplied) <\/p>\n