Hard road for retirees
THE trip to Northern Queensland that Ballina retirees Fay and Bob Riddell were planning will have to take a back seat.
The couple has lost more than $40,000 in superannuation returns in the past 12 months. And they are not alone.
Just about anywhere you go on the Northern Rivers you will hear stories of people who have had to return to work, tighten their purse strings, or even put off retirement for another four or five years in the hope of getting their fund balances back to what they were before the share markets tumbled.
Superannuation funds have suffered four quarters of negative returns, bringing the 12-month median return for a balanced option super account to a minus 11.59 per cent – the worst rolling 12 months return since the introduction of compulsory super in 1992.
And as super funds continue to be battered by the global financial crisis, many retirees are wondering if they will be able to make ends meet.
“It has slowed us down a bit,” Mrs Riddell told The Northern Star.
“We have to be more careful with our money, and probably won’t be able to visit the grandkids as much now.
“And we were going to go travelling, but now it looks like we’ll just have to wait.”
Mrs Riddell said a friend who was planning to retire this year could not now afford to do so.
Another had gone back to work two days a week after retiring.
“There is no point in checking your balance every five minutes or stressing too much about it,” Mrs Riddell said.
“At this age you’re supposed to be relaxing.”
A report by industry analyst SuperRatings indicated returns were expected to fall further by the end of the month.
The rolling seven-year return to the end of September was 7.18 per cent and the rolling 10-year return was 7.14 per cent, the report said.
These were almost exactly in line with long-term annual targets of 3.5 per cent above the consumer price index.
“However, even these may come under pressure in coming months,” the report said.
“The era of double digit per annum returns over a five-year period appear to be at an end.”
SuperRatings managing director Jeff Bresnahan said there was clear evidence that more super members were moving to cash.
“With short-term losses at an all-time high, funds are being forced to try even harder to engage members to ensure panic reactions are avoided,” Mr Bresnahan said.
“Members are flocking to seminars being run by funds in an effort to understand the potential effect these markets may have on their superannuation.
“Funds need to communicate more simply and on a more personal basis.”