Investing in retirement when markets feel overpriced

If you’ve been watching financial news lately, you’ve heard that markets are surging. Global share markets are hitting all-time highs, and the headlines may be celebratory, but if you’re in or approaching retirement you’re more likely thinking about what happens next.

Could this be a bubble? And more importantly, how do you protect the income you rely on?

Now is the time for a calm, considered approach. Your strategy, not the state of the market, should be guiding your next move. For retirees, what really matters is keeping your money working for you, while managing risk and preserving flexibility.

The wealth specialists at Wattle remind clients that your return isn’t just about market growth, it’s about income, too. And with interest rates now offering 4-6% across cash and bonds, income is playing a much bigger role in retirement portfolios. 

Reassessing the balance growth and income can provide greater stability, especially when valuations feel stretched.

For some, strong markets have lifted balances and boosted confidence but also led to increased spending.

This can result in drawing more from your pension than necessary or spending more than you actually need. It’s a good time to revisit your drawdown strategy. Are you using the income? Could some of it be re-contributed to super? Is your spending aligned with your goals, or has lifestyle crept in?

Rebalancing is another essential part of retirement planning. As some sectors soar, your portfolio can drift out of balance. Concentration risk – the risk of relying too much on a handful of companies, sectors, or regions – can quickly build up.

With the US tech stocks and Australian banks dominating many portfolios, the risk of being overexposed are real. Rebalancing helps reset your allocation, trims the excess, and redistributes into areas that offer better long-term value.

This is a valuable time to stress-test your plan. Retirement is about resilience, having enough income and liquidity to ride out whatever the markets do next. Whether that’s ensuring you’ve got 6-12 months of cash, low-risk income assets to draw up, or knowing that your income needs are covered even if growth slows or dividends fall.

It’s not about timing the market. It’s about being prepared for uncertainty, and giving yourself confidence, not concern.

Holding a little more cash than usual may be a smart move. Think of cash not just as a buffer, but as an opportunity. If markets do pull back, you’ll have the ability to act. Separating investment cash from emergency cash helps you maintain control and make thoughtful decisions, rather than reactive ones.

For those seeking growth, it’s worth looking beyond just equities. Infrastructure, commercial property, and defensive sectors like healthcare or utilities can all offer meaningful growth with more stability. Valuations in some of these sectors remain more attractive than the headline-grabbing tech stocks. Diversifying your growth is a powerful way to build resilience.

And while passive investing has had its moment in recent years, this could be the time to consider active manager who can navigate shifting and uncover value where others aren’t looking. Every dollar in retirement should be working harder and smarter, not just following the herd.

Ultimately, a robust retirement plan is built on a framework that balances income and growth, manages risk, and adapts with you over time. Markets will rise and fall. What matters is having a strategy that’s grounded, flexible, and built around your goals, not just the news cycle.

Wattle specialises exclusively in retirement planning. They partner with Australians over 50 to help structure income, simplify decisions, and build confidence in every financial stage of retirement. Wattle’s advice is tailored, ongoing, and grounded in decades of experience.

If you're unsure where to start or whether your current approach still suits your needs, Wattle is here to help.

Visit wattlepartners.com.au to start your journey with clarity and confidence.