Investing in retirement when markets feel overpriced

Retirement planning often starts with a flood of questions. How much is enough? What if markets fall? Will I outlive my savings?

These aren’t just theoretical concerns, they’re the real, pressing thoughts that Australians have as they approach or enter retirement.

And they’re fair questions. Retirement today often spans 25 to 30 years. It’s a stage of life that demands careful planning, not just for lifestyle and income, but also for peace of mind.

Based on years of working closely with retirees, these are the seven questions that come up most often, and the insights that help people move forward with clarity and confidence.

The most common question is also the hardest to answer: how much is enough? There’s no universal number. Lifestyle, location, family needs, and future goals all influence the amount someone needs.

Many retirees who have had long careers, owned businesses, or saved diligently through super, trend to spend between $80,000 and $120,000 per year. That’s well above the often-quoted “comfortable retirement” benchmark of $75,000 for couples.

Why the gap? It comes down to expectations. That benchmark typically assumes one overseas trip every seven years. But for those who want to travel more frequently, support children or grandchildren, or simply enjoy greater flexibility, the actual cost of retirement can be significantly higher.

Depending on when retirement begins and the level of risk taken, this level of spending requires between $1.7 and $2.2 million in retirement savings.

The next question is about investment returns. After more than a decade of robust performance from both shares and property, many assume 10% annual returns are normal. But these returns have been the exception, not the rule. Long-term data from balanced portfolios (typically 60 – 70% in growth assets) displays returns sitting closer to 7% per annum.

Building a plan based on more realistic expectations is critical to avoiding disappointment, or shortfall in later years.

Then comes the allure of the "sure thing”. Whether it’s a hot tip, an online trading system, or a fail-safe property strategy, the idea of guaranteed success is tempting. But history shows that resilience, not risk-taking, is what sustains a good retirement.

Diversification, discipline, and a long-term mindset remains the most effective tools in navigating uncertainty.

Another area of confusion is the role of bonds. After delivering negative returns in 2022, some question whether they still belong in retirement portfolios. But bonds continue to provide important benefits, such as stable income, lower risk, and diversification from equities. And with yields between 4 and 4.5%, their value is more relevant now than in recent years.

With markets regularly hitting new highs and headlines warning of bubbles, it’s natural to hesitate. But trying to predict market tops or wait for a cash can lead to inaction. Markets have felt “overvalued” for over a decade now, yet they’ve continued to climb.

The better approach is to focus on allocation, not prediction. A well-diversified portfolio reduces reliance on any single market or sector and allows retirees to participate in long-term growth without overexposure.  

The most emotionally charged concern is running out of money. It’s a fear that cuts across all levels of wealth. While the age pension offers a safety net, the maximum rate of around $46,000 for couples is often far from what people envision for their retirement.

The key is managing both income and growth, while drawing from cash and lower-risk investments when needed, while still allocating part of the portfolio to growth assets that keep working overtime.

This raises a final question: is professional advice worth paying for? In rising markets, many feel confident managing their own affairs. But retirement brings complexity, including tax considerations, superannuation rules, Centrelink thresholds, estate planning, and more.

Just as importantly, it’s not always about what you do, but what you avoid. Panic-selling during a downturn, chasing fads, or making poorly timed decisions can all derail years of planning. The value of advice often comes not from spectacular outperformance, but from structure, accountability, and consistent decision-making.

The most successful retirees tend to approach these questions with honesty, adaptability, and a willingness to review their plan regularly. Retirement isn’t static, it changes as life does. Staying informed, realistic, and open to guidance is often what makes the biggest difference.

To learn more about how Wattle supports Australians in retirement, visit here.