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When it comes to your retirement, COVID-19 doesn’t have to be a total gamechanger

26 Jun 2020

By Liberty Executive Wealth Adviser Carlo Gil

Not only are the health implications of the COVID-19 pandemic at their most severe for people in the retirement age bracket, but the negative financial impact on savings and retirement funds has been seen worldwide. Retirement savings are intrinsically linked to financial markets, and as global lockdowns brought economies to a grinding halt, so too did we see a broad-based fall across most asset classes. This meant a noticeable decrease in retirement savings value after the lockdown was first implemented.

Fortunately, things are looking up. The market volatility that was so prevalent just a few weeks ago is already starting to stabilise, and the recovery period means that not only are there opportunities to recoup any losses, but there may be opportunities to grow your investment. The markets are recovering and it’s safe to reinvest – with expert help.

This is the time to speak with a financial adviser, because just a slight re-managing of your retirement plan could mean the difference between a loss or potential growth of your life’s savings.

Going into retirement during the lockdown

As a specialist in investment and risk cover, prior to the lockdown I was receiving numerous calls for advice from clients – particularly those on the verge of retirement. Typically, at this point, when I looked at my older clients’ portfolios, the initial reaction was that we had to hold off on selling because the losses were too big. But now, there are a lot of opportunities arising during the pandemic.

I had a client who was set to retire the week that the lockdown was about to start and, in that week, we saw a 30% drop in the (FTSE) All-Share Index. This client was invested both locally and internationally, and in that scenario, we told him to hold on, to postpone his retirement because he stood to lose a significant amount. But just five weeks later, there was already a 20% market recovery, locally and abroad, which allowed the same client to retire that week without significant loss.

Where are the opportunities for reinvestment?

While every retiree's circumstances are different, there have been some markets that are becoming more lucrative across the board, even in the face of continued volatility. The bonds market has become a top investment priority, for example, as well as safe investments in currency or cash markets. South Africa has some of the world’s highest bonds rates – for now - due to the fact that the reserve bank and treasury are trying to attract foreign investment. This is helped by the fact that, in spite of our downgrades, developed world investors have been looking to South Africa for higher yield growth amid COVID-19 carnage. However, local investors should be careful – this is a temporary window of opportunity and won’t last for too long.

Certain clients have also been able to invest in life annuities, because the rates have gone up so much. I had a client who, pre-lockdown, was on an income of R55 000 – but for the same capital amount, with the new bond rates, we increased his income to R73 000. However, it may not be possible for all investors to alter their portfolios so easily, especially if they’ve already experienced major losses. We are advising clients who have seen very negative effects to hold off on selling for now, because many of these markets can still bounce back, as we’ve seen in the past.

But even with depleted portfolios, we have some opportunities. We’ve seen the rand strengthening, as well as the S&P 500 Index and European markets improving. You do need to look at the various options.

Packages to consider for investment security

Many financial services providers offer stable and secure investments to ensure that your retirement savings are protected, such as the Liberty Agile Retirement Range, with its Exact Income Fund (EIF) feature. The EIF puts you in charge of your finances, with ongoing updates to let you know exactly how much guaranteed retirement income you can get.

A higher risk package may allow you to take more risks and make bolder investment choices while securing your retirement income. The optional High Watermark guarantee allows you to invest in a high-growth portfolio while locking in a minimum investment value, giving you the safety net you need during market downturns.

Liberty’s Agile is one example where if at the end of five years, your investment is below the guaranteed level of 80%, you will get a top-up to bring you in line with the guaranteed amount.

Find out how COVID-19-proof your retirement is in five minutes

It takes five minutes or less to find out if your finances are handling this difficult time with our online Quick Check. Simply complete the assessment online, then receive your own personalised report which shows how well your retirement savings are holding up during the COVID-19 pandemic.

Individual advice at the click of a button

You’ll also get ways to connect with a financial professional and handy tips and advice for your finances’ specific strengths and weaknesses.

Take five

Want to try it out? Click on this link for your individual, five-minute online assessment:


Try not to panic

It’s understandable that many people of retirement age are making knee-jerk decisions to try and “save” their retirement funds. After all, these are their life savings that we’re talking about. However, everyone’s situation is different, meaning there could be opportunities for growth that you might be missing. In the unprecedented age of COVID-19, now is the time to take advantage of having an expert financial adviser at your fingertips.

This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice.  The material has been created for information purpose only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Please consult your financial adviser should you require advice of a financial nature and/or intermediary services.  Liberty Group Limited is the insurer of the Liberty Agile Retirement Range and an Authorised Financial Services Provider (no. 2409). Terms and Conditions, risks and limitations apply.

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).