It’s March 2020. COVID hits. Markets crash.
I got calls from dozens of panicked clients watching their super balances drop 25%, 30%, 35% in a matter of weeks.
“Should we move to cash?” “Should we stop our retirement plans?” “Is it over?”
Fast forward to today. Every single one of those super balances has recovered. Most are higher than they were before the crash.
But here’s what’s interesting: The clients who understood how their super actually generates income? They barely flinched during the crash.
The ones who thought of their super as just “a number on a screen”? They lost sleep, made panicked decisions, and some even delayed retirement unnecessarily.
As a Balmain financial planner working with pre-retirees in their 50s and 60s, I’ve seen this pattern play out through multiple market crashes: GFC, COVID, every correction in between.
And the lesson is always the same: Your super keeps growing – and more importantly, keeps generating income – regardless of market crashes. But only if you understand how it actually works.
Let me paint you a picture.
It’s February 2020. James and Linda are 61, living in Balmain, with $720,000 in their combined super. They’ve been planning to retire in June – just four months away.
Everything is on track. They’ve done the numbers. They’ve told their employers. They’ve even booked a trip to Europe for September to celebrate.
Then COVID hits.
By late March, their super balance has dropped to $520,000. They’ve “lost” $200,000 in six weeks.
Linda calls me, voice shaking: “We can’t retire now. We’ve lost everything. Should we cancel our plans?”
Here’s what James and Linda didn’t understand at the time:
They hadn’t actually “lost” $200,000. Their super balance had dropped – which is completely different.
Why? Because their super wasn’t just sitting there as cash. It was invested in assets that generate income:
When markets crashed, the market VALUE of these investments dropped. But the companies didn’t stop paying dividends. The properties didn’t stop collecting rent. The bonds didn’t stop paying interest.
In other words: The income kept flowing.
James and Linda’s super was still generating approximately the same annual income in April 2020 as it was in February 2020 – even though the “account balance” had dropped dramatically.
“Your Retirement Number Isn’t What You Think”
Most people think about their super like a savings account. A number. A balance. A pile of money.
When that number goes down, they panic.
But that’s the wrong way to think about retirement super.
Your super in retirement isn’t a pile of cash you’re slowly spending. It’s a collection of income-producing assets.
Think of it this way:
Imagine you own a Balmain investment property worth $800,000 that rents for $35,000 per year.
One day, the property market crashes. Suddenly your property is only “worth” $600,000 according to recent comparable sales.
Question: Does your tenant stop paying rent?
Of course not. Your rental income continues regardless of what the property is theoretically “worth” today.
That’s exactly how properly structured retirement super works.
The market value fluctuates. The income stays relatively stable.
Let me show you what actually happens during a market crash using real numbers from the COVID crash.
Pre-COVID (February 2020):
Total annual income: ~$50,000
During COVID Crash (March-April 2020):
Total annual income: ~$46,000
Notice what happened:
Your balance fluctuates wildly. Your income is far more stable.
Post-COVID Recovery (2021-2024):
The people who panicked and sold everything during the crash? They locked in their losses and missed the recovery.
The people who understood that their income would keep flowing? They stayed the course and came out ahead.
This is the nightmare scenario everyone worries about: “What if I retire in February and markets crash in March?”
Valid concern. Let’s address it.
Meet David and Susan. They retired in February 2020 with $750,000 in super.
Literally the worst possible timing.
Six weeks later, their super balance had dropped to $525,000. They’d “lost” $225,000 before they’d even received their first pension payment.
So what happened to them?
They’re fine. Actually, they’re more than fine.
Here’s why:
They weren’t planning to “spend down” their super. They were drawing a sustainable income from it. Big difference.
Part of their super (about $60,000) was held in cash specifically for the first 1-2 years of retirement. This meant they didn’t need to sell any investments during the crash.
Their dividend payments dropped slightly, but not catastrophically. Rent kept coming in. Their income was down about 10% – annoying, but manageable.
Because they understood the income vs balance distinction, they didn’t sell everything in a panic. They held steady.
Result: By 2024, their super balance had fully recovered and was generating more income than before the crash. They’re now 65, still retired, still comfortable, and grateful they didn’t panic.
COVID was scary. But the GFC was worse – markets dropped nearly 50% in some sectors.
I had clients who retired in 2007 with $600,000 who watched their balances drop to $350,000 by early 2009.
Many of them are now in their late 70s. And you know what? They’re fine.
Their super balances recovered. Their income kept flowing (albeit reduced temporarily). They didn’t run out of money.
The ones who struggled? The ones who sold everything in a panic and moved to cash in 2008-2009, locking in their losses and missing the entire recovery.
Not all super strategies are equally resilient to market crashes. Here’s what actually protects you:
If your retirement strategy is “accumulate as much as possible and then slowly sell it off,” crashes are terrifying.
If your strategy is “generate sustainable income from assets,” crashes are concerning but not catastrophic.
You care more about the dividends and distributions than the daily share price.
When COVID hit, Australian bank dividends got smashed. But property trusts kept paying. Infrastructure investments kept paying. International shares (in different sectors) kept paying.
If your entire super was in one sector or one asset class, you’d be much more vulnerable.
Having 1-2 years of living expenses in cash means you never have to sell investments during a crash.
You can ride out the volatility while living off your cash buffer, knowing your investments will recover.
Here’s something most people don’t think about:
If your super balance drops significantly due to a market crash, you might become eligible for MORE Age Pension (because the asset test threshold is based on your current balance).
It’s not ideal, but it’s a built-in safety net. If markets crash and your super drops dramatically, government support increases to compensate.
Every pre-retiree wants to know: “When should I retire to avoid the next crash?”
The answer: You can’t know. Nobody can.
Markets have crashed:
Trying to time the market is a fool’s errand. Professionals can’t do it consistently. You definitely can’t.
So what do you do instead?
You build a retirement income strategy that works regardless of what markets do.
When your income is sustainable and diversified, market timing becomes irrelevant. You retire when you’re ready, not when markets give you “permission.”
“Income for Life vs Capital Gains”
You might have heard about “sequence of returns risk” – the idea that retiring right before a crash can permanently damage your retirement.
It’s a real thing. But it’s massively overstated for most Balmain retirees.
Here’s why:
If you’re selling 7-10% of your super every year to fund retirement, sequence risk is a real problem.
If you’re drawing sustainable income at 4-6%, it’s much less of an issue.
Most Australians are at least partially eligible for Age Pension. This guaranteed income reduces sequence risk dramatically.
If markets crash right after you retire, you can temporarily reduce discretionary spending (travel, renovations, gifts) while your super recovers.
Not ideal, but completely manageable for most people.
Instead of obsessing over when markets might crash, focus on these factors that actually matter:
Drawing 4-5% annually from a diversified portfolio? You’ll probably be fine through any crash.
Drawing 8-10% annually? You’re in trouble even without a crash.
Is your super structured to generate sustainable income? Or are you just planning to “sell stuff when you need money”?
The former survives crashes. The latter doesn’t.
Can you reduce spending by 10-20% for a year or two if needed?
If yes, you’ll survive any crash.
If no, you need a bigger buffer.
Planning for 30 years of retirement? You’ll experience multiple crashes. But you’ll also experience multiple recoveries.
The longer your time horizon, the less any single crash matters.
If you’re a Balmain local approaching retirement, you have some advantages that protect you from market crashes:
This means your essential costs are much lower than someone paying rent or a mortgage. You can weather income reductions more easily.
Even if your super crashes, this guaranteed income provides a floor. You won’t be destitute.
In a worst-case scenario (which almost never happens), you could downsize and access hundreds of thousands in equity. That’s a powerful backup plan.
Inner West Sydney has proven remarkably resilient through economic downturns. Your property values, local services, and community stability provide a buffer many Australians don’t have.
Your super grows – and more importantly, generates income – regardless of market crashes.
Not because crashes don’t affect it (they do). But because:
The retirees who struggle during crashes aren’t the ones with less money. They’re the ones without a clear income strategy, who panic and make emotional decisions.
Don’t let fear of crashes delay your retirement or prevent you from enjoying the money you’ve spent 40 years accumulating.
Build a resilient income strategy. Then trust it.
Stop worrying about market timing. Build a retirement income strategy designed to weather any crash.
Get your One Page Financial Plan tailored for Balmain living and market resilience.
For $660 (inc GST), you’ll discover:
✓ How much sustainable income your super can generate (regardless of market volatility)
✓ Your crash protection strategy (diversification, buffers, Age Pension)
✓ When you can actually retire (not when markets “let you”)
✓ 100% satisfaction guaranteed
📧 Email: adam@suncow.com.au
📞 Phone: 0418 785 200
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Information provided by Suncow Wealth is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice. Remember, the value of any investment can go down as well as up. Before acting, you should consider seeking independent personal financial advice that is tailored to your needs. Suncow Wealth Pty Ltd is a Corporate Representative No.441116 of AFSL 342766.