When clients think about investing, the first question is usually, “How much can I make?”. For retirees, and those approaching retirement, a more important question is: “How much can I afford to lose?”

This shift in focus is critical. Once clients move from accumulation to retirement, the risks they face change fundamentally as market volatility is no longer just uncomfortable — it can permanently impair outcomes. For example, a 20% portfolio decline requires a subsequent 25% gain just to get back to where you started, and even modest drawdowns can materially extend recovery time and erode long-term outcomes¹.

For retirees, the issue is not whether losses will occur, but how severe they are and how long recovery takes.  This is where downside protection becomes one of the most valuable tools in a retirement portfolio.

The edge for retirees

Prioritising downside protection can help preserve capital, support long-term compounding and contribute to more reliable outcomes. Over time, the ability to lose less in down markets can matter more than the occasional outsized gain. This is particularly important in the 5 to 10 years around retirement, when sequencing risk is typically highest and large losses can permanently impair a client’s retirement position.

Practically, advisers can build downside resilience in their strategies by considering products with explicit downside protection features. To show how this can work in practice, consider the following example.

Meet Sarah

Aged 62, Sarah is approaching retirement and invests $200,000 into Allianz Retire+ Allianz Guaranteed Income for Life (AGILE), remaining in Growth Phase² until she retires in a few years. Her key concern is continuing to participate in market growth while avoiding large losses just before retirement.

During the Growth Phase, Sarah is able to invest AGILE in one or more Protected Investment Options. These options provide exposure linked to equity markets while limiting downside risk through built‑in protection mechanisms³. Concerned about significant market volatility, she selects the Australian Equity Index – Total Protection option and she can review this election annually.

Under Total Protection, her annual return can never be negative.

Assume that in one year, the underlying equity index falls –15%. Without downside protection, Sarah’s $200,000 investment could fall to $170,000, locking in a large loss at a critical time.

With AGILE’s Total Protection option, the negative index return is ignored, her annual return is 0% and her investment value remains at $200,000⁴. She experiences the benefit of complete downside protection as her capital is shielded from all market losses, even during severe downturns.

By avoiding a major downturn, she has preserved her investment value. She also avoids needing to chase outsized returns to recover from recent losses. This directly reduces sequencing risk which is most damaging when losses occur close to, or during the early years of, retirement.

Key takeaway

For retirees, managing sequencing risk is less about capturing every upside year and more about avoiding drawdowns that realise losses and result in less income being paid in subsequent months and years—something strategies like Allianz Retire+ AGILE are designed to help address. The AGILE strategy does this by limiting (or in some options, eliminating) negative annual returns, preserving capital and reducing recovery pressure heading into retirement.

In practice, AGILE’s protected options aim to preserve and grow retirement capital, helping clients stay invested and avoid the need to ‘make back’ losses at the worst possible time. Used appropriately, downside protection can be a valuable building block in a retirement portfolio.

1. Firstlinks article: Can the sequence of investment returns ruin retirement?

2. Investors can commence regular monthly income payments any time after one year in Growth Phase.

3. Returns are capped at a Maximum Return (reset annually).

4. Before fees and premiums.

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at May 2026 unless otherwise specified and is for general information purposes only. This information has been prepared specifically for authorised financial advisers in Australia and is not intended for retail investors. It does not take account of any person’s objectives, financial situation or needs. Before acting on anything contained in this material, you should consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. The returns on the Allianz Guaranteed Income for Life (AGILE) product are subject to a number of variables including investor elections, market performance and other external factors, and may differ from the information contained herein. Past performance is not a reliable indicator of future performance.  No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material. Use of the word ‘guarantee’ in this material refers to an assurance that certain conditions or contractual promises will be fulfilled by Allianz Retire+ from the available assets of its Statutory Fund No 2, in relation to the product terms. This includes ‘guaranteed’ income payments in the Lifetime Income Phase which will be paid from the available assets of Statutory Fund No 2, noting that Allianz Retire+ may terminate the product in certain limited circumstances as outlined in the Product Disclosure Statement referred below. Allianz Australia Life Insurance Limited is the issuer of Allianz Guaranteed Income for Life (AGILE). Prior to making an investment decision, investors should consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) which are available on our website (www.allianzretireplus.com.au).