Retirees remain very focused on ensuring their savings will last them their lifetime and fund essential living and health costs, but have indicated current measures of a modest standard of living are lower than their expectations, according to a retirement income provider.
Challenger head of technical services Andrew Lowe said retirees were exposed to longevity, investment and inflation risks and in the absence of guidance from a superannuation fund or financial adviser were protecting themselves by reducing spending.
“Not spending to protect against the risk in the future is absolutely real and superannuation funds can solve for that challenge by building out retirement income strategies to address that concern. Advisers have long been able to do that and continue to do that,” Lowe said during a presentation in Sydney today.
“We have done research with National Seniors Australia over a long period of time and one of the things that we test is their members’ preferences for retirement income and the idea of regular income to meet essential spending requirements is a really important element that comes from that research.
“They are looking for income that keeps pace with inflation and there is a complementary role that income from superannuation can play for clients who are eligible for the age pension and the protections built into it through indexation.”
He said the Association of Superannuation Funds of Australia’s modest retirement standard was usually a few thousand dollars above the maximum rate of the age pension and was regarded by many as a starting point.
“We do a lot of modelling with advisers around retirement incomes and the days where I used to set $52,000 as retirement income for a retired couple have now gone. It seems to me that $60,000 or $70,000 or more per annum is the new $52,000 per annum in that space,” he said.
