The latest research into retirement outcomes has indicated Australians investing in annuities or guaranteed income products enter their post-work years with greater financial security and improved mental health compared to those who do not use these investment vehicles.
The study, conducted by Macquarie University’s School of Psychological Sciences and supported by Challenger, gathered responses from nearly 1000 of the investment manager’s clients over the age of 60.
It found 72 per cent of respondents receiving a guaranteed retirement income felt confident about their financial security. In contrast, a previous Challenger report showed only 56 per cent of those without guaranteed income felt financially secure.
Additionally, 85 per cent of those with guaranteed incomes reported positive mental health outcomes, compared to 79 per cent of those without.
Challenger chief executive Mandy Mannix noted the findings demonstrated the role retirement products such as annuities can play in helping Australians navigate this stage of their lives.
“For the first time, we are hearing from real customers about the power of guaranteed regular income. The data clearly indicates that annuities, or some element of guaranteed regular income in retirement, can be a game changer and we are seeing this in our broader customer base and increase in annuity take-up,” Mannix said.
“When you know a portion of your savings is guaranteed to last a lifetime, it brings an unparalleled sense of security. In fact, 60 per cent of our customers surveyed said they lived comfortably and the majority did not think they would outlive their savings, regardless of household income.
“This confidence in receiving a stable ‘pay check’ for life allows you to focus on what truly makes you happy.”
Macquarie University lead researcher Professor Joanne Earl added individuals in this category were more likely to transition into retirement earlier and with greater confidence.
“The findings demonstrate that feeling empowered to choose when and how you step into this next phase of life results in a healthier transition and greater retirement happiness, retirement adjustment and satisfaction,” Earl noted.
“Pleasingly, research respondents are choosing to enter this next stage of life while their health allows them to truly enjoy themselves and explore their passions and purpose. Of those surveyed, 22 per cent noted the choice to focus on what you want to do rather than what you have to do was the top retirement benefit.
“This was closely followed by enjoying freedom and flexibility to be spontaneous (20 per cent), family time (17 per cent) and travel (15 per cent). Financial security came through strongly as one of the key enablers for Challenger customers to have the peace of mind to take this step with confidence.”
