Australian life expectancy has increased dramatically over the past 60 years. This means our retirement savings will need to last a lot longer than ever before. So how prepared are we to sustain ourselves and future generations into old age?
According to Mercer’s new report 'Bold Ideas for Mending the Long-Term Saving Gap', there is currently a $70 trillion global retirement savings deficit and that gap will only widen. Addressing this challenge will take concerted action on the part of governments, employers, financial intermediaries and individuals.
Bold solutions are needed and creating a solution goes to the core of Mercer’s mission to make a difference in the lives of people.
LifetimePlus® is an award-wimming financial solution that we believe offers the missing piece to today’s retirement planning challenge – affordable, effective longevity risk protection in the form of an investment option, not an insurance contract.
We're living longer
People retiring today are likely to live well in their nineties. This trend is increasing but us often not accounted for in the financial planning process.
Source: Based on The Australian Government Treasury data
Australians are likely to outlive their savings
Source: Expectations vs Reality of Retirement, Mercer
Retirees can't just rely on the age pension
People often assume that as they reach late stages of retirement the age pension will be sufficient.
This isn't actually the case. Whilst retirees spend less on holidays and going out, they spend more on basic needs.
“Contrary to findings commonly cited in research on retirement, households do not show a decline in expenditure through the course of retirement”.
Source: Expenditure Patterns in Retirement, August 2016, AIST & Australian Centre for Financial Studies
As life expectancy increases, retirees may be worried about whether their money will last as long as they do.
With LifetimePlus, retirees won’t have to worry about outliving their savings because they will continue to receive an income for as long as they live.
Like an annuity, Lifetimeplus pays an income to investors with an increasing income for as long as they live.
But unlike an annuity, Lifetimeplus does not guarantee a set level of income. Returns will vary according to the market and how long money has been invested.
The big advantage of Lifetimeplus over annuities is that the income is stronger and increases the older the investor gets.
Lifetimeplus is an investment option for retirement savings and complements other investment options.
It is designed to give the greatest returns when they are needed most – when other assets may be running out.
With Lifetimeplus, retirees can live the retirement they want, comfortable in the knowledge they will never run out of money.
Lifetimeplus has been designed to play a valuable role for majority of retirees. It also provides benefits to advisers and superannuation funds.
Retirement is a new chapter in a retiree’s life. It’s full of excitement but can be daunting at the same time. Retirees finally have a chance to tick off their bucket list, but financial concerns often weigh at the back of their minds.
LifetimePlus gives investors the financial peace of mind they need, the flexibility they want and the control they desire.
For Financial Advisers
Lifetimeplus behaves like a normal managed fund in the initial years, followed by growth like returns but without the investment risk due to the mutual pool.
Advisers can easily integrate Lifetimeplus into their client’s portfolios. The difference is that the clients will have an income generating investment for as long as they live.
For Super Funds
Super funds have long sought meaningful ways to help retiring members address longevity risk. The challenge has been to find a solution that is accessible to members through their account-based pension, meets members’ needs and is transparent and flexible.
The Government is now driving an agenda to develop a framework to increase the efficiency of the superannuation system. Lifetimeplus is one solution that can help super funds deliver a sustainable income throughout their member’s retirement.