Assessing longevity risk l Mercer LifetimePlus Australia

We're living longer than ever before. Assessing longevity risk.

Our Thinking / Mercer LifetimePlus /

Assessing longevity risk
Calendar26 September 2017

IMPORTANT NOTICE: FOR FINANCIAL ADVISERS ONLY

The life expectancy of Australians has increased dramatically over the past 60 years. This means retirement savings will need to last a lot longer than ever before - otherwise people risk outliving their savings and experiencing a sharp decline in their standard of living.

Fact 1: We’re living longer than ever before

People retiring today are likely to live well into their nineties and the 100-year life will be a reality for many. Current life expectancy estimates are that Australian females have a 55% chance of living beyond 90, whilst males have a 42% chance.


 

Fact 2: We’re likely to outlive our savings

On average, 50% of retirees are likely to outlive their savings by more than five years – and 25 per cent are expected to outlive their savings by 10 or more years. Australians today need to plan for a period of retirement that might last a quarter of a century or longer. One part of the problem is the retirement planning industry uses lifetable data that is a whole of population average. This significantly underestimates the lifespan of clients who have reached age 65.

Fact 3: Current solutions are not adequate

Current attempts to solve longevity risk through an insurance solution involve costly overheads that limit returns, such as providing guarantees, meeting capital adequacy requirements or paying profits to shareholders. The alternative solutions of asset disposal, high risk investments or relying on family for support are not adequate or sustainable.

Fact 4: The age pension is not enough

Many people assume they will spend less money in later retirement and the age pension will be sufficient for their needs. This isn’t the case. Studies show whilst spending on travel and entertainment decreases, this is matched by a corresponding increase in medical, care and housing needs.

 

 

  Contact us
Please complete the following form or call us on 1800 870 678 for more information.
*Required Fields

This website and the materials contained in it are provided by Mercer Investments (Australia) Limited ABN 66 008 612 397 Australian Financial Services Licence #244 385 (refer to our Financial Services Guide). They are for the benefit of financial advisers only and are not intended to be used by retail clients.  Any advice contained in the website and materials is of a general nature only and has been prepared without taking into account the objectives, financial situation or needs of any particular individual.  Prior to acting on any information you need to take into account all of your client’s personal and financial circumstances and consider the product disclosure statement for Mercer LifetimePlus and any other relevant materials.

No guarantee is given (either express or implied) regarding the reliability, timeliness, completeness, or accuracy of the information contained within this website at any particular time.  All information available within this website is subject to change without notice.  ‘MERCER’ is an Australian- registered trade mark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.  Copyright Mercer LLC. All rights reserved.