Retirement is a time of transition and excitement – however it can often be overshadowed by uncertainty and fear, which is perfectly understandable when we consider that no one really knows what’s down the road.

Thanks to improvements in medicine and technology, we’re living longer than ever before, with Australian life expectancies now 81.3 years for men and 85.4 years for women* and is expected to keep increasing. And while this increased longevity is great news, it has major implications for our savings.

On average, we now spend over 25 years in retirement+. To put it another way, that’s almost one-third of our lives in retirement! It’s a sobering number, and one which goes part of the way to explain why many people are holding on to their savings – to the extent that, according to the Government, the majority of Australians die with the bulk of their wealth which they had at retirement intact+.

However, there’s an even bigger reason why we are preserving our savings – and that reason is uncertainty. Uncertainty about market volatility, uncertainty about inflation and the cost of living, uncertainty about unplanned future expenses (such as health and aged care costs). Ultimately, this uncertainty is preventing older Australians from living the fullest lives in their post-work years because they lack the confidence to spend and enjoy their hard-earned retirement.

While it’s often said that you can’t put a price on peace of mind, certainty actually has a tangible value: Dan Buettner, longevity researcher and author, found that financial security (or certainty) has a three-times greater impact on our happiness than just receiving an income.

So how do we go about achieving financial certainty (and the contentment that comes with it) in retirement? For Australia’s growing wave of retirees, there’s a surging demand for innovative retirement income solutions that rethink how we live – and spend – in retirement.

Up until now, traditional retirement products (such as account-based pensions) have fallen short of providing certainty – principally because all of the investment and longevity risk has landed squarely on the shoulders of the retiree. On the other hand, traditional income products (such as annuities) looked to provide that income certainty, albeit with tradeoffs such as flexibility and access to capital.

In recent times we have seen an emergence of innovative retirement solutions designed to pay a guaranteed income for life with more flexibility in their design.  These next-generation lifetime income solutions have been designed to provide income certainty, flexibility and the ability to access capital whenever needed. Combining traditional sources of retirement income with innovative solutions can potentially provide you with an additional 30% increase in retirement income. They are designed to work alongside account-based pensions and even the Age Pension.

To flourish in retirement, you need to start to plan for your retirement early to ensure the best chance of financial certainty. Achieving this can be easier than one may think: the secret is to obtain financial advice and consider all of the options available to create an integrated retirement income strategy. After all, having worked all your life to reach this exciting milestone, you deserve nothing less than a certain retirement.

  1. Source: Life expectancy at birth 2022-2023. Australian Treasury, Intergenerational Report 2023, August 2023.
  2. Source: Australian Government Retirement Income Review July 2020.

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