A smart retirement portfolio helps to manage and mitigate risk and ensures clients’ savings work hard at every stage of retirement. As with any astute investment approach, tapping into diverse sources of retirement income is key when it comes to balancing risk and return. After a lifetime’s work, peace of mind is a reasonable expectation in retirement.

Accumulating as much as possible in superannuation (and other investments) is only part one of the retirement challenge and Australia’s $3.5 trillion retirement system has deservedly garnered world acclaim. Super continues to provide workers with a growing pool of tax-effective savings set aside to finance their life in retirement.

However, it can be challenging to plan for the future when there’s uncertainty around how long clients will need a regular income to fund their lifestyle. What if they need access to capital to meet unplanned health or aged care needs, or fund other ‘lumpy’ expenses? How could drawing on this capital affect their future income?

For Australians to have the confidence to spend and thrive in retirement, they need retirement income certainty and access to capital.

Unfortunately, the investment strategies and products that have served so well to accumulate assets via super don’t necessarily provide the kind of financial certainty Australians expect for their retirement years. As Australia’s demographics shift, today’s retirees face unique challenges. The tools, products and strategies that retirees have relied on for decades need to be optimised for a future in which people live longer and every dollar has to be stretched further.

Rather than having to shoe-horn retirement into existing products to get the ‘best possible’ outcome, what if there was an innovative solution that could provide retirees with the capital protection, flexibility and income certainty that most existing products don’t deliver?

Imagining the retirement products of the future

While superannuation funds and other financial services firms have focused primarily on the accumulation phase, the development of innovative retirement income products has been slow.  A 2022 Actuaries Institute report[1] noted that combining traditional products with innovative solutions could lead to a remarkable 30 percent increase in retirement income.

Further, the report noted that methods such as using investment-linked lifetime income streams have been shown to lift retirement income without increasing longevity risk. This is a win-win outcome that would see Australian retirees benefit from larger payments and a better quality of life without increasing the likelihood of outliving their savings.

So, what will the next generation of retirement products look like? They will improve further on the earlier efforts with outcome oriented solutions designed around core features that include:

Protected growth Retirees benefit from growth and a downside protection mechanism limiting risk exposure, while offering the potential for the capital growth necessary to fund longer retirement periods.
Guaranteed lifetime income Backed by regulated life companies with strong balance sheets and capital reserves, guaranteed income payments will be paid for the life of the retiree. A choice of fixed or rising income payments will also be available.
Flexible access to savings Retirees will be able to withdraw all or part of their account balance at any time so that unexpected expenses can be quickly and easily met.
Control A range of investment and protection options will enable retired Australians to adjust their investment strategies as their needs change.
Seamless integration Integration into a super fund or an ABP will make administration easier for retirees, financial advisers and super funds.
Long-term surety Australians will feel confident that the promises made to them today will provide security into the future. Life company guarantees mean they’ll retire with certainty and confidence.
Investment Value payable
on death
Retirees can leave their residual investment value to beneficiaries.

The next generation of retirement income products will help Australians make informed and confident spending decisions so that ultimately they can really live, thrive and flourish in retirement. Won’t that be a positive outcome for your clients?

The future is here. Read more about transforming your clients’ retirement with income certainty by clicking below.

  1. Actuaries Institute, ‘Actuaries develop a framework for maximising retirement income’, 26 April 2022

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559. (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited.
This information is current as at October 2023 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation and needs.
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