As market volatility leaves pre-retirees with few places to hide, good advice can lead them to a safer space during the countdown to retirement.

Ready or not, retirement is coming for droves of Australians.

The latest official figures show more than 1.4 million Australian residents are in the pre-retirement holding pen that broadly covers the 55- to 65-year-old group.

Up ahead of them, about 2 million people have strayed into retirement-age territory while just behind a further 763,000 in the 50- to 54-year-old bracket will ensure a constant annual flow of 150,000 or so joining the pre-retiree population, according to Australian Bureau of Statistics (ABS) data as at the end of March 2021.

Yet countless surveys show the majority of Australians are actually drifting in droves into the retirement zone, somewhat confused, lacking confidence and fearful of adverse market conditions.

Simon Aboud, Chief Product Officer, Allianz Retire+ says the recent market volatility serves as a useful reminder that the increased exposure to shares among pre-retirees comes with ‘sequencing risk’, which needs to be managed.

“It’s never been more important for prospective retirees to seek financial advice to review their options to adequately safeguard assets in the current economic environment, and reduce sequencing risk,” Aboud says.

Recent market volatility may understandably be testing the nerves of pre-retirees he says, but good advice can lead them to a safer space during the countdown to retirement.

Why advisers can cure pre-retiree anxiety

This pre-retiree anxiety also shows up in the latest data from the ongoing Allianz Retire+ study of over 1,000 Australians either in or close to retirement, with a large confidence disparity of the cohort relative to those already in retirement.

Roughly 40 per cent of prospective retirees in the Allianz Retire+ 2021 study worry that their finances will not sustain a quality post-work lifestyle versus just 25 per cent of current retirees.

That angst-gap between pre-retirees and the already-retired hasn’t improved over time either, with ABC ‘Australia Talks National Survey’ 2019 data showing only a third of respondents aged 65 to 74 were ‘not confident’ of maintaining a comfortable retirement compared to 50 per cent of Australians in the 50- to 64-year-old range.

Aboud says since the firm launched their retirement study in 2019, the results have invariably shown the value of professional financial advice, including for pre-retirees, showing those who use an adviser tend to be more satisfied and confident that their financial resources will fund a comfortable retirement.

Unfortunately, though, the 2021 Allianz Retire+ survey found the proportion of pre-retirees who had a financial adviser fell to 14 per cent down from an already low 21 per cent in the previous year.

The study reveals about one in four prospective retirees aren’t even considering seeking financial advice: a further 10 per cent said they were too embarrassed to ask for advice while a slightly higher proportion felt ‘shame’ about their financial status.

Finding the middle-ground in retirement planning

Despite the downbeat data, the survey reinforces the intuitive conclusion that pre-retirees represent “a large, growing market segment that remains under-serviced with financial advice”, Aboud says.

“Our research consistently shows there is a cohort of Australians who understand the benefits of financial advice but are reluctant to seek it,” he says. “This is apparent among people nearing retirement and concerned about their savings.”

However, as an industry we may need to change the way we engage to address the changing generational needs of those in the pre-retiree cohort (which, by a rule-of-thumb, generally starts about seven to ten years before retirement age).

“For example, 50% of prospective retirees plan to work in retirement, compared to 8% for current retirees,” Aboud says.

“Prospective retirees will benefit from a broader advice conversation that accounts for them potentially working at different stages in retirement.”

The incoming cohort of retirees also intend to rely more on superannuation and other assets (including property) to fund their retirement lifestyles compared to the current pension-age groups.

Other findings in the Allianz Retire+ study show the top advice needs for pre-retiree cohorts today cover:

  • help re-evaluating financial goals;
  • independent, sympathetic feedback on broader concerns; and
  • managing the risk of share market falls.

“If people in pre-retirement are feeling unsure of their financial situation, engage with your superfund, seek information from government websites and do some research on advice options to suit your circumstances. Now is the perfect time to seek advice and financial security”.

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 March 2022 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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