Retirement: giving members the confidence to spend

While super plays an essential role in helping retirees enjoy the lifestyle of their choice, the challenge for many Australians is planning their retirement spending. Since no-one knows how long they’ll live in retirement, it’s difficult to work out how much super is safe to spend without running into problems later in life.

Many retirees are going without

As the superannuation system matures, super has become an increasingly valuable asset. But the reality is that most Australians don’t feel confident to spend their savings in retirement. In fact, 1 in 2 Australian pre-retirees worry about running out of money during their lifetime.¹ This can cause them to underspend in retirement and prevent them from enjoying the lifestyle they can actually afford.

These concerns aren’t unfounded. Longevity risk has a compounding adverse effect on retirement outcomes, because as members age they have less financial flexibility and are increasingly exposed to unforeseen health events.

What members want from a retirement solution

Super funds and insurers have an opportunity to work together to create retirement solutions that protect members against longevity risk, so they can spend their super confidently without worrying about outliving their retirement savings.

We recently worked with some of our super fund partners and their members to understand the needs and preferences around retirement solutions. Our research revealed that members want these four key features:

• A holistic retirement proposition offered by their super fund that provides them with the confidence of a regular income for as long as they and their partner live.
• Guidance to better understand how a retirement income product would work, including how it would interact with the age pension.
• A digital income tool that can project how long their savings will last in retirement, as well as any potential changes they can make to improve their retirement income.
• A compelling member journey that makes it easy and desirable for the member to opt in or out of the retirement solution.

TAL retirement income solutions

The driving force behind TAL’s retirement income solutions is to help super fund members retire confidently, knowing they’ll be financially protected for the rest of their life. Our solutions combine the flexibility of an account-based pension with the certainty of lifetime income. Our insurance offers protection against longevity risk to allow super funds to meet their promise to members – even those who live longer than expected.

To find out more about TAL retirement income solutions, download a copy of our Retirement Positioning Paper.

Spotlight on retirement

I’m looking forward to speaking at the inaugural ASFA Spotlight on Retirement in Melbourne on 14^th September. There’s thought-provoking program planned, including discussions on how funds can drive bolder ambition, make key operational changes together with insights into regulators’ thinking. View the full program here and I look forward to seeing you in Melbourne.

1 TAL,Ageing Australians: YouGov Retirement Report, 2021. Based on responses from 526 Australians aged 50–64.