Everything You Wanted to Know About Mortality Credits & Were Too Afraid to Ask.
Hopefully it was amusement and interest not avarice that made you start to read this paper.
Did you know that few Australians are prepared with a retirement income that is guaranteed to last – no matter how long they live?
Currently the prevailing product offered by Australian superannuation funds to retirees is an Account Based Pension where members make regular withdrawals from their savings to facilitate their retirement ‘income’. Withdrawing too much in the early years creates a risk of exhausting the account prematurely, leaving members struggling to make ends meet.
However, with life expectancy levels reaching record highs Australians increasingly face the risk of outliving their retirement income with this solution. A recent survey by the National Seniors Association shows that over half of retirees feel anxious that their savings could run out and a third of those over age 80 had done so.
A Real Lifetime Pension, on the other hand, is a new retirement product type that provides income for life and is designed for that income to increase over time. This is not a new concept, in Sweden, Switzerland, Chile and Denmark roughly 80% of retirees voluntarily choose lifetime income products for security in retirement.
Hopefully a larger percentage of Australian retirees will understand the benefits of a Real Lifetime Pension – for their own protection and to help reduce taxpayer expense on the Age Pension and aged care support for retirees who do exhaust their savings.