Income Security or Flexibility? A Retirement Income Case Study
THE LONGEVITY CONVERSATION|Video 9 of 9
Most clients approaching retirement assume they have to choose: lock in income security, or keep flexibility and accept the risk of running out. A real case study of Vanessa and Simon, both 67 and retired in good health with $1.15 million combined, shows that assumption doesn’t have to hold.
Their adviser modelled three options.
- A fully account-based pension offered flexibility but was projected to deplete by age 94, leaving them reliant on the Age Pension.
- A fully investment-linked annuity guaranteed lifetime income but no access to capital for unforeseen costs.
- A hybrid approach with $700,000 in an investment-linked annuity and $450,000 in an account-based pension delivered a different outcome altogether. They will receive a sustainable annual income of $90,000 to age 101, longevity protection through the annuity, and $450,000 remaining accessible for emergencies via the account-based pension…and better Age Pension treatment than the account-based-only scenario, with potential for a residual estate besides.
The lesson isn’t that one product beats another. It’s that matching product features to a client’s specific goals, rather than defaulting to a single solution, is what actually delivers both the security and the control most clients say they want.
Related articles and resources:
- [Case Study] Balancing Growth & Security (Vanessa & Simon)
- [Blog] Balancing Retirement Income and Access to Capital: A Financial Planning Case Study
- [Blog] Meeting Retirement Needs: Decumulating with Confidence
- [Blog] Fixing the Retirement Phase
- [Blog] Which Clients Benefit Most from Lifetime Income Products?
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