Which Clients Benefit Most from Lifetime Income Products?
New evidence financial planners should consider.
Financial advisers now have evidence-based guidance on incorporating lifetime income products into retirement strategies, thanks to comprehensive new research from Accurium that tested 672 retirement scenarios across 96 client cohorts.
The study, “Confidence for Life: A retirement advice framework,” commissioned by Generation Life, provides clear direction on which clients experience material improvements when lifetime income products complement account-based pensions—and crucially, which clients see less benefit.
One of the research’s most striking findings is the significant benefit for clients with assets above the Age Pension assets test threshold. Counter to what many advisers might expect, adding a lifetime income product to these clients’ portfolios can deliver meaningful uplift in retirement income through substantially increased access to the Age Pension. This finding has important implications for how advisers approach product selection for higher-wealth clients.
A Framework for Client Identification
The research examined singles and couples at different ages (67, 71, and 75), across various asset levels ($350,000 to $950,000 for singles; $500,000 to $1.4 million for couples), and four risk profiles from conservative to high growth.
Each scenario was stress-tested through 2,000 simulations of market returns and inflation to calculate a ‘retirement strategy score’, defined as the proportion of simulations where the household’s target income was sustainable to the 25% age. The 25% age is the age at which 25% of the population is expected to live beyond. This is a more appropriate planning horizon for healthy, advised clients than average life expectancy.
This stochastic modelling approach, rather than relying on single-point average return assumptions, tests strategies across a full range of possible market conditions—including poor sequences of returns early in retirement. A higher strategy score therefore reflects genuine confidence that income will last for life, not just an outcome based on optimistic averages.
The simulation approach adds rigour to establishing levels of confidence in how each retirement strategy will perform in a range of market conditions.
The findings provide advisers with a practical framework for identifying which clients should have lifetime income products included in their strategy consideration process.
Client Cohorts Showing Significant Improvement
The research identified that clients with total assets above Age Pension thresholds up to amounts exceeding the assets test cut-off limits, with conservative to growth risk profiles, experienced the most significant improvements in retirement confidence.
For couples with $800,000 to $1.4 million in assets, strategies incorporating Generation Life’s LifeIncome product showed consistent and significant benefits across all ages modelled. The best performing scenario, a 67-year-old couple with $1.1 million in conservative investments allocating 50% to LifeIncome with a 2.5% LifeBooster rate, achieved a 41% improvement in retirement confidence compared to the same scenario using only an account-based pension.
Single clients with $550,000 to $750,000 in assets with conservative or balanced risk profiles also experienced substantial improvements, particularly with allocations of 35-50% to lifetime income products.
The research found that broadly, the higher the allocation to LifeIncome and the more conservative the client’s risk profile, the greater the uplift in retirement strategy score.
The Age Pension Advantage Explained
A key driver of improved outcomes is increased Age Pension entitlement, particularly in early retirement. Lifetime income products qualifying for concessional treatment are assessed at only 60% of the purchase price under the Assets Test (reducing to 30% from age 85 or after five years, whichever is later), and only 60% of income payments count under the Income Test.
The research demonstrated significant impacts that financial advisers should not ignore. For couples with $800,000 in assets, incorporating LifeIncome increased Age Pension by up to 68%. For couples with $1.1 million who would receive no Age Pension with an account-based pension alone, many scenarios with LifeIncome generated immediate Age Pension entitlements.
This additional Age Pension income reduces withdrawals from other investments and provides crucial sequencing risk benefits, protecting portfolios from being depleted during poor market conditions early in retirement.
Planning Horizons That Match Client Reality
The research emphasises that longevity risk is an important consideration for advised clients. Research shows socioeconomic status and income brackets are positively correlated with lifespans. Clients who seek financial advice typically have higher household incomes and education levels than the overall Australian population.
For advised clients in reasonable health, planning to the 25% age is not just prudent but essential. This extends the planning horizon significantly to approximately 28 years for a single 67-year-old female and 30 years for a 67-year-old couple.
As Accurium notes: “Planning for retirement to last well beyond life expectancy is not just prudent, but essential to ensuring their retirement planning horizon is appropriate for their expected longevity risk.”
When Lifetime Income Products Add Less Value
The research also identifies cohorts where improvements are less pronounced. Clients with total assets near or below Age Pension assets test limits who are already receiving or close to receiving full Age Pension experienced smaller improvements in retirement strategy scores.
For these lower-asset households, the concessional assessment provides less advantage since they’re already maximising Age Pension entitlements. High allocations to lifetime income products (particularly with the 5.0% LifeBooster rate) could even be detrimental for some lower-asset clients, as high starting income payments may result in income testing that reduces Age Pension below what would be received with an account-based pension alone.
The research suggests that for clients near assets test limits, allocations under 50% and the 2.5% LifeBooster rate may be more appropriate starting points.
Product Features That Enable Strategic Planning
The research examined Generation Life’s LifeIncome product specifically, highlighting features that enable strategic income planning:
- Investment-linked income: 29 professionally managed investment options allow advisers to align LifeIncome investments with the client’s risk profile, simplifying portfolio construction
- LifeBooster rates: Options of 2.5% or 5.0% enable higher starting payments by bringing forward future returns, with the trade-off of lower future growth
- Reversionary options: Flexible beneficiary arrangements, including the ability to use LifeIncome Flex to create intuitive income profiles that reduce upon first death in a couple
- Death and withdrawal benefits: Access to capital during a death benefit period, though this should be understood in the context of the product’s primary purpose of lifetime income
Implementing in Your Practice
The research provides a clear framework for incorporating lifetime income products into your advice process:
- Identify clients with assets above Age Pension thresholds and conservative to growth risk profiles
- Assess client objectives—are they comfortable consuming capital for retirement income?
- Evaluate health and life expectancy—clients with materially impaired life expectancy may not benefit
- Model scenarios with appropriate allocations (generally 20-50%)
- Consider strategic use of product features like LifeBooster rates to shape income profiles
As the research concludes: “Whilst a lifetime income product may not suit every client, this research shows that a partial allocation to a lifetime income product should absolutely be part of the range of financial products considered by financial advisers when evaluating retirement strategies as part of the advice process.”
For appropriate client cohorts, lifetime income products deliver material improvements in retirement confidence. The question is no longer whether to consider them, but how efficiently you can incorporate them into your advice process.
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The research referenced in this article was commissioned by Generation Life and conducted by Accurium.
Research Link: “Confidence for Life: A retirement advice framework,”
This information is general in nature and does not take into account individual objectives, financial situations or needs.
