Retirement
Retirees face uncertain future
Australian retirees are spending less amid fears they are financially unprepared for retirement or that an economic slowdown could impact their retirement, new research has found.
Retirees face uncertain future
Australian retirees are spending less amid fears they are financially unprepared for retirement or that an economic slowdown could impact their retirement, new research has found.
Allianz Retire+ surveyed current and prospective retirees nationwide, revealing that retirees are responding to changing economic conditions by reducing spendings and risk in their portfolios.
“They have less interest in travel and other luxuries, and greater emphasis on maintaining independence, staying in their home, being healthy and caring for family,” Allianz Retire+ head of customer experience Jacqui Lennon said.
Ms Lennon believes a confluence of economic and demographic trends are influencing retiree intentions.
“Many retirees have lived frugally over the years. But with term-deposit interest rates at record lows and investment returns falling, more retirees are having to cut back,” she noted.
The result is even greater spending and investment conservatism in retirement.
Ms Lennon also noted that retirees are living longer, with different social expectations to generation gone by meaning the needs of retirees are changing.
“Many are worried that their money will not last as long as they do or that they will have far lower living standards in the final quarter of their life. They are reducing spending now, so their money can last into their 80s, 90s or beyond,” Ms Lennon explained.
What can retirees do?
Ms Lennon said greater investment conservatism in retirement is understandable, but the risk is not achieving sufficient returns to maintain lifestyle for an increasing lifetime.
“The investment industry needs to respond to changing retiree needs,” said Ms Lennon.
“As people live longer, a higher allocation to growth assets such as shares may be needed to generate sufficient returns to ensure their portfolio can go the distance.
“However, retirees are naturally concerned about equity volatility. They don’t want the stress of sharemarket falls they cannot recover from.”
Ms Lennon believes investors should choose an approach, such as stop losses, that eliminates downside risk while allowing retirees to grow their funds.
For example, a 60-year-old nearing retirement might choose a -10 per cent floor (with a corresponding cap) because he or she can tolerate higher risk.
If Australian shares fall 20 per cent that year, their loss is limited to 10 per cent. The maximum potential return that year will be subject to the corresponding cap, she concludes.
About the author
About the author
Retirement Planning
Empowering your future: Financial literacy and retirement planning in Australia
In today’s complex financial landscape, achieving a secure and comfortable retirement requires more than just saving money. It demands a deep understanding of financial concepts and the ability to ...Read more
Retirement Planning
How much do you need to retire comfortably in Australia?
Retiring comfortably in Australia is a goal shared by many, but achieving this requires careful financial planning and a clear understanding of the cost of living. Read more
Retirement Planning
Retirement planning advice for Australians: Avoiding common pitfalls
Retirement planning is a critical step in securing your financial future, but it's fraught with potential pitfalls that can derail even the best-laid plans. Read more
Retirement Planning
Mastering financial planning for retirement in Australia
Financial planning for retirement is a nuanced journey that requires careful consideration and strategic planning, particularly in Australia's unique financial landscape. Read more
Retirement Planning
Crafting your retirement planning spreadsheet in Australia
Retirement planning is a crucial aspect of financial management, especially in Australia where the landscape of superannuation and investments offers unique opportunities and challenges. Read more
Retirement Planning
Maximising your pension plan in Australia: Strategies for a comfortable retirement
In the ever-evolving landscape of retirement planning in Australia, securing a comfortable retirement through your pension plan has become increasingly important. Read more
Retirement Planning
Supporting our veterans: A guide to financial resources and benefits
Military veterans have made invaluable contributions to their country, and in recognition of their service, there are numerous financial resources and benefits available to support them in civilian ...Read more
Retirement Planning
The ultimate retirement planning checklist for Australians
Retirement planning is a multifaceted process that demands careful attention to financial, legal, and personal considerations. Read more
Retirement Planning
Empowering your future: Financial literacy and retirement planning in Australia
In today’s complex financial landscape, achieving a secure and comfortable retirement requires more than just saving money. It demands a deep understanding of financial concepts and the ability to ...Read more
Retirement Planning
How much do you need to retire comfortably in Australia?
Retiring comfortably in Australia is a goal shared by many, but achieving this requires careful financial planning and a clear understanding of the cost of living. Read more
Retirement Planning
Retirement planning advice for Australians: Avoiding common pitfalls
Retirement planning is a critical step in securing your financial future, but it's fraught with potential pitfalls that can derail even the best-laid plans. Read more
Retirement Planning
Mastering financial planning for retirement in Australia
Financial planning for retirement is a nuanced journey that requires careful consideration and strategic planning, particularly in Australia's unique financial landscape. Read more
Retirement Planning
Crafting your retirement planning spreadsheet in Australia
Retirement planning is a crucial aspect of financial management, especially in Australia where the landscape of superannuation and investments offers unique opportunities and challenges. Read more
Retirement Planning
Maximising your pension plan in Australia: Strategies for a comfortable retirement
In the ever-evolving landscape of retirement planning in Australia, securing a comfortable retirement through your pension plan has become increasingly important. Read more
Retirement Planning
Supporting our veterans: A guide to financial resources and benefits
Military veterans have made invaluable contributions to their country, and in recognition of their service, there are numerous financial resources and benefits available to support them in civilian ...Read more
Retirement Planning
The ultimate retirement planning checklist for Australians
Retirement planning is a multifaceted process that demands careful attention to financial, legal, and personal considerations. Read more