The cost of living too long

Australians will continue to outlive their retirement savings unless the financial services industry produces a better array of retirement related products, according to the director of leading Sydney-based actuarial firm Rice Warner, Michael Rice.

Rice told the Investment and Financial Services Association national conference in Brisbane that while a range of measures had been put in place to address the issue, the problem of retirement incomes and increased longevity remained.

He said around 50 per cent of people currently approaching retirement were likely to outlive their forecast life expectancy and, therefore, their retirement incomes.

Rice said his company’s analysis suggested that too many retirees were living well for the first decade of their retirement but became increasingly reliant on the age pension in the succeeding years.

What is more, the existing regulatory regime tended to be biased against people with mid-range superannuation and retirement savings of between $300,000 and $500,000.

Rice said amid the current array of financial services products there were none that precisely fitted the bill, with each being problematic depending upon peoples’ savings and when the products were accessed.

He cited as an example the dangers of people accessing reverse mortgages at too early an age and then living well beyond what had originally been envisaged.