New research has confirmed the degree to which Australians are failing to plan for living longer and longer retirements and has canvassed policy changes to superannuation along with tax changes to deliver annuity-type income beyond age 85.
The research, carried out by National Seniors Australia, has pointed to a significant absence of planning with respect to their post-retirement phase, with National Seniors research director, Professor John McCallum suggesting people needed clear direction and help.
The report said that even when people wanted to plan to cover for their longevity, there was limited availability and take-up of financial products that could assist individuals efficiently manage the risk of outliving their savings.
However, the bottom line of the research was that around 56 per cent of survey respondents expressed positive support for two new policy options that might be pursued by the Government - superannuation insurance and compulsory saving at retirement.
That response was driven by two survey questions entailed in the research: 1. ‘Should superannuation funds include an insurance option that would keep paying you an income if you lived longer than say 85?’ And, 2. ‘Would you consider paying a portion of your savings, say 10 per cent, on retirement, in order to receive income for life once you reached say 85?’
The research report confirmed the fact there was an over-representation of women in groups deemed vulnerable who would benefit from the superannuation and retirement savings options.
“The analysis shows women have both greater vulnerabilities than men and a preference of protection in the superannuation option,” it said. “There is growing anecdotal evidence of increasing homelessness and disadvantage among older women relative to men. More generally, the free comments in the survey provide deep insights into the challenging situations facing many older women.”
Comments
Australia desperately needs this product.
Here's how it should be put to the world. At 65, you can pay $80k as a one off insurance premium. If you live to age 85, you can receive $60k p.a. for as long as you live after that. If you die early, no money back but possibly helpful for Centrelink tests up front. With the insurance in place, you don't need to hold back the reserves you might otherwise to deal with age 85+ living expenses. Do you want to buy it? Planners would have to recommend it.
It would be one insurance policy where the insurers don't want a medical done!!
10 years ago I would have agreed with you - but 85 isn't a huge hurdle these days! It's a great idea though, as an under 40 planner I'd be prepared to give up 10% - 20% of my Super into a soverign wealth fund, used to bankroll large nation-building infra in exchange for a guaranteed rate of return when I pull the pin.
It maybe a good idea, but it ignores the way people think. Given a choice between putting money aside now and spending it - they spend it. That's the whole reason we have a retirement savings shortage - they could have saved it, but chose to spend it. So why would they change and spend money on this "insurance".
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