With the availability of large pools of retirees, the law of large numbers will start to see a predictable distribution of lifespans around the mean, allowing for longevity risk products. An important development.
Author Archive | Jeremy Cooper
The National Seniors Australia (NSA) survey reveals that retirees want access to regular and stable income, even at the expense of lower returns. The need to preserve capital reduces tolerance of losses.
Life expectancies have increased dramatically since the nineties, but the uncertainty is forcing retirees to live too frugally. The super industry is switching its attention to the drawdown phase to find better solutions.
As Cuffelinks celebrates five years of publishing, I have chosen five of my favourite articles over that time, all of which deal with the ‘retirement income challenge’ one way or another.
We need different tools to measure success in the retirement phase, as many people become dependent on the cash flow from their super fund. The defined contribution system has failed to keep pace with retirees’ needs.
Contrary to popular belief, there are significant variations in equity returns over long periods such as 20 years. Whether you will earn the ‘equity risk premium’ is far from certain.
The idea behind comprehensive income products for retirement, or CIPRs, is to provide retirees with a product that can generate a good income, manage risks and remain flexible. We need a scorecard to understand them better.
Uncertainties about life expectancy and market returns are a challenge for retirement planning, and using averages may do more harm than good by disguising multiple possible outcomes.
Jeremy Cooper answers a question from one of our subscribers about the risk profile, regulatory standards and track record of lifetime annuities. If you have something to add, we invite you to join the debate.
I think the legislation based on the Cooper Review recommendations looks pretty good overall, although naturally, compromises have occurred. The big disappointment, though, is retirement.