The latest budget has shone a spotlight on the need for super funds to better consider and support members’ retirement outcomes once they move into the decumulation phase.
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Sticking to a long-term ‘set and forget’ asset allocation plan forgets those close to or in the retirement phase. Further, we are at a point where prospective returns in all markets are lower.
The superannuation industry is facing a retirement outcome challenge, which is driving the need to develop products, strategies and solutions that better reflect members’ objectives and preferences.
Nobel Laureate, Richard Thaler, believes that the irrationality of humans affects economics and financial markets, with wide-ranging implications for decision-making and investing.
Both before and after retirement, there are actions most people can take to improve the chances of attaining a desired lifestyle after paid work finishes.
It’s no surprise that increasing living costs (food, energy, health care) are impacting retirees on modest incomes the most. Early planning and saving is needed to be ‘retirement-ready’.
Analysis of the retirement expectations and spending habits of over 300,000 retirees is a valuable tool to make plans more specific, including both super and non-super wealth sources.
Adequate retirement incomes rely on accumulating superannuation balances throughout a working life, and many factors are detrimental to women keeping pace with men. Urgent reform is needed.
Superannuation funds have too much emphasis on short-term performance and they need more focus on outcome-based objectives. Members deserve a better idea of their likely income in retirement.
An appeal for interested parties to contribute to the government’s discussion paper on post-retirement products, now called ‘MyRetirement’ solutions, to be offered within the superannuation system.
Super funds have Chief Investment Officers charged with optimising investment returns, but should they also appoint a Chief Retirement Income Officer (CRIO) to achieve the best retirement outcomes?
Long periods of low returns are likely to compromise retirement goals that were set some years ago. This places greater importance on retirement advice and not assuming average returns and lifespans.
Highly respected author and academic David Blake makes a compelling case for a major overhaul of financial advice, especially the way in which projected outcomes are communicated to investors.
The wealth industry’s focus on building retirement savings to a defined asset value should be replaced by aiming for a sustainable income level, argues Nobel Laureate Robert Merton.
The way retirement risks and outcomes are visualised and communicated needs to move from simplistic assumptions on returns to calculating a range of outcomes and probabilities to better represent the real world.
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.