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Good advice and policy certainty keys to retirement happiness
New research has revealed the importance of good advice and consistent Government policy approaches in ensuring peoples’ happiness with their retirement outcome.
The research, undertaken by State Street Global Advisors compared international retirement structures and concluded that a high ranking such as that enjoyed in the Netherlands did not guarantee satisfaction on the part of retirees.
It said that while the Netherlands consistently ranked as one of the strongest retirement systems in the world it had the second-lowest level of satisfaction in retirement for all countries surveyed, while in the lower-ranking US savers on a defined contribution plan were very confident and optimistic about their prospects and were generally happy in retirement.
The report found that the key factors driving retirement happiness were a combination of trust in a country’s retirement system stability, a strong feeling of ownership regarding their own outcomes and being well prepared in terms of accumulated retirement assets.
It found that stability and credibility in a country’s retirement system engendered trust whereas change or the expectation of change at the policy level, such as alteration of retirement age, eroded trust.
The report also found that people who accepted responsibility for their retirement and understood the chances that they could make felt more secure, with respondents in the US and Australia who had a long tradition of individual retirement responsibility through defined contributions, were happiest.
It said the challenge faced by many was determining how much is “enough” and understanding whether savings would be sufficient with the study highlighting that few people understand how to convert a relatively large lump sum into a dependable income for life, making the definition of sufficiency elusive.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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