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Look beyond life expectancy in retirement planning
Figures around how long the average Australian will live are so diverse and susceptible to so many variables that planning retirement around life expectancy is no longer realistic, according to CommInsure.
CommInsure has launched a new retirement strategy, called ‘Staggered Annuitisation’ to address uncertainties around life expectancy, with the aim of providing retirement management plans with stronger flexibility around interest rate changes and inflation instead.
CommInsure head of annuities, George Lytas said: “The average life expectancy for healthy 65-year-old in Australia is close to 88 years for women and 85 years for men”.
“Trying to estimate how long your retirement income will last is one of the biggest risks a retiree can take,” he said.
“The genius of Staggered Annuitisation is that, by redirecting amounts from the second bucket to supplementary annuity purchases, income is boosted.”
Lytas said staggered annuitisation would also be efficient in a layered retirement plan as it accounted for basic uncertainties such as loss of capital on premature death.
“Investing in lifetime annuities as part of a layered plan often make sense for retirees,” he said.
“[It] is a way for advisers to continue helping their clients throughout their retirement years.”
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Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
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