Client life expectancy a key factor in retirement planning

The latest report by Allianz Retire+, How do we make retirements more epic?, has revealed that more than one in four (28 per cent) respondents have not built their retirement plan for a specific lifespan despite 26 per cent indicating they expect to live beyond 92.

Of the nearly 850 survey respondents, more than 50 per cent are not receiving financial advice.

According to the co-founder of Agebetter and founder and principal of Epic Retirement, Bec Wilson, this highlights a “significant opportunity” to initiate meaningful conversations with prospective clients about longevity and retirement planning.

As one of the most common concerns among Australians, according to the report, the fear of outliving their retirement savings, it is “crucial” that advisers make longevity a “central element” of retirement planning strategies.

“Australians are looking to embrace a second act that could span 25 years or more, but many don’t feel financially prepared to navigate the transition,” Wilson said.

“Our research indicates a strong desire for education and advice to help achieve retirement goals and alleviate concerns about running out of money.”

The report further emphasised the importance of addressing longevity as expenses and financial needs evolve significantly as people get older.

Allianz Australia Life Insurance chief executive Adrian Stewart said: “These gains in quality and quantity of life come with an implied financial cost, one that requires retirees to stretch their savings over multi-decade time frames that will include unpredictable market conditions, such as those experienced recently, and personal challenges.”

To counter the fear of their retirement savings running out, the report said Australians are showing greater interest in lifetime income products to provide financial security.

While less than half (49 per cent) of respondents indicated they had heard of lifetime income streams, with the report noting they lacked detailed knowledge about them, 71 per cent emphasised the importance of ensuring a lifelong income stream, indicating a growing desire for greater financial confidence in retirement.

Allianz said this has been reflected in the growing interest in its lifetime income products, which has seen significant increases.

In a white paper produced by Allianz Retire+ in June, Retirement Income Products Reframed, the firm encouraged advisers to build a better understanding of lifetime income products as they continue to garner interest among clients.

“Advisers with a profound understanding of guaranteed lifetime income solutions will attract new clients seeking guidance to maximise their retirement outcomes,” the report said.

Speaking on the white paper’s findings, chief product and marketing officer for Allianz Retire+ Simon Aboud said that as life expectations increase, Australians are looking for new solutions to fund their retirement and offset their financial fears.

“While retirement planning has historically focused on helping clients to accumulate wealth, as lifespans lengthen and retirement journeys evolve, a new mindset has emerged – one that focuses not on only accumulation, but on a reliable and sustainable income stream,” Aboud said at the time.