The government’s deadline for submissions on lifetime income solutions has just passed. While the consultation is a welcome and important exercise, it also begs the question: why are we still in consultation mode,five years on from the Retirement Income Review?
Retirement shouldn’t feel like stepping off a cliff – but for too many Australians, that’s precisely what it is: a plunge into uncertainty, with no clear plan for income that lasts.
Having a simple retirement budget and plan, consolidating accounts to reduce fees, checking Age Pension and concession entitlements and considering part-time work for longer, can compound into confidence about retirement.
AMP’s new Retirement Confidence Pulse gives Australia a score of 50/100: a wake-up call that too many of us still lack financial peace of mind about life after work. This is despite a national savings pool now well above $4 trillion.
Beneath the headline Pulse score, the divides are stark. Retirement confidence is a privilege of the wealthy: three-quarters of Australians earning $190,000 to $250,000 feel confident about retirement. Among those earning under $45,000, it’s just two in five. The middle is hurting too – only one in two people earning between $45,000 and $135,000 feel on track.
Consistent with the super gap, women are less confident than men, with just two in five feeling confident, compared to three in five men. For separated or divorced women, it’s just one in three. While the so-called ‘Sandwich Generation’ – those supporting both children and ageing parents – are consistently among the least confident.
Confidence about retirement shouldn’t be a privilege for high earners or limited by gender. There’s a lot that can be done at any income level: having a simple retirement budget and plan, consolidating accounts to reduce fees, checking Age Pension and concession entitlements, accessing guidance or advice at key decisions, considering part-time work for longer, and using drawdown strategies and lifetime income options to make money last. Small, informed choices – made early – compound into confidence. But people shouldn’t have to hack the system to do it. It should be easy.
Right now, it isn’t. It’s been close to five years since the Retirement Income Review, and more than three years since the Retirement Income Covenant told super funds to help members use their savings – not just grow them. Yet progress has been slow, and the path to dependable income is still a DIY maze. Most funds, for example, still only offer retirees traditional account-based pensions. These offer flexibility and access to capital, but they don’t address the number one financial fear for retirees: running out of money.
That’s where the new class of retirement solutions comes in; lifetime income products provide certainty of income for life and have proven to boost retirement income by up to 60 per cent. Yet despite these clear benefits, only a handful of funds offer these solutions. Even fewer have paired them with personalised digital advice to help members make confident, informed decisions during the transition to retirement.
This latest consultation on lifetime income solutions should hopefully drive forward an innovation agenda focused on recognising the individual circumstances of retirees, and importantly, those sections of our community with the lowest confidence levels. But talk is cheap – we need to get a move on.
Yes, we can keep patting ourselves on the back for having one of the largest retirement savings pools in the world. That’s a remarkable achievement and one we should be proud of. But what’s the point if half the population doesn’t feel confident to spend it – to enjoy the quality of life they’ve worked hard for?
After years of reviews and reports, Australians don’t need more paperwork. They need dependable income, accessible guidance, and products that give them confidence to live well.
It’s time to move from discussion to delivery. The super system has done a great job helping Australians save. Now it must help them spend – wisely, with dignity and confidence.
Ends.