Almost half of retirees are expected to have more than $500,000 in superannuation by 2031.
According to Deloitte, there were currently a majority of retirees (65%) with less than $250,000 in super ‘at retirement’.
But this was expected to reverse with the number falling from 65% to 30% before reaching almost 50% having more than half a million dollars in super.
This scenario indicated now was a topical time for people to engage with their super.
Deloitte said: “Research has shown that superannuation fund members start to engage more with their super when they reach age 50 and/or their account balance reaches $250,000 (even more so when it reaches $500,000). So, the time has come, with demographics turning in our favour, to engage more people with their retirement.”
A good way to do this, the firm said, was through retirement calculators and income estimates for members approaching retirement. The super fund should raise awareness with members then provide information on retirement and its risks.
This included how much a member expected to retire with; what their spending needs were; how much they expected to additionally spend; what product strategy was relevant for their needs and what drawdown strategy would they use.
In some cases, the member may then seek advice to confirm their preferred retirement income strategy.
Meanwhile, retirement income calculators could allow members to compare outcomes under a variety of investment portfolios, how much Age Pension uplift to expect and how different retirement products could be blended to produce different spending patterns.
“While it is tempting for product providers to think about how best to distribute their retirement product, we think that a better approach is to solve the retirement problem from a customer’s perspective – that is, we have a financial literacy problem, not a product scarcity problem,” Deloitte said.
