POWERED BY MOMENTUM MEDIA
Australian retirees defy profligate stereotype
The vast majority of Australian retirees are frugal and not the profligate double-dippers which some people have suggested, according to actuarial research house, Rice Warner.
In a recently-published analysis, Rice Warner has confirmed that the days of retirees taking and squandering lump sums are long gone, with most retirees taking an income stream and almost inevitably drawing down close to the minimum amount.
“The fact is that around 85 per cent of retirement benefits are taken as retirement income streams, mostly in account-based pensions,” the analysis said. “A large portion of lump sum benefits taken are used for savings not consumption by paying down debt or reinvesting into term deposits.”
“In fact, we have the reverse problem as many retirees are frugal with their pension payments. They are conservative in their drawdowns as they don’t participate in any form of mortality pooling and don’t want to spend their pensions too quickly and run out before they die.”
The Rice Warner analysis said that the Federal Government believed Comprehensive Income Products in Retirement (CIPRs) would address this by allowing people to increase their consumption in retirement by as much as 15 per cent and this had been promoted as a desirable outcome as more of the benefit would be used for retirement and much smaller amounts left as bequests.
The actuarial consultancy flagged that it would be shortly be releasing a report modelling the growth in draw-downs over a 15-year period and how this impacted industry cashflow.
It said the aggregate rate of drawdown was between seven and high per cent, which was only marginally higher than the expected minimum drawdown.
“Based on member demographics, the average minimum drawdown would be close to five per cent of account balance,” the analysis said.
AUTHOR
Mike Taylor
Recommended for you
The two funds have announced the signing of a non-binding MOU to explore a potential merger.
The board must shift its focus from managing inflation to stimulating the economy with the trimmed mean inflation figure edging closer to the 2.5 per cent target, economists have said.
ASIC chair Joe Longo says superannuation trustees must do more to protect members from misconduct and high-risk schemes.
Super fund mergers are rising, but poor planning during successor fund transfers has left members and employers exposed to serious risks.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.24 3 y p.a(%)
4
Pengana High Conviction Equities B
40.36 3 y p.a(%)
5
Pengana High Conviction Equities A
40.34 3 y p.a(%)
