Co-designed with retirees and pre-retirees, the tool helps older Australians understand how long their retirement income might last and the amount of Age Pension they may be eligible for. The tool also shows how including different types of investments and sources of income, such as a lifetime income stream could improve their financial outcomes.
Challenger undertook behavioural research in developing the tool, which identified misconceptions retirees’ have about retirement income and barriers to talking to a financial adviser. Many retirees incorrectly believe income from their super will last them for life, and most have a longevity disconnect where they struggle to identify with their future self, leading them to underestimate their life expectancy and quality of life in later years.
Challenger’s Chief Executive Distribution, Product and Marketing Angela Murphy said that Challenger hopes the tool will help prepare retirees discuss their options when talking to a financial adviser about retirement.
“Planning for retirement is complex. There are a range of barriers that inhibit retirees when it comes to developing a comprehensive retirement income plan,” Ms Murphy said.
“The Retire with Confidence tool aims to overcome those barriers by using a series of ‘reality checks’ that help to explain different retirement income options that may be available to retirees, encouraging them to consider their current financial plan and take action to talk to a financial adviser.”
Coronavirus pandemic puts retirement income in the spotlight
Ms Murphy said that while the tool has been in development for some time, its release is timely as the coronavirus pandemic highlights the unique risks of retirement and retirees find themselves contemplating how the crisis might impact their retirement income.
“The market shock from the coronavirus pandemic has put retirement income in the spotlight. Retirees without a guaranteed source of income may now be facing increasing uncertainty in an unchartered landscape.
“Many older Australians might be questioning the confidence they previously had about their financial situation, and reviewing their retirement income plan to understand how long their savings and investments might last.
“Integral to our vision to create financial security in retirement is engaging and educating older Australians about retirement income. Planning for retirement can be complex with a range of risks and options to consider. We wanted to create a tool for retirees that brought these elements together in a simple way to help build confidence and understanding about income options in retirement.”
The Retire with Confidence tool has been developed for those who are retired or considering their retirement income options. The tool uses gamification to test perceived confidence asking retirees to guess when their super will run out. The tool also educates retirees on the different sources of retirement income highlighting how investments such as a lifetime annuity can complement other income sources such as super and the age pension.
The tool provides results and insights that the retiree can print out and take to a financial adviser, supporting a more informed discussion on how they can maximise their finances in retirement and improve their confidence by developing a comprehensive retirement income plan.
The Retire with Confidence tool is available at www.challenger.com.au
Challenger Limited (Challenger) is an investment management firm focusing on providing customers with financial security for retirement.
Challenger operates two core investment businesses, a fiduciary Funds Management division and an APRA-regulated Life division. Challenger Life Company Limited is Australia's largest provider of annuities.
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