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Fast forward to 2017, and a recent report by NSA and Challenger revealed a growing awareness of longevity. The survey of 5,500 senior Australians found that retirees are aware of their increased longevity with 83% reporting an understanding of a likely 6-year increase in life expectancy compared to their parent’s generation.
When asked about their savings and finances in retirement, 84% of respondents said regular income to cover essential needs in retirement was very important to them.
The report also revealed that a clear majority of people said they used, or would use, a financial adviser to get advice and information about retirement.
According to Challenger Senior Product Development Manager Nathalie Bouquet, there is an important role for advisers to play in helping their clients achieve greater income certainty for a longer life.
“Assisting their clients to achieve these goals requires a greater understanding of life expectancy and an investment strategy that can deliver guaranteed income for life.” Bouquet said.
However, she highlights that current data and models used to determine longevity have their drawbacks. She believes there are constraints in commonly used measures of life expectancy such as the Australian Bureau of Statistics’ life tables.
“These life tables are estimated using historical data alone and therefore only provide a snapshot of mortality at a particular point in time. Mortality rates have been improving and therefore these life tables are likely to underestimate actual life expectancies.”
This information is provided by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 for licensed financial advisers. It is not intended to be financial product advice or legal advice and should not be relied upon as such.