In retirement, super fund members start drawing on their savings to fund consumption, a fundamentally different proposition to accumulation. How long will a retiree live and how much can they afford to spend each month? Can a retiree do anything to recoup poor investment returns and how should inflation be considered?

Already superannuation is moving from supplementing the age pension, to substituting it. After more than 30 years of compulsory superannuation in Australia, 58 per cent of retirees have sufficient means to reduce, or eliminate, their entitlement to government support. While this is good news, not enough consideration has been given to income strategies for the retirement phase of life.

ABPs aren’t designed to produce a particular level of income, or last for life. They expose members to risks that they are not well placed to manage. This has been exacerbated by retirees living longer. As a result, many retires underspend and don’t enjoy the standard of living they deserve.