Living longer

Outliving your savings

While living a long and healthy life is a goal for most of us, it does raise a valid question. Is there a chance that you could outlive your savings?

Why does living longer matter in retirement?

The risk of outliving your savings is known as longevity risk. With Australians living for longer it is more important than ever to make sure your savings will go the distance.

  • Research shows that Australians retiring today are living a staggering ten years longer than in the 1990s.
  • A National Seniors Australia survey found respondents underestimated their life expectancy by five years.
  • When improvements in medical care and living standards are taken into account a 65-year-old today can expect to live well into their 90’s and may now spend up to three decades in retirement.
life expectancy hub 
Source: Challenger Life Company estimates

The retirement income challenge

A big challenge for Australian retirees is how to plan for retirement income that will last a lifetime. Income from super such as an account-based pension is generally not guaranteed which means payments will stop as soon as your account balance runs out. Poor share market performance can also put you at risk of outliving your savings. Adding a source of guaranteed income such as a lifetime annuity to your retirement income plan can help you manage the risk of outliving your savings.


Feel confident your retirement income will last as long as you do

At Challenger, we’re specialists in retirement income and we understand living for longer requires a smarter approach to planning your income in retirement. The good news is that it doesn’t need to be complicated. It starts with three key steps. 

  1. Understand how long your super and savings will last. As a rule of thumb, you should plan to be able to meet your essential expenses for the rest of your life.
  2. Get support from the Age Pension. If you’re eligible, the Age Pension can form part of your safety net income. Bear in mind that even the full Age Pension entitlement may not be enough to cover the cost of living of a modest retirement.
  3. Secure your retirement income with a guaranteed lifetime income stream. A lifetime annuity can boost your safety net income with guaranteed income for life, giving you confidence you can pay for your essential expenses even if you live to age 100 or older.

Managing the risk of outliving your savings – what are the options?

  • Talk to a financial adviser about how long your super and/or savings may last.
  • Check your eligibility for the Age Pension. The sooner you prepare to apply for the Age Pension the better, as it cannot be back-paid.
  • Consider a guaranteed lifetime income stream such as a lifetime annuity to complement your retirement income.

Navigating a changing environment

With less certainty in the world’s financial markets, Challenger has created an information hub to help our customers navigate these uncertain times. Access the hub.

Next page > What is the best age to retire?