This article was produced in partnership with Hostplus.
In the years since the Covid-19 pandemic, prices of everyday goods have surged – leaving many of Australia’s 4.2 million retirees wondering whether they’ll have enough income in retirement to maintain their lifestyle.
This lack of certainty can prompt many to spend less and save more at the expense of their quality of life.
The elusive combo: certainty and flexibility in retirement
Nearly 700,000 Australians plan to leave the workforce in the years ahead, according to data from the Australian Bureau of Statistics. Investment products are needed to provide more tailored solutions for this growing pool of retirees.
Often at the centre of this issue is the competing need for both certainty and flexibility. Retirees want peace of mind that they’ll have a more predictable income stream. But they also want the option to switch investment strategies and have ready access to their capital should they need to make withdrawals in the future.
Traditional products can be too prescriptive
Clients seeking certainty have a handful of products to choose from. Among the most common are annuities and fixed-income products like term deposits.
These products tend to be subject to rigid terms and conditions, making accessing capital challenging. They can also leave retirees exposed to inflation risks.
For advisers whose clients are looking for flexibility and certainty in retirement, options are limited, especially given there are only so many combinations of these products available for advisers to use.
Super funds leading the way
Under the Retirement Income Covenant, super funds are being encouraged to develop retirement income strategies that focus on retirement outcomes for their members. Already Hostplus has launched a CPI-linked pension investment option that seeks to address these requirements, and provide members with flexibility and certainty in retirement.
As more super funds look at offering innovative retirement options for their members, the current range of retirement solutions will expand. This will give advisers more choice to offer their clients.
