Any financial advice practice advising Boomers, GenXers or pre-retirees might be well-served to reflect on a new report highlighting the work and lifestyle choices many of these clients have made, or are contemplating making.
The research – How do we make retirements more epic? – conducted by Allianz Retire+ in partnership with author, podcaster, and retirement educator Bec Wilson, underscores Australia’s shifting attitudes towards traditional retirement.
The study of nearly 850 retirees and pre-retirees has found that 38% of respondents plan to explore part-time work or other employment opportunities post-retirement, with a further 39% open to the idea.
The study also found that:
- 82% believe the Age Pension is insufficient to fully support their retirement
- 26% expect to live beyond 92, underscoring the need for extended financial planning
- 28% of participants have not yet developed a retirement plan tailored to a specific life expectancy
It says those aged 55 to 65, referred to as Gen X ‘flexers’, no longer see retirement as a hard finish line and instead are embracing an extended phase of life, marked by newfound freedoms and opportunities.
…[this] signals a massive step change for retirement. It is no longer a line in the sand in an individual’s working-life…
Allianz Australia Life Insurance CEO Adrian Stewart says this desire to continue some form of work “…signals a massive step change for retirement. It is no longer a line in the sand in an individual’s working-life.”
He says retirement needs to be completely reconsidered from all aspects, including how we plan financially, noting that Australians are living longer, healthier lives and that today’s retirees typically enjoy a more active lifestyle than previous generations.
“These gains in quality and quantity of life come with an implied financial cost, one that requires retirees to stretch their savings over multi-decade time-frames that will include unpredictable market conditions, such as those experienced recently, and personal challenges,” Stewart says.
The study found only 24% of retirees surveyed feel confident they’ll have enough funds for a comfortable retirement.
Fear of Running Out
The report notes that the term ‘FORO’—Fear of Running Out—has recently gained traction in retirement discussions. FORO encompasses concerns about inflation eroding savings, market volatility, and the risk of outliving one’s savings and being reliant on the Age Pension.
“Australians are looking to embrace a second act that could span 25 years or more, but many don’t feel financially prepared to navigate the transition,” says Wilson.
…Our research indicates a strong desire for education and advice to help achieve retirement goals and alleviate concerns about running out of money…
“Our research indicates a strong desire for education and advice to help achieve retirement goals and alleviate concerns about running out of money.”
The study found significant demand for retirement income solutions that provide guaranteed lifetime income, income certainty, easy access to funds, investment growth, and protection against market volatility.
More than 75% of respondents said they would consider “new era” lifetime income streams as a source of retirement income.
While 49% of respondents had heard of lifetime income streams, they lacked detailed knowledge about them, and 28% of participants have not yet developed a retirement plan tailored to a specific life expectancy. Despite this, 71% emphasised the importance of ensuring a lifelong income.
The company says these findings highlight the growing consumer desire for increased financial confidence in retirement, noting that this trend is also reflected in interest in and uptake of Allianz Retire+’s Allianz Guaranteed Income for Life (AGILE) product, which is seeing significant month-on-month increases.
The full report, which is categorised into key topics including longevity planning, financial confidence, retirement planning needs, and understanding of retirement income products and concepts also includes tips and suggestions to help advisers speak confidently with their clients about retirement planning.
