The Actuaries Institute has published a paper titled “Retirement Matters,” urging Australia to rethink its retirement system. The paper suggests that, given the evolving nature of retirement, lasting up to three decades, there is a need for a more flexible approach.
Australia currently has about four million retirees, with another 670,000 people intending to retire in the next five years, Australian Bureau of Statistics data shows. While Australians intend to retire at 65.5 years, on average, many people retire much earlier than planned.
The report’s authors, Actuaries Andrew Gale, a former chairman of the Self Managed Super Fund (SMSF) Association and experienced non-executive director, and Stephen Huppert, an independent superannuation adviser, say the key retirement challenge for many people is longevity, which can make them worry about running out of money and live more frugally than they need to.
Australia’s Three Pillar Retirement Income System
- a publicly provided means-tested Age Pension
- mandatory private superannuation savings
- voluntary savings (including voluntary superannuation
The authors propose expanding the Three Pillars of retirement funding to include additional income sources such as part-time work and accessing equity in homes. They call for a regulatory framework to enable superannuation trustees to provide targeted help and advice on retirement-related issues, including the removal of barriers to allow superannuation funds to know more about their members. The paper emphasises the importance of addressing both financial and non-financial considerations in retirement planning.
The authors advocate for a national Longevity Strategy to celebrate older Australians, promote extended work patterns, and combat ageism. Overall, the paper encourages a holistic approach to retirement planning, considering physical and mental health needs and the maintenance of identity and purpose after full-time work. “Retirement Matters” is the first in a series of Dialogue Papers aiming to improve the retirement income system.