The increasing cost and length of retirement means few people are likely to have adequate retirement savings and the superannuation system needs to evolve to match this changing cycle, according to Russell Investments.
At the Russell Investments Summit yesterday, Russell chief executive Alan Schoenheimer said one change could involve spending more on financial advice and less on life insurance for people who had paid off their mortgage and whose children had moved out.
“In the superannuation system… the only thing you can do with retirement savings is spend it on retirement, with one exception that you can buy life insurance, but when you’re 55 years old and you’ve paid off your mortgage and the kids are gone, you don’t actually need life insurance,” he said.
KPMG partner Bernard Salt said that Australia has reached an inflection point at which the bulk of the baby boomers are now retiring.
For this reason, one of the primary products over the next decade will be those targeted to the early active drawdown years of retirement.
Mr Salt said he expects more baby boomers to partake in a “portfolio lifestyle”, in which they continue to work on a part-time basis, and that business should align to take advantage of this change in attitude.
“The idea of hitting 65, getting your gold watch and retiring is a 20th century notion,” Mr Salt said.
“I think we will see people working beyond 60, beyond 65 and perhaps even beyond 70. There needs to be a change in the narrative.
“Baby boomers will interpret that over the next 10 years and I think the opportunity it gives business is to actually write yourself into that narrative,” he said.
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