Australians have an estimated 9.7 years of savings beyond retirement; however, the population is expected to outlive these savings by 9.9 years for Australian men and 12.6 years for Australian women, according to the World Economic Forum.
As more Australians move towards retirement, and life expectancy increases, traditional retirement investment may not suffice for the economic complexity of an aging population.
Ahead of her keynote address at the Australian Wealth Management Summit 2025, Cassandra Crowe, CFA, vice president at T. Rowe Price Group, said the world’s aging population has forced investors to pivot retirement and investment strategies to meet the future demographic.
The number of people aged 65 or older is projected to reach 994 million by 2030 and 1.6 billion by 2050, according to the United Nations. In fact, the World Health Organisation reports that people aged 60 years and older already outnumber children aged five years or younger.
“With more of the population ageing, we are shifting to a new chapter in global demographics,” Crowe said.
The decline in the working-age population leaves nations with larger older populations now reliant on a relatively smaller group to pay for publicly funded programs such as pension benefits.
This shift in demographics alters demand drivers within the economy and places strain on the system.
“As wealth transitions from savings to pension phase, retirement savings have not kept pace, and without action, this shortfall is anticipated to grow,” she said.
“We are facing big questions, but these demographic shifts will present opportunities to invest, as well as make a positive impact across society through improved retirement outcomes.”
The demand for innovative solutions to improve retirement outcomes is projected to intensify as retiree populations grow, the T. Rowe Price Group VP said.
“While challenging, as we shift to a new frontier, human progress is clear. Longer lives reflect advances in healthcare, education, and economic development.
“We’re entering an era where wisdom, experience, and longevity become powerful assets for society,” Crowe said.
To keep pace with changing demographics, T. Rowe Price developed a multidimensional framework to balance the five key attributes of retirement investment, including longevity risk hedge, payment level, payment volatility, balance liquidity, and unexpected balance depletion.
Evolving from the traditional two-dimensional efficient portfolio model, which optimised for risk and return, the five-dimensional framework balances a range of human-centred factors such as income needs, stability, flexibility, and peace of mind, according to Crowe.
While traditional metrics such as risk‑adjusted returns and the mean‑variance frontier are sufficient during the accumulation phase, a more sophisticated approach is required to evaluate retirement income solutions.
The five-dimensional framework better captures the diverse needs and real-life preferences of retirees and, importantly, considers the relationships between these preferences, Crowe said.
“These factors can work as tradeoffs to best achieve preferred retirement experiences for a better future,” she added.
To hear Cassandra Crowe speak further on the core questions and mega themes transforming the investment landscape, come along to the Australian Wealth Management Summit 2025.
Run in partnership with principal partner, Metrics, the summit will be held on Friday, 22 August 2025, at the Sofitel Sydney Wentworth. Click here to buy tickets.
To learn more about the summit, including the agenda and speakers, click here.
