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In 2014 the final report of Murray’s Financial System Inquiry presented two opposing retirement scenarios in an age of increasing longevity: the first was under the current superannuation system, where retirees adapt to “a lower standard of living in retirement to avoid outliving savings.” The second projected scenario, based on implementing the report’s recommendations, offered “higher and more enduring income in retirement.” The second scenario involves incorporating lifetime income products, such as annuities, into the mix of products offered to retirees. Since then, the government has been discussing the need for better financial products for people as they retire, so that they can maintain a satisfactory income through to end of life. Up to this time, the primary focus has been on financial products rather than on consumer demand and experiences. The unsettling nature of the consumer experience of being between the two scenarios was well-expressed by one of our interviewees:
“I think it is basically [that] we are meant to gamble in the share market. At the moment it is scary, and we are faced with things that we haven’t in the past, and we have to have trust in the super fund” (woman retired 20 years)
A previous National Seniors report1 documented the experiences of people who were having financial difficulties in retirement, together with an absence of long-term planning. The purpose of this report is to document the consumer experience of different comfort levels in retirement for those with private assets and to understand how different financial situations in retirement affect a retiree’s sense of comfort. Survey data are used to set the scene for these interview responses. Future financial products need to be well-tuned to consumer preferences and thinking to be effective. |
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