Retirement Income
Is a comfortable retirement drifting out of reach?
New figures suggest that the cumulative effective of the changes to the Age Pension asset test, coming into effect from 1 January 2016, will result in the possibility of a comfortable life in retirement drifting out of reach for many Australians.
Figures compiled by The New Daily, from Willis Towers Watson retirement income forecast modelling and data from the Melbourne Institute’s Household, Income and Labour Dynamics in Australia (HILDA) Survey, suggest that the outlook isn’t looking that rosy for Australia’s next generation of retirees (particularly those who are part of a couple).
Part of the reason for this is that the asset test changes will see eligibility for the partial Age Pension payment cut off at a lower amount than it has in previous years, leading to a tricky situation where some seniors are ‘penalised’ for having slightly more assets. The New Daily states, “Under the new rules, only 51 per cent of couples will be on track to be able to retire comfortably.”
The New Daily Figures suggest that the average couple can expect to experience a 29 per cent decline in Age Pension payments under the new asset test rules, which works out to be somewhere in the region of $6,000 every day.
The New Daily states, “Importantly, the changes to come into effect on January 1 are unlikely to be the last move to reduce the Government’s Age Pension bill, and Australians currently of working age would be wise to factor this into their retirement planning.
“Indeed, our results demonstrate the broader point that, while market risk is real and important, households are exposed to another risk that is potentially more significant, but often ignored – the risk of adverse government policy changes.”
If these figures prove anything, it’s that there’s never been a more important time to take proactive steps to set yourself up for a comfortable retirement. The good news is the superannuation industry is increasingly tailoring products to make this possible.
Equip’s MyPension is a perfect example of this. Using a ‘3-bucket strategy’, Equip MyPension capitalises your nest egg with a simple investment strategy that sees part of your money grow while the other part provides a stable pension income stream.
For more information on how the Equip MyPension can help you achieve a comfortable life in retirement, watch this video presentation from Kim Watkins.
What’s your take on these numbers? Do you think Canberra is taking the right approach to the Age Pension? Share your thoughts in the comments.
Equip manages $7 billion of investments for members working across a wide range of Australian industry sectors. This superannuation fund has been providing strong investment performance and has been a reliable provider of retirement benefits for over 80 years.
Related links:
Major changes for age pension in 2017
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