Retirement healthcheck

Australians have one of the highest life expectancies in the world. Life expectancy from age 65 – males 87 Females 89.

SMSF trustees are living longer…

UK data shows wealthier people are living longer. US data shows better education also linked to higher longevity with a 9 years difference in life expenctancy between those who have a batchelor’s degree and those who don’t finish high school.

SMSF trustees are wealthier and better educated than the average:
* Taxable income 84% higher than non-SMSF super members
* 81 % hold a tertiary qualification



Based on these mortality rates, it is calculated that the life expectancies for SMSF trustees:

Note that life expectancy of last survivor in a couple is longer than for individuals – there is a higher chance that one person in a couple survives to an old age then an individual.

What does this mean for SMSF trustees?

Very few people live to their exact life expectancy – this is just an average.

Many retirees will want more certainty that their retirement plans will last for life.

By analysing the distribution of expected lifespans, we can calculate retirement planning horizons for difference confidence levels:

There is a one in ten chance that the last survivor in a couple will live to age 100.

Initiative is able to provide a retirement healthcheck service which enables us to check and assess, within minutes, a household’s ability to sustain a desired level of spending for the duration of retirement. Providing us with the ability to prepare retirement scenarios for clients prior to meetings, as well as run multiple scenarios for clients in real-time.

It takes into consideration the key risks in retirement – longevity risk, market risk and inflation. The retirement healthcheck adds value by enabling clients to assess the risk that their retirement plan will succeed or fail.

Research shows 75% of typical 65-year-old couples do not have sufficient assets in their SMSF to confidently sustain $100,000 per annum for life in retirement.

Answer those difficult questions that your clients want to know, such as:
* When can I afford to retire?
* Will my money last for life in retirement?
* How much money can I afford to leave my children?
* Can I afford that round the world trip and still have a comfortable retirement?
* How much money can I safely afford to spend each year?
* Will I be entitled to the Age Pension, and when?

Kyla Dalton – Accountant