Deloitte’s superannuation partner Russell Mason noted longevity is increasing by approximately one year every decade.
For investors to have saved enough to meet the ’comfortable’ standard as defined by the Association of Superannuation Funds of Australia, a 30-year-old male on an average salary, getting the Superannuation Guarantee from his employer, will have had to contribute an extra 5.4 per cent of his salary per annum, and a female an extra 7.5 per cent, Mr Mason said.
“Clearly, for many retiring in the foreseeable future, a ’modest’ lifestyle – that is around $415 dollars a week for living expenses, will still be aspirational,” he said.
On a government level, lifetime superannuation contribution caps would help mitigate the risk of longevity, Mr Mason said.
“The current system does not give individuals any opportunity to make up for those times of no excess income for superannuation contributions,” Mr Mason said.
“We believe the solution lies in a lifetime contribution cap that allows people to ’catch up’ during the latter part of their working life when they are far more likely to have disposable income.”
The government should also facilitate access to deferred or lifetime annuities, Mr Mason said.
“At retirement [retirees] get a lump sum which they need to make last for the rest of their lives. But how long will that be? No one knows. A system that required retirees to purchase a deferred annuity to commence from, say, age 80 (with exemptions for small balances), could allow people, and their advisers, to plan with some degree of certainty,” he said.
Accountants also have a role to play, Mr Mason has previously said, given they are a “great influencer” of their clients.
“Accountants are numbers people so they can alert their clients to the likely income needs of longevity, which a lot of people are very naïve about,” Mr Mason said.
“I think accountants need to give some of their clients a wake-up call,” he added.
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