In the shifting landscape of retirement planning, advisers are under increasing pressure to deliver strategies that balance managing key retirement risks, flexible access to savings, and maximising retirement income that is sustainable for life.

Recognising that a major concern for Australian retirees is the risk of outliving their savings or experiencing a decline in their retirement lifestyle, Generation Life has engaged actuarial and retirement specialists, Accurium, to conduct independent research for financial advisers on the role of Generation Life’s LifeIncome. LifeIncome is an innovative investment-linked lifetime income product designed to deliver income for life and complement other income sources, such as an account-based pension and Age Pension, as part of a comprehensive retirement strategy.

This new report prepared by Accurium, shines a spotlight on lifetime income products, and could redefine how advisers approach retirement portfolios for their clients.  

The report’s modelling reveals that advised retiree clients with total assets above the Age Pension Assets Test limit and a conservative to growth risk profile may significantly benefit from incorporating LifeIncome into their retirement income strategy. These clients, often wealthier and more educated, may be expected to live longer than the national average. To account for this longevity risk, the report tested outcomes to the “25% age”, the age beyond which 25% of Australians are expected to live. This benchmark is proposed as a minimum planning horizon for healthy advised clients.

Using 2,000 simulations across 672 retirement strategies and 96 household cohorts, the report calculated a retirement strategy score: the proportion of scenarios in which a household’s target income was sustainable to the 25% age. The results were compelling. Retirees with moderate to high assets and a conservative to growth risk profile saw significant improvements in their strategy scores when LifeIncome was included. In some cases, the uplift exceeded 40%, underscoring the product’s potential to enhance retirement confidence.

The report also highlights how LifeIncome can increase Age Pension entitlements, particularly in the early years of retirement. For example, a couple with $800,000 in assets could see their first-year Age Pension rise by up to 68% with LifeIncome in their portfolio.

While LifeIncome may not suit every client, the evidence suggests it should be part of the suite of products advisers consider when crafting retirement strategies. For those seeking to future proof their advice and deliver lasting value, this report offers a data-driven framework worth exploring.