Lack of awareness impacts retirement satisfaction: TAL

New research indicates that although around 90% of retirees selecting pension accounts or lifetime income streams were satisfied with their decision, less than two in five (38%) pre-retirees understood how those products work.

The second edition of TAL's What I Wish I knew About Retirement report, surveying some 2000 pre-retirees and retirees, found retirees are much more satisfied with their retirement when acquiring lifetime income products compared to those who left their super in accumulation (81%) and who withdrew lump sums (66%).

Yet, only 38% of pre-retirees were familiar with those products and 87% were eager to find out more if their super fund offered them, and among current retirees, 66% said they would have been interested if such products had been clearly offered when they retired.

TAL general manager, retirement and wealth Shaun Bransdon said the findings show a disconnect between engagement and action on retirement planning.

"People care deeply about their financial futures and they're paying attention - but we don't see that in the actions they're taking to plan for this critical life stage. Many feel they don't have all the information they need," Bransdon said.

"Super funds are stepping into this opportunity, building on the trust developed with members over their working lives: 64% of pre-retirees say they trust their fund to advise on retirement needs.

"Options like guided settings, information on how different retirement income options work together with the Age Pension, and tools that help them make decisions that suit their circumstances, could help more Australians approach retirement with confidence."

Further, the report noted only almost half of pre-retirees expect to have less spending power in retirement, with one in three (33%) expecting their retirement to last more than 20 years. However, less than half expect their super to run out before then, and 31% taking no action to prepare for retirement.

The trend is exacerbated by the lack of engagement with super, as 21% of pre-retirees don't know what to do with super, 31% are unsure about options to access super, and 37% don't know how to draw it down, the report said.

"Retirement income strategies work best when flexibility is combined with certainty. And our research shows this is increasingly important to people," Bransdon said.

"Account-based pensions provide growth potential and capital access for active years, while lifetime income streams support spending confidence and can reduce Age Pension reliance.

"Without certainty about future income, even retirees with adequate savings may default to conservative spending. Product design can help - giving people confidence to enjoy their retirement while knowing their essential needs are covered."