Retirees leave 90% of pension unspent: AMP Super

AMP Super retirement director Ben Hillier said on average clients are leaving around 90% of their account based pension unspent at death, which makes it important for adviser to tackle 'regret risk' in retirement.

Speaking at the Financial Standard Advisers Big Day Out (ABDO) in Sydney, Hillier said the 90% figure could be used by the client for travel, retiring early, helping children with their first homes, supporting the community or having access to better health care.

He suggested advisers could bucket the needs of their clients in five categories for retirement: liquid, living, lifestyle, later and legacy.

The liquid bucket would have short-term needs of the client held in cash plus a little extra for emergencies, the living bucket would include recurring living expenses generated by the Age Pension and lifetime income, the lifestyle bucket would capture discretionary spending invested for long-term growth to maintain standard of living, the later bucket would fund needs in the future, and finally the legacy bucket to include if the other buckets are full.

"One of my strongest wishes professionally is that we can actually address each of these individually, because you fill them from left to right and then you find out wait I still have 'X' left over. Now I can actually pass that legacy on," Hillier said.

Instead of just waiting until the very end to see what is left over Hillier said this strategy allows clients to take control of their retirement.

"Let's actually be more purposeful about retirement and including that legacy to give to give our clients the confidence to achieve their dreams and also their family's dreams," he said.