With the federal government’s Intergenerational Report (IGR) projecting a higher life expectancy for Australians, the FPA has urged consumers to seek professional financial advice for their retirement needs.
The report, released yesterday by Treasurer Joe Hockey, projected that the number of Australians aged 65 and over will double by 2055.
Male life expectancy is projected to increase from 91.5 today to 95.1 in 2055, while female life expectancy will increase from 93.6 today to 96.6 in 40 years’ time, according to the IGR.
In addition, the report conculded that by 2055 there will be only 2.7 working Australians to support every Australian over 65, compared with 4.5 today and 7.3 in 1974/1975.
Commenting on the release of the IGR, FPA chief executive Mark Rantall said while the report does not anticipate a drop in the number of retirees receiving the age pension, it does project an increase in the number of part-rate pensioners.
“The IGR makes it very clear that there is a link between superannuation savings and reliance on the age pension,” Mr Rantall said.
“Fewer people relying on the age pension will clearly help reduce the overall financial burden on the nation.
“That’s where getting the right financial advice comes in. If Australians seek proper financial advice from an early age and use it to maximise their superannuation so they can reduce reliance on the age pension, the nation as a whole will be infinitely better off,” he said.
Mr Rantall also highlighted that those who do receive financial advice are more likely to only rely on a part-pension than a full-pension.
“They are more financially secure, have a greater level of standard of living and are able to better manage any longevity risk,” Mr Rantall said.
“The role financial planners play is pivotal. They have the knowledge to assist consumers in accumulating a larger and more adequate retirement savings balance and the ability to implement appropriate strategies of drawing down income and managing longevity risks,” he said.
The FPA also pointed out that currently 2.5 million Australians use a financial adviser and the appetite has increased with 33 per cent more people intending to see an adviser in the next two years.
“This represents an increase from 1.5 million intending to seek advice in 2013 to 1.9 million in 2014. However not all may do so,” a statement from the FPA said.
“The [FPA] wants to see those who intend to seek advice actually do so as a significant step in filling the shortfall between superannuation balances and realistic retirement funding,” it said.
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