Increasingly funds are positioning themselves as a fund for life, offering members the ability to save for retirement and then to draw down on those savings as pension income in their post-work lives.
But how well are super funds catering to the needs of members in their post-work lives to ensure they truly are a fund for life? Here’s some of the trends we’re seeing that are set to shift how funds communicate with, and meet the needs of, their older members.
Retirement has retired
Retirement is now viewed as a ‘second act’ where personal growth, expansion, learning, socialising and contributing to the community are important in ensuring a happy (and long) retirement. It’s no longer just about recreation. The concept of retirement as ‘slowing down’ (and sometimes viewed as ‘retiring from life’) is dead.
So too is the idea of being in full-time work one day and retired the next. Now the journey into retirement might mean transitioning through part-time or contract work, a late in life career change, starting a business, volunteer work or taking up further study.
The new retirement changes what funds communicate, the methods of delivery and the supporting services they offer to members. Increasingly, there is emphasis on planning holistically, taking into account relationships, health and wellbeing, and finances. Retirees want a fulfilling and meaningful post-work life, not a permanent holiday.
Not one homogeneous group
Ageing members are incredibly diverse. Think about the needs and lifestyle of someone in their 60s compared to someone in their 90s. Then add in the complexity of personal circumstances. Someone in their 60s bringing up teenage children in a blended family with a mortgage and school fees has a completely different set of needs and interests to a debt free 60-year-old with adult children and grandkids.
The importance of segmentation and tailored, personalised communication is just as important in the post-work phase as in the accumulation phase. Member profiling and segmentation based on life stage and behaviours rather than physical age is important. And its importance is only going to grow given Australia’s ageing population.
Fear of outliving savings
One of the biggest fears of retirees is outliving their retirement savings. With rising lifespans, members can now look forward to up to 40 years in retirement. At the same time, more and more retirees are still paying off a mortgage, many are still supporting adult children, the divorce rate amongst retirees is increasing and many are forced to retire earlier than they would have hoped.
The role of property as a retirement asset is also undergoing generational change. Some lucky retirees own prime land or inner-city property and they’ve had strong capital growth since 1992 – giving them the choice of downsizing or leveraging that asset for retirement income purposes. Others are in a different position. Retirees who are renting, particularly in capital cities, face rent taking a large chunk out of their superannuation savings. Funds can assist members in addressing both a shortfall in savings and ensuring available funds last for as long as possible.
Age is about mindset, not physical age
The concept of ageing is being reinvented. Good health is viewed as something that can be maintained for longer and so, if you’re living a healthy lifestyle, age is more about mindset than physical age. Most 60s do not consider themselves old – it’s the new 40s and 70 is the new 60. Unfortunately, 80 is pretty much still 80 because of declining health but the point is retirees don’t see themselves as old until declining health plays its part. Leading funds recognise this by engaging members with lifestyle-based communications that talk to members’ interests rather than communications that are triggered primarily by regulatory change.
Three phases of ageing have different needs
Research suggests there are generally three post-work stages of life – an active phase, followed by a sedentary phase and then a dependency phase. The active phase is usually the early years of retirement, the sedentary phase is when health starts to decline, and the dependency phase involves a need for aged care or assisted living.
These phases don’t apply to all and vary in length across individuals, but research tells us that expenditure levels vary at each stage. This has implications for the products and services funds offer to members. Funds can assist members to prepare for and navigate each stage with flexible products and services that cater to changing circumstances.
Fresh ideas on reshaping services and communications
A fund for life means engaging with members, no matter what their life stage or circumstances. Leading super funds will be those that expand their focus from the accumulation phase and retention at retirement to identify the needs of their ageing members and delivering services and communication to match those needs.