Retirees taking super in lump sum is a ‘myth'

The belief that the majority of Australian retirees take their superannuation as a lump sum payment and then rely on the age pension is simply not true, according to research by Rice Warner.

Conducting the research on behalf of State Street Global Advisors (SSGA), Rice Warner found that fewer than one in five people plan to take their superannuation as a lump sum on retirement, and of those who are retired, "only 13 per cent" took their superannuation as a lump sum.

"This SSGA study was an important piece of work that also helped to further debunk the myth that a majority of Australians take their superannuation as a lump sum and spend it, relying instead on the age pension," Rice Warner senior consultant Salvador Saiz said.

"Rather, we discovered an increasing take-up of income stream products in retirement," he said.

Although, Mr Saiz said what is noticeable among Australian retirees is a lack of knowledge or understanding of "even basic superannuation concepts".

"[This shows] there is plenty of upside for quality advice to make a difference," he said.

"For example, only one third of people understand superannuation basics like whether or not they are able to contribute extra to their superannuation."

"Australians need to better understand the benefits of advice, what it is, how much it costs, do they pay for fees out of their pocket or does it come out of their superannuation account, and how it can be delivered," Mr Saiz said.

This is where superannuation funds have a significant role to play, Mr Saiz said.

"With a projected increase in the take-up of advice by fund members over the next decade, the 16,000 to 18,000 practising financial planners will not be able to service demand via face-to-face conversations," he said.

"Digital advice, as well as phone-based advice, will help solve the scale conundrum. It is here where superannuation funds are focusing on triaging and guiding members to the most appropriate advice channel."

Written by Scott Hodder
Friday, 02 October 2015
ifa.com.au

Cristy Houghton

Embarketing, 48 Johnston Street, Wagga Wagga, NSW, 2650

Cristy's unique career has taken her from country NSW to the city lights of Clarendon Street South Melbourne and back again. With an early career in radio as a copywriter and creative strategist, she is now a Jill of all trades as a graphic designer, website builder, blog writer, video editor, social media manager, marketing strategist and more. 

In fact, give her any task and this chick will figure out how to do it! Go on, we dare you!

No, really, we DARE you!!

Cristy has won two Australian Commercial Radio Awards (ACRAs) for Best Ad and Best Sales Promotion, and even has an 'Employee of the Year' certificate with her name on it.

Cristy and her husband James have traveled extensively through Russia, China and South East Asia, and have two fur-babies, Sooty (cat) and Panda (puppy). Cristy loves drinking coffee, meeting people to drink coffee, coffee tasting and coffee flavoured cocktails. She also enjoys road trips, TED Talks and watching cat videos on youtube.