Interest rates, old-age dependency and climate change are the top three threats to retirement security, according to the Global Retirement Index.
The Index assesses 44 countries on factors that drive retirement security, including health, finances in retirement, material wellbeing and quality of life.
And Australia is on the skids... well, it has dropped three places to ninth since last year, as a result of lower year-on-year scores in quality of life and finances.
The debate over deeming rates shows how relevant the threat of low interest rates and returns is to Australians.
It’s a global problem that appears to have no end in sight.
According to the Index, retirees can now expect yields of less than 1 per cent from their fixed income investments – a significant drop from the 6 per cent forecast in 2007.
As a result, people are likely to take greater investment risks in pursuit of higher returns.
People across the world are now living longer and old-age dependency has been identified as a real issue.
Old-age dependency is the ratio of people over 65 to the working-age.
It illustrates how many people are putting money into the system, compared to those taking money out.
Why is it important?
UN projections show that individuals in developed regions who reach age 60 in 2015 will live an average of 23 more years.
By 2065, this is likely to increase to 28 more years.
This could place great strain on systems across the world.
What will the implications be? Will retirees have their pensions cut? Will people lose their retirement benefits?
This uncertainty is another reason why we need to get the retirement income system right in Australia.
Climate change not only poses long-term risks, but immediate concerns as well.
The Munich Reinsurance Company reported that natural disasters caused $350 billion in damages during 2017.
The company says that 2018 was the fourth costliest year since 1980 in terms of insured losses and that property insurance premiums could soon become too expensive for many people to afford.
“If the risk from wildfires, flooding, storms, or hail is increasing, the only sustainable option will be to increase our risk prices accordingly.”
For years, retirees have become an easy target for successive governments.
It’s time to take a stand.
Join our campaign to fight for a retirement income system based on principles of adequacy, sustainability, certainty and fairness.
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