A report by the World Economic Forum has said that Australians will use up their superannuation too quickly.
The report, Investing in (and for) Our Future, explains that government and employer-sponsored retirement plans are strained not just here, but globally, making us responsible for our own retirement savings plans.
Savings are not enough, however, to combat the loss, since most retirees in six countries, including Australia, can expect to outlive their superannuation by nearly a decade. The others alongside us are Japan, Canada, the Netherlands, the United Kingdom and the United States.
The report stresses that we’re just not going to have enough money to last our expected life span, and we need to change our expectations and behaviour now for the future.
The recommendations in the report include for policymakers to ensure there aren’t obstacles for people to save for their retirement and old age. This was specifically mentioned regarding the focus on liquidity and the ability to perform daily valuations that can push investors into less diverse strategies.
Most retirement investments are based on equity and fixed income investments, which are easy to value but have high liquidity. Illiquid assets can add diversification value to a portfolio, increasing its overall value to the individual down the track.
The report calls on governments to consider rolling back regulations that allow savers to invest in assets that best suits their retirement needs, including alternatives. The authors also suggest that we need to get a bit more creative in how we approach the range of financial tools we have to protect against longevity.