Making drawdown a success
More work needs to be done helping people spend their savings in retirement, the Society of Actuaries says.
Friday, November 26th 2021, 7:29AM
In a newly-released paper, How to make drawdown a success, the society notes New Zealand is well behind other countries when it comes to helping people mage their savings through the decumulation phase.
It has also updated is "rule of thumb" for decumuation.
The actuaries, in the society's Retirement Income Interest Group (RIIG), say that agencies should work together to provide consistent content information and guidance to help people that demystifies drawdown.
They say drawdown is a difficult problem to solve, and there are no obvious best examples available of how to achieve it successfully.
"RIIG believes more guidance to help people think about drawdown is needed."
Its framework consists of having two buckets, one for emergency spending and the other for drawdown. It's rules of thumb are applied to the drawdown bucket which is usually KiwiSaver.
The question retirees need to ask is how much income am I comfortable taking for the next year or two until I review?
They say retirees have to make choices and take positive action, but the choices are not easy.
The founder and managing director of variable annuity group, Retirement Income, says he agrees with the society's paper and his group has commercialised the process.
"We have taken the theory and commercialised it.
"Everyone gets their own personal annuity factor which is monitored daily and reviewed annually to make sure life style choices matches financial resources."
The latest Lifetime Retirement Income product "covers 100% of the NZSA guidelines using some pretty straight forward algorithms to drive new calculators."
These calculators will be available soon.
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