Rachel joins Allianz Retire+ from AMP, where she was a New Business Manager for the North platform. She brings more than 30 years of experience across wealth management, distribution and relationship management, having held senior roles with AMP, VGI Partners, Pengana Capital Group and Australian Unity.

She also has a strong track record of industry leadership and advocacy, having previously served as President of Women in Finance Queensland, and currently sitting on FINSIA’s Queensland Regional Council.

Chief Distribution and Marketing Officers Catherine van der Veen and Lucy Foster said Rachel’s appointment reflects Allianz Retire+’s continued investment in supporting advisers in delivering better retirement outcomes for Australians.

“Rachel joins Allianz Retire+ at an exciting time for the business,” van der Veen and Foster said.

“She brings deep industry experience, strong adviser relationships and a genuine passion for helping financial professionals deliver better outcomes for their clients.

“As demand for retirement income solutions grows, expanding our distribution capability ensures more advisers can access innovative products and strategies that help Australians retire with confidence.”

The appointment comes as Allianz Retire+ continues to build momentum, with uptake of its flagship retirement income solution Allianz Guaranteed Income for Life (AGILE) increasing by 31 per cent since January 2026.

Commenting on her appointment, Rachel said she was delighted to join Allianz Retire+, a business focused on addressing one of Australia’s most significant financial challenges.

“I am passionate about helping financial professionals access outstanding products and strategies that improve outcomes for clients while supporting business growth and efficiency,” Ms Elfverson said.

“Allianz Retire+ is helping shape the future of retirement income in Australia, and I’m looking forward to working closely with advisers across Queensland to help more Australians achieve confidence and security in retirement.”

Rachel’s appointment follows a period of continued recognition and growth for Allianz Retire+, including Chief Distribution and Marketing Officer Catherine van der Veen being named ‘Thought Leader of the Year’ at the Money Management 38th Annual Fund Manager of the Year Awards.

The business also recently announced the appointment of Kiru Anantharaj as Senior Manager, Retirement Solutions, further strengthening its retirement expertise and adviser support capabilities.

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The Two-Chapter Retirement framework highlights how behavioural biases can shape retirement planning and decision-making.

Introduction

Why do financially secure retirees still hesitate to spend, or commit to strategies that would clearly improve their outcomes?

This article sets out the Two-Chapter Retirement framework, a new way of understanding retirement not as one continuous journey, but as two psychologically distinct phases which clients experience very differently.

Chapter One is the near-term future clients can easily picture: the active years when they’re most open to advice about lifestyle and access to capital. Chapter Two is the distant, harder-to-imagine future, where fear and uncertainty tend to drive overly cautious, defensive decisions.

Drawing on recent Australian research into retiree behaviour, the article explores why this two-chapter mindset produces predictable patterns – declining spending over time, a bias toward minimum drawdowns, and a reluctance to commit to strategies perceived as hard to unwind – and what this means for how advice should be delivered. It examines the practical implications for advisers, including how income layering can help clients achieve both certainty and flexibility, rather than being forced into a choice between the two.

Decision paralysis: The emerging risk to retirement outcomes

For many Australians, the greatest emerging threat to retirement outcomes is no longer market volatility or inadequate savings, but a hesitancy to make the decisions retirement requires. Increasing system complexity and behavioural biases are leaving many otherwise well-resourced retirees reluctant to spend, commit capital or implement strategies that could improve both their financial and emotional security.

Recent Australian research^[1] has reinforced how this persistent decision paralysis among retirees is creating a gap between the retirement they have the financial capacity to achieve, and the retirement they feel confident to live.

While traditional retirement income planning focuses on sustaining target income levels, processes alone cannot resolve the deeply held concerns that lead many retirees to live an overly cautious and constrained retirement. To build genuine confidence, advisers must recognise the underlying tension clients experience between enjoying the present and managing the uncertainty of the future.

In practice, this tension manifests as a ‘two-chapter’ view of retirement: an initial 10–15-year period of active, healthy, ‘golden years’ that clients can readily envision and plan for, followed by a later, more uncertain period characterised by anxiety about health, longevity and financial needs.

Recognising this two-chapter mindset is essential because it shapes how clients respond to advice, perceive risk and evaluate strategies from the outset. Viewing retirement planning through this lens allows advisers to better support clients as they balance the desire to live well today with the need to remain secure tomorrow.

How retirees actually think about the future

Many advisers will be familiar with the often-quoted work by Michael Stein – author of The Prosperous Retirement^[2] – which envisaged retirement spending in three phases: ‘Go-go’ (the early active years when health, energy and independence are at their peak), ‘Slow-go’ (when declining health and shifting priorities see a less active life), and ‘No-go’ (when activity related spending stops but healthcare spending goes up).

While this work may be useful in understanding the typical shape of retirement spending, it is less valuable as a way of understanding client decision processes, because this is not the way clients think. Rather, they tend to think about the future in just two parts – the near-term future which they can vividly imagine, and the distant future which they are largely incapable of picturing, and which is therefore associated with fear and uncertainty.

A recent Australian qualitative study^[3] brought this two-chapter mindset to life.

Surveying a wide cross section of pre-retirees and retirees, Accenture researchers observed:

 “Whatever the journey towards retirement, almost all see their retirement in two distinct chapters”.

Those chapters were described as:

• Chapter One – ‘Maximising enjoyment of retirement’; and
• Chapter Two – ‘Slowing down and getting by’.

The two-chapter mindset is also grounded in a wider body of research^[4] – including work by the Conexus Institute – into the effect of behavioural and decision biases on retirement planning. These include myopia, present bias, and hyperbolic discounting, which limit our ability to effectively plan for the long term, and see us apply an irrationally large discount to the value of future benefits.

Some researchers^[5] have even suggested we think in terms of two selves – our present self and our future self– going as far as to suggest our distant future self ‘feels like a stranger’, and saving is like a choice between spending money today or ‘giving it to a stranger, years from now’. This separation between our two selves makes future planning decisions difficult, which often sees another decision bias – procrastination (decision inertia) – come to the fore.

Chapter One:  The retirement clients can see

Ages 60 – 75

When clients first sit down to plan retirement, the part of the future they engage with most readily is the near-term period immediately following the end of full-time work.  In this chapter, they can vividly imagine how they will spend their time, the lifestyle they want to maintain and the experiences they hope to enjoy while health and independence are intact.

Because this chapter feels tangible and controllable, decision-making is driven by aspirations rather than constraints. Clients think in terms of possibilities: the trips they will take, that new car or home renovation, the time they will spend with family. Financial discussions are framed around enabling this lifestyle, with clients likely to be receptive to strategies that support spending, flexibility and access to capital.

However, even at this early stage, opposing forces are at work.

The pressure to ‘do it all now’ while still healthy and active conflicts with the knowledge that the future is uncertain, and unforeseen events could derail plans.  Paradoxically, many will hold back from experiences they aspire to, struggling to confidently enjoy this part of their retirement.

In this chapter, confidence becomes a critical facilitator of decision making, action, and commitment. When clients feel assured that their long-term needs have been considered, they are more willing to spend and commit to experiences. Without that assurance, even financially well-prepared clients may hesitate, preferring to preserve options rather than fully embrace the golden years they envisaged.

Chapter Two:  The retirement clients cannot see

Ages 75 to 90 and beyond

In contrast to Chapter One, the later period of retirement exists largely as an abstraction at the planning stage. Clients know it will occur, but struggle to picture what it will look like, or what their resource needs will be.

Clients worry about longevity, medical costs, market downturns and loss of independence, but cannot specify the magnitude or timing of these risks. Accenture’s research found that clients may be reluctant to discuss these issues in depth and may even avoid thinking about them altogether.

Because this chapter is distant and uncertain, it is processed primarily through fear-based heuristics rather than detailed planning. This leads many to defer decisions about the future, or to make highly defensive decisions, such as preserving capital, avoiding irreversible commitments and favouring flexibility even when it comes at the expense of tangibly better financial outcomes.

Confidence plays a different – but equally critical role – in chapter two planning. Rather than being an enabler of action, it provides reassurance. Clients seek strategies that reduce uncertainty and ensure that essential needs will be met regardless of how circumstances unfold. When this reassurance is absent, reluctance to spend or commit resources in the first chapter intensifies, because the future feels unsecured.

Behavioural outcomes of the two-chapter mindset

The mental framing of each chapter is not just conceptual, it translates into consistent behavioural patterns observed across spending, decision inertia, and product preferences.

Retirement spending is not steady or smooth

Analysis of data from Australia’s HILDA survey^[6] and the ABS has shown that total household expenditure typically declines across retirement rather than remaining stable, likely reflecting a combination of reduced physical capability, increasing risk aversion and precautionary behaviour in the face of uncertain future needs

Various experts have sought to quantify the extent of this ‘front loading’ of spending.

One researcher^[7] estimated that the median retired couple’s expenditure falls by more than one-third (36.7%) as they move from their peak spending years in early retirement (65 to 69 years of age) and into older age (85 years and beyond). The decline in expenditure for couples was found to be relatively stable in the early years of retirement at about 6% to 8% across each four-year age band, but then rapidly accelerates once retirees pass 80 years of age.

Decision inertia and default bias contribute to frugality and loss

2025 research by the Grattan Institute^[8] linked the cognitively overwhelming complexity of retirement with decision inertia and default bias. In their ‘Simpler Super’ study, 80% of respondents said they found retirement planning complicated, with half (40%) of those saying it was very or extremely complicated.

That same study also found around half of all retirees with account-based pensions draw only the legislated minimum, of whom around one in five falsely believe this figure to be what the government has recommended. A clear reluctance to spend was observed, driven by uncertainty about the future, health concerns, and fear of outliving savings, ultimately resulting in more than 40% of pensioners being net savers.

A Super Members Council (SMC) study^[9] from 2025 similarly observed ‘decision paralysis’ across various stages of the retirement journey. One example they cited was the prevalence of people leaving their superannuation in accumulation accounts even after retirement. While noting that for some this may have been an active decision, their conclusion was that for the estimated 700,000 retirees in such accounts, this was likely explained by complexity-driven decision inertia. They estimated the cost of this inertia to be up to $136,000 per retiree^[10].

Flexibility and liquidity preference

Both the Grattan and SMC studies also highlight a consistent behavioural preference for flexibility over commitment in retirement decision-making.

Grattan notes that strategies designed to mitigate longevity risk often require retirees to surrender liquidity and control, creating trade-offs many are reluctant to accept, while SMC similarly identifies low understanding and concerns about locking away capital as key barriers to lifetime income products. Together, these findings reinforce the idea that a reluctance to commit is not merely caution, but a deep emotional preference for optionality.

The irreversibility barrier

Decisions about the distant future become especially difficult when they are perceived as hard to reverse. Retirement planning often involves multiple commitments of this nature, from housing and capital allocation to income structuring and family support.

Within the two-chapter context, enabling clients to enjoy the early years of retirement requires making them confident that the uncertain later years are secured. Yet the strategies advisers typically use to provide that security – such as establishing a layer of guaranteed future income – can often require a degree of commitment that clients fear may lead to regret or loss of control.

Research^[11] into long-term financial decision-making shows that when a strategy requires retirees to lock in arrangements they perceive as not easily unwound, they effectively apply an ‘irrevocability aversion discount’ to the benefits of that strategy.

The regret aversion bias amplifies this effect. Retirees anticipate the possibility that a decision made today could prove wrong in hindsight, particularly in the face of uncertain longevity, health costs or family circumstance, and therefore delay or dilute commitments that feel permanent.

To the extent that such decisions result in sub-optimal long-term outcomes, irreversibility fears become a risk in their own right, a risk that – along with sequencing, longevity, and other retirement risks – advisers must seek to mitigate.

From insight to action: advice implications

1. Prioritise early decisions while capacity is highest

Research^[12] has shown that our fluid intelligence – our capacity to learn new things – peaks at age 40. Given the complexity of retirement, the window for high impact decisions is therefore at the start of retirement, not later.

This of course creates a challenge for advisers: the strategies that will most influence long-term outcomes are often those clients feel least comfortable committing to early.

However, difficult this may be, establishing a durable foundation for later life, particularly in terms of income security and longevity protection, will allow clients to approach the first chapter of retirement with greater confidence, knowing that essential needs in the second chapter have already been addressed.

2. Treat confidence as the primary behavioural lever

Across both chapters, confidence emerges as the variable that determines whether clients act on advice or retreat into caution. In the early years, confidence enables spending, experiences and lifestyle decisions. In later years, it provides reassurance that essential needs will be met.

Importantly, confidence is not created by comparing income projections against some target level. It arises when clients feel that uncertainty has been managed in a way that preserves both security and control. Strategies that appear financially optimal but psychologically challenging are unlikely to be adopted, regardless of modelling outcomes.

For advisers, this reframes retirement planning from a purely financial optimisation exercise into a human confidence-building process.

3. Income layering as ‘commitment diversification’

The central challenge revealed by the two-chapter mindset is that clients seek certainty and flexibility simultaneously. They want assurance that their future needs will be met, but without feeling that they have surrendered control of their capital made irreversible decisions.

Income layering provides a structural solution to this dilemma. Advisers can construct a plan of diversified income sources, each with different characteristics of certainty, liquidity and reversibility. Layers might include an account-based pension, a lifetime income stream, the age pension, along with other income sources.

In this framework, the client doesn’t risk regret by committing to a single strategy. A guaranteed income layer (comprising the age pension and a lifetime income solution) can secure the foundation of later-life needs, while more flexible components preserve access to capital and adaptability as circumstances evolve. In effect, as well as diversifying income streams, the client is also diversifying commitment levels.

By ensuring that long-term financial security does not depend on committing all capital to arrangements perceived as hard-to-unwind, income layering reduces the psychological barrier to early action. Rather than forcing a choice between certainty and control, it allows advisers to establish a durable income floor while retaining optionality for the years ahead. In doing so, it directly addresses the behavioural constraints identified throughout this paper, enabling clients to act with confidence at the outset of retirement while preserving flexibility across both chapters.

A new paradigm for retirement planning

Viewed through the two-chapter lens, retirement planning is not about choosing between certainty and flexibility, but about structuring both in a way that aligns with how clients actually think about the future. Strategies that address only one dimension will struggle to overcome decision paralysis.

The most effective retirement frameworks will therefore be those that:

• Secure essential lifetime needs early
• Preserve flexibility for evolving priorities
• Build confidence across both chapters simultaneously

When these conditions are met, clients are better able to enjoy the retirement they can see without fearing the one they cannot.

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References
[1] https://smcaustralia.com/app/uploads/2025/10/251028-SMC-Retirement-Report-2_Final-.pdf
[2] https://www.morganstanley.com/cs/pdf/10078209-Retirement-Spending-Reality.pdf
[3] Allianz Retire + research: retiree insights, November 2024, conducted by fiftyfive5, part of the Accenture Song group.
[4] https://theconexusinstitute.org.au/wp-content/uploads/2025/02/Retirement-explainer-11-Behavioural-influences-on-retirement-decisions.pdf
[5] https://pmc.ncbi.nlm.nih.gov/articles/PMC3949005/pdf/nihms550109.pdf
[6] https://www.legacy.challenger.com.au/-/media/shared/challenger/document/research/crir-spending_patterns_in_retirement.pdf
[7] https://au.milliman.com/en/insight/analysis-retirees-spending-falls-faster-than-expected-into-old-age
[8] https://grattan.edu.au/wp-content/uploads/2025/01/Simpler-Super-Grattan-Institute-Report.pdf
[9] https://smcaustralia.com/wp-content/uploads/2025/10/251028-SMC-Retirement-Report-2_Final-.pdf
[10] https://smcaustralia.com/media/complexity-in-the-super-system-could-cost-new-retirees-up-to-136000-in-retirement-new-report/
[11] https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4555546_code3520657.pdf?abstractid=4555546&mirid=1
[12] https://www.netwealth.com.au/web/media/378487/2020-05_netwealth_retirement-advice.pdf

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Business update

• Strong and accelerating growth: AGILE uptake has increased by more than 30% since January, with repeat usage from advisers continuing to build momentum
• Enhanced value proposition: Recent product enhancements, including reduced fees and earlier access to lifetime income, have further strengthened AGILE’s competitiveness, and
• Addressing advisers’ top concern: Allianz Retire+ research conducted with Core Data in March 2026 showed access to capital is the number one priority for advisers (71%), with AGILE designed to provide flexible access to capital alongside guaranteed lifetime income.

AGILE is currently the only retirement income solution in Australia offering the unique combination of investment growth exposure, protection from market downturns, guaranteed lifetime income and flexible capital access.

Distribution appointment

Allianz Retire+ has also announced the appointment of Kiru Anantharaj as Senior Manager, Retirement Solutions, within its Distribution and Marketing team.

Kiru brings more than 20 years’ experience across insurance, advice, retirement and superannuation, and has a strong track record of building trusted relationships and delivering impactful adviser engagement. She joins from AMP, where she was a Retirement Specialist, and has previously held roles at Insignia Financial, MLC Life Insurance, BT Advice and ANZ.

Commenting on the appointment, Chief Distribution and Marketing Officers Catherine van der Veen and Lucy Foster, said Kiru’s experience and relationships would support the business in its next phase of growth.

“We are thrilled to welcome Kiru to the team at a time of strong growth for Allianz Retire+. She brings deep relationships across the advice community and a proven ability to support advisers in delivering better retirement outcomes for their clients.

As momentum continues to build in the retirement income category, strengthening our distribution capability is critical to ensuring more advisers and clients can access innovative solutions like AGILE.”

Commenting on her new role, Kiru said: “There is a growing need for solutions that give retirees confidence and flexibility, and advisers are increasingly looking for partners who can help them navigate this complexity.

“I’m excited to be joining Allianz Retire+ at such a pivotal time and to work closely with advisers to deliver better retirement outcomes.”

This appointment follows continued recognition of Allianz Retire+’s distribution strength, with Senior Retirement Income Specialist Lauren Matthews recently named BDM of the Year at the Financial Newswire Women Empowering Wealth Awards 2026.

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David Kane

As Anthropic expands into the Australian and New Zealand markets, leading Asia-Pacific data and AI consultancy V2 AI has built an enterprise-grade, intelligent AI solution, leveraging Anthropic’s Claude, that revolutionises how financial advisers engage with Allianz Retire+.

As a key Anthropic implementation partner, V2 AI is supporting a range of Australian enterprises across highly regulated industries to rapidly adopt Claude models to deliver unmatched speed, security, and scalable AI value.

The Allianz Retire+ Adviser Digital Assistant, or Ada, leverages Claude via AWS Bedrock, selected for its reasoning performance and assurance capability in regulated environments. The conversational tool transforms how financial advisers, paraplanners, and the financial services community engage with the Allianz Retire+ retirement income solution, Allianz Guaranteed Income for Life (AGILE).

From complexity to confident advice, accelerating the sales cycle

Understanding and comparing retirement solutions is time-intensive. Ada delivers contextual education precisely when and where it’s needed. It makes complex retirement income concepts more accessible, enabling self-paced exploration and empowering advisers to deliver better retirement outcomes.

David Kane, Chief Executive Officer, Allianz Retire+, said the AI assistant provides a user-centric experience built on enterprise-grade tooling with robust guardrails to ensure the highest standards of quality and accuracy.

“We’ve listened to advisers and recognised that for them to effectively solve for their clients’ retirement needs, they first need a frictionless way to master the tools at their disposal. Ada allows advisers to ask questions and receive robust answers within seconds, freeing up their time to focus on building better retirements for their clients.”

Anthropic expanding AI possibilities for Australian enterprises

Craig Howe, Founder and CEO of V2 AI, said that Anthropic presents an immense opportunity for Australian enterprises, with many V2 clients already experiencing the business benefits.

“Partnering with Anthropic at this pivotal moment allows us to bring world-class trusted AI capabilities to Australian organisations like Allianz and deliver significant business outcomes,” said Howe.

V2 AI’s experience spans the full Anthropic ecosystem, including Claude via AWS Bedrock, Claude Code, the Claude API platform and enterprise-wide adoption through Claude Teams.

In the energy sector, V2 AI is building grid-optimisation agents, automated customer billing optimisation, and anomaly detection systems to improve infrastructure resilience, customer experience, and safety. For the government, V2 is delivering agentic-based mainframe modernisation and regulatory knowledge assistants to transform public administration and improve service delivery.

These industry blueprints are designed to be repeatable, enabling rapid scale across enterprises in the region.

Scaling enterprise AI with confidence, speed, and control

V2’s experience, coupled with Anthropic’s technology capabilities, demonstrates how enterprise AI can propel businesses in regulated environments like financial services when compliance, legal, risk, product, and leadership come together. When organisational readiness meets clear AI strategy, governance and technical delivery, measurable value flows across the entire chain, from insurer to intermediary to customer.

Scaling Claude-based solutions demands a disciplined approach to responsible AI, where robust AI safety and assurance guardrails, such as evaluation with hallucination detection, human-in-the-loop escalation and regulator-ready audit trails are embedded from the outset.

V2 AI enables this through its proprietary Enterprise Velocity System, which combines AI technology with the governance, operating rhythm and delivery structures required to run an Intelligent Enterprise.

“Through our partnership with Anthropic, we aim to continue harnessing Claude to deliver consistent, high-quality solutions that help our customers not just adopt AI faster, but grow faster as a result. We believe this will establish a new standard for trusted, responsible and outcome-driven AI, supporting businesses across Australia and the broader APAC region to achieve significant business outcomes,” concluded Howe.

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Many retirees can afford a comfortable retirement – yet hesitate to spend, delay decisions or default to caution.

New research from Allianz Retire+ has identified decision inertia, driven by a powerful fear of commitments perceived as irreversible, as an emerging risk to retirement outcomes for otherwise well-prepared Australians.

Many retirees can afford a comfortable retirement – yet hesitate to spend, delay decisions or default to caution, according to a new white paper released by Allianz Retire+.

The behavioural cost of this inaction is clear across the Australian retirement system. Around 700,000 retirees leave their superannuation in accumulation after retiring, costing individuals up to $136,000, while around half of account-based pension holders withdraw only the minimum required, leading many to live more cautiously than their savings actually demand.

While many financial risks can be managed through diversification and portfolio construction, longevity risk remains fundamentally different. It cannot be diversified away within an individual retirement portfolio.

When retirees lack protection against the risk of outliving their savings, advisers are forced to manage longevity as a probability rather than a certainty, a reality that often drives underspending, heightened caution and lower confidence in retirement.

David Kane, Chief Executive Officer, Allianz Retire+, said advisers face a unique challenge when it comes to longevity risk.

“Longevity is the one major retirement risk advisers can’t meaningfully diversify away. While markets can be modelled and managed over time, traditional asset allocation strategies can’t insure against the risk of outliving your savings.

“Guaranteed lifetime income is not a product preference, it is a structural planning tool that helps advisers discharge their duty of care by securing essential income for life, and in doing so, gives clients the confidence to enjoy the years they can without fearing the years they can’t.”

The paper ‘The two-chapter retirement’ brings together a wide body of evidence spanning behavioural research, Australian and global retirement studies, economic data and adviser practice insights to explain this persistent disconnect. The paper synthesises this evidence into a single, coherent framework that reflects, generally, how retirees may actually think, feel and make decisions.

The ‘Two-Chapter Retirement’ framework highlights how many people experience their retirement journey as two psychologically distinct phases:

• an active, aspirational early chapter they can clearly imagine; and
• a later, more uncertain chapter associated with caution, fear and complexity.

Mr Kane added: “What we see is not the result of financial illiteracy or inadequate savings. These are clients who are well resourced and understand their position and yet are still reluctant to act.

“The constraint is behavioural, and no amount of additional information or projections are likely to help. Instead, advisers need a fresh approach which reframes levels of commitment and stresses the exit ramps in any retirement income strategy.

“The retirement system is getting more complicated, and many people aren’t aware of products that can give them guaranteed income. Combined with natural hesitation about large financial decisions, this is leaving many retirees unclear on their spending capacity and holding them back from plans that could help them enjoy the retirement they’ve worked hard for.”

These same patterns have played out consistently across decades of experience for Allianz in the United States at greater scale. In a 2024 survey by the Allianz Centre for the Future of Retirement, 85% of respondents said they find it easier to spend when they know their basic needs are covered, with 68% saying that the fear of unexpected expenses prevents them from wanting to spend money.

The white paper outlines the benefits of guaranteed income solutions, and the positive impacts for retirees when their advisers include these products as an option in their planning discussions.

“New-era retirement income solutions offer flexible access to capital and growth with downside protection not seen in older-style annuities.” Mr Kane said.

“Advisers who can help their clients distinguish between what is genuinely irreversible and what merely feels that way will materially shift their clients’ willingness to act, and will ultimately improve both their clients’ financial and emotional security.”

The ‘Two-Chapter Retirement’ framework represents a new paradigm for retirement planning. Recognising this two-chapter mindset is essential because it shapes how clients respond to advice, perceive risk and evaluate strategies from the outset. Viewing retirement planning through this lens allows advisers to better support their clients as they balance the desire to live well today with the need to secure tomorrow.

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Ada significantly reduces the adviser and paraplanner learning curve and product analysis process.

Allianz Retire+ launched a market leading Al powered assistant to transform how advisers engage with its retirement income solution, Allianz Guaranteed Income for Life (AGILE), empowering them to deliver better retirements for their clients.

What advisers have told us is that retirement solutions can sometimes be complex and time consuming to understand and compare. To bridge the gap in product awareness and make technical details more accessible, we have partnered with V2 Al, a leading data and Al consultancy, to create a market first in building an Al tool for financial advisers, paraplanners and the financial services community.

The Adviser Digital Assistant, or Ada, is an interactive, conversational Al tool designed to help understand AGILE in a simple, engaging, and intuitive way. Moving away from time consuming and dense documentation by creating a space where advisers can build knowledge on their own terms was our goal. Ada significantly reduces the adviser and paraplanner learning curve and product analysis process, delivering contextual education precisely when and where it’s needed, shifting adviser enablement from static learning to dynamic, embedded support.

Importantly, Ada is built on enterprise-grade tooling with robust guardrails to ensure the highest standards of quality and accuracy.

David Kane, Chief Executive Officer, Allianz Retire+, said: “Ada adds another market leading differentiator to our AGILE product.

“We’ve listened to advisers and recognised that for them to effectively solve for their clients’ retirement needs, they first need a frictionless way to master the tools at their disposal. Ada will allow advisers to ask questions and receive robust answers within seconds, freeing up their time to focus on building better retirements for their clients.”

“We appreciate the important compliance obligations associated with providing financial advice and have developed Ada with these in mind. Leveraging Amazon Bedrock, Ada is built on enterprise-grade tooling with robust guardrails to maximise accuracy and quality.”

Craig Howe, Chief Executive Officer, V2 Al, said: “Through our partnership, we have developed an enterprise-grade intelligent, Al-led solution that revolutionises how Financial Advisers engage with Allianz Retire+. Built as an AWS-native Al capability, Ada leverages the power of Anthropic Claude via AWS Bedrock, ensuring robust data security, seamless functionality, a user-centric experience,
and full control over its roadmap.”

The retirement income market is becoming increasingly relevant for Australians, however the complexity of traditional documentation and supporting materials can create uncertainty. Ada addresses a critical gap in the market by offering a dynamic experience to make complex retirement income concepts more accessible for advisers and their clients.

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Advisers need to be able to help their clients understand and navigate the six stages of retirement.

Retirement marks a truly significant transition in one’s life, representing the culmination of years of hard work, diligent saving, and careful financial planning. This period is far more than just the end of a career; it is a profound pivot point.

While retirement is often eloquently described as a journey, it is critical to recognise that this journey does not simply conclude with the cessation of formal employment. Instead, it evolves dynamically into a complex new phase of life that demands careful navigation to ensure a client’s continued wellbeing, fulfillment and importantly, financial security.

Beyond merely focusing on traditional investment and financial management, comprehensive retirement planning must encompass a broader spectrum of emotional, social and psychological considerations for each client. In this expanded context, the role of a trusted financial adviser naturally transcends traditional investment strategies and extends deeply into providing holistic support for the client’s overall life wellbeing.

As individuals initially enter retirement, they frequently find themselves grappling with a myriad of uncertainties and necessary adjustments. Pressing questions about future lifestyle changes, evolving health needs, maintaining social engagements, and, critically, their sustainable spending capacity, all demand immediate and focused attention.

In this unfamiliar and often challenging landscape, skilled financial advisers instinctively become trusted and indispensable guides. Their support spans from fostering a comprehensive understanding of all available financial resources through to providing crucial emotional support during these major life transitions. Advisers, therefore, play a pivotal role to empower retiree clients to lead genuinely fulfilling and self-directed lives.

Despite how it is often portrayed, retirement is anything but a single, monolithic event. Those who are actively living through it – as well as their financial advisers – know this reality. It has been established through research dating back to the 1980s^[1], and since ratified by more recent, thorough studies, that retirement comprises distinct and identifiable stages. Each one of these stages possesses its own unique characteristics, presents its own specific set of challenges, and requires a tailored advisory approach. Furthermore, the exact amount of time a client spends within any given stage is highly unique to them, varying significantly depending on a wide range of individual personal and financial factors.

The comprehensive cycle begins with the preparatory stage, known as pre-retirement, which leads into the second stage: the actual retirement event itself, whether that occurs as a carefully planned or an unexpected transition. This momentous shift is then traditionally followed by the initial honeymoon period of retirement, which can then give way to a period of disenchantment as the new reality sets in. This is then followed by a necessary reorientation period. Finally, the retiree reaches the settling stage, establishing a new sustainable routine and pace of life that will continue to evolve and adapt throughout the rest of their retirement years.

Stage one: Pre-retirement

The first phase in the retirement process, as identified by scholars such as Robert Atchley^[1], is the pre-retirement stage. This is far more than simply being the final years of employment; it is a vital, intentional period of transition where individuals begin the essential, gradual process of mentally and practically disengaging from their professional lives.

During this time, clients actively start to envision and map out their post-employment existence, moving beyond vague aspirations to taking concrete steps toward comprehensive financial, emotional and logistical readiness. A key component of this preparation often involves exploring formal strategies, such as a ‘transition to retirement’ strategy, designed to ease the shift from full-time work to a new life structure.

It’s also a time when clients may feel the first flutter of fear about their retirement funding. FORO – the fear of running out – is real. Years of inflation coupled with more recent market volatility have reinforced the notion that while people may live longer, there’s no guarantee their retirement savings will stretch that far.

Therefore, at this pre-retirement stage, your role as a trusted financial adviser is paramount. An adviser’s mandate is to guide their clients through a complex myriad of decisions, all aimed at laying the robust groundwork for a secure, comfortable and fulfilling future. This advisory work begins with a thorough and comprehensive assessment of the client’s current financial standing against their anticipated future retirement needs. This assessment must consider the specific income stream required to meet the client’s lifestyle objectives throughout what may be an extended retirement period.

A core component of your value here is to provide clients with an unambiguous and clear understanding of their financial position. By quantifying their current standing and projecting future requirements, you can empower your clients to make fully informed decisions and take proactive steps to bridge any identified gaps between their existing assets and their desired retirement lifestyle.

With increased longevity now meaning retirement may span twenty-five years or more, careful planning is crucial. To provide clients with a strong certainty of income across this extended duration, it is essential to lock down decisions about sustainable income generation during the pre-retirement stage, which includes a detailed consideration of the most suitable retirement income products.

For many clients, the focus shifts to ensuring reliability. Products that offer the certainty of a guaranteed lifetime income, ideally coupled with reasonable access to capital and some form of capital protection, can provide substantial peace of mind as they approach the official end of their working careers. You must expertly weigh the client’s risk tolerance, longevity projections, and income needs to select and implement solutions that maximise financial security while minimising worry. This income planning is the bedrock upon which the entire retirement structure is built, making this stage the most financially intense part of the advisory relationship.

However, the guidance offered in the pre-retirement stage extends far beyond pure financial planning. You can also assist clients to create a structured retirement master plan that intentionally encompasses not only quantifiable financial goals but also personal aspirations and desired lifestyle preferences.

This holistic planning might involve reviewing optimal healthcare and insurance options, as well as collaboratively devising plans for future leisure activities, extensive travel, or meaningful volunteer work. By delivering a tailored retirement plan that aligns precisely with each client’s unique needs and aspirations, you help foster a crucial sense of purpose and fulfillment in the pre-retirement phase, thereby ensuring a smooth, confident transition into retirement and laying the strongest foundations for a secure and satisfying future.

Stage two: The ‘Near’ phase

The Near Phase is the stage immediately surrounding the actual cessation of employment, often referred to as the ‘retirement event’. Ideally, this event is the culmination of years of planning and anticipation, signifying a significant and welcome life transition characterised by freedom and leisure. However, in less ideal scenarios, clients may be forced into retirement due to unforeseen and unplanned events.

Planned retirement

For clients with a structured transition plan, this phase involves finalising financial arrangements. This typically includes setting up income streams from superannuation funds and retirement income products to ensure the client’s desired lifestyle is maintained. Your guidance is essential here for factoring in critical risks such as inflation, market volatility, as well as longevity and sequencing risk.

Unplanned retirement

Unforeseen events can significantly impact a client’s readiness. Of the 156,000 Australians who retired in 2024-2025, 13 percent left work earlier than planned due to sickness, injury or disability and six percent found themselves retrenched or dismissed and unable to find alternative employment^[2].

Your role is critical when it comes to helping clients navigate these unexpected challenges. This involves providing guidance on contingency planning and evaluating appropriate insurance coverage. Clients benefit greatly from the early implementation of flexible retirement income strategies, which better position them for an unplanned exit from the workforce.

The retirement event brings a host of complex financial, emotional and logistical considerations. Beyond the technical financial strategies, you may find yourself providing emotional support and reassurance during times of uncertainty, helping clients adapt to their changing circumstances while staying focused on their long-term financial goals.

Stage three: The honeymoon period

The honeymoon period immediately follows the retirement event, marking a period of newfound freedom and intense relaxation where clients actively savour the fruits of their labour by engaging in desired activities. This period is often characterised by travel, hobbies and anything that brings your client enjoyment.

The duration of this phase is highly individual, potentially lasting anywhere from six months to several years, as each client’s unique experience and enthusiasm determine its length. Despite the initial euphoria and high activity level, this time requires clients to maintain a critical sense of financial stewardship to ensure their new, active lifestyle is financially sustainable over the long term.

Your strategic guidance is indispensable here; you can help clients enjoy this stage without inadvertently depleting their assets through overspending. A key action is to establish a sustainable spending plan that aligns their desires (discretionary spending on travel and entertainment) with their reliable retirement income, while firmly securing essential needs like housing and healthcare.

This period is also crucial for optimising investment portfolios to manage risk and returns, as significant market drawdowns early in retirement can severely jeopardise long-term financial outcomes. By providing this guidance, you enable clients to maximise their enjoyment and freedom while they are young and in good health, without compromising their future financial security.

Stage four: Disenchantment

Fortunately, this phase does not affect all retirees, but for those it does, it typically follows the initial excitement of the honeymoon period. This stage is marked by a letdown when the reality of retirement fails to meet earlier, often idealistic, expectations. Common symptoms include feelings of boredom, isolation, anxiety and disillusionment. These feelings are often provoked or exacerbated by financial concerns or the loss of the structure and social identity provided by work.

In this challenging period, your role often extends beyond financial oversight to become a holistic guide helping the client reconnect with purpose and stability. If a client does become disenchanted, a fundamental step is to initiate a comprehensive reassessment of the client’s current situation and their initial retirement goals.

At the same time, you can conduct an open and non-judgmental conversation to gain insights into the client’s sources of dissatisfaction. What is and isn’t working? Does the disenchantment stem from financial anxiety or non-financial factors?

This provides you with an opportunity to help your client readjust their priorities and expectations. This might involve revisiting the financial plan, adjusting the spending plan to alleviate monetary pressure or confirming that the current plan is robust, thereby assuaging anxieties. The goal is to move your client from generalised dissatisfaction to actionable steps.

Where disenchantment stems from a loss of purpose, you can facilitate solutions by exploring avenues for personal fulfillment and engagement that lie outside the financial portfolio. You could discuss potential structured activities such as a return to part-time work or consulting or pursuing volunteering opportunities that align with their personal values. Both options can help provide your client with a sense of meaning and contribution.

By encouraging clients to cultivate and maintain a strong sense of purpose and structure in their daily lives, you provide essential support that supports your client to transition out of disenchantment and move towards the next, more stable stage of reorientation.

Stage five: Reorientation

This phase follows the potential emotional dip of disenchantment. It is a period where clients, having recognised that their initial retirement assumptions or expectations were perhaps a little flawed, begin to construct a new, more realistic and satisfying lifestyle. This involves questioning their post-retirement aspirations and making deliberate lifestyle choices that align with their needs and long-term financial reality. While proactive engagement in comprehensive retirement planning well in advance of the retirement event can significantly mitigate uncertainty and facilitate a smoother transition into this phase, you can also play an important role in guiding this recalibration.

The core task during reorientation is helping your client cultivate a new sense of purpose and direction in their post-work life. You can do this by engaging clients in a deep exploration of their interests; the activities, relationships or causes that provide genuine meaning and fulfillment. Although this ideal exploration begins years before retirement, it must be revisited and adjusted throughout the retirement lifecycle to ensure the client’s current lifestyle remains aligned with their evolving personal and financial objectives.

By skilfully integrating financial projections to ensure sufficiency and sustainability with lifestyle preferences, you can assist clients to make informed, deliberate decisions that actively support their long-term personal and financial wellbeing and sense of fulfillment.

Stage six: Stability

Sometimes referred to as the ‘Routine Phase’, stability is the stage where retired clients finally settle into a predictable rhythm of life that reflects their preferences, interests and core values. For some, this routine is established soon after leaving full-time employment; for others, it may only solidify after navigating the other earlier stages of retirement.

This stage is typically the longest, often lasting many years, and provides your clients with the enduring opportunity to fully embrace the lifestyle they have worked to envision and create. Even during this settled period, your role retains importance. As clients become comfortable in their routines, their financial needs and priorities continue to evolve, even if only incrementally. Importantly, this stage often sees the emergence of health issues, which can necessitate a reassessment of living arrangements (such as downsizing or moving to aged care) and a significant adjustment to required medical expenses.

A thorough review of retirement goals, income sources and spending patterns is fundamental to ensure that each client’s financial strategies remain aligned with their long-term objectives. Regular check-ins allow you and your client to make necessary adaptive adjustments as new opportunities or challenges arise.

Whether your client decides to pursue a new, costly pastime, undertakes an extended travel plan, or is suddenly faced with unexpected medical expenses, you can offer the essential guidance and support to adapt the retirement plan accordingly, therefore preserving both the client’s financial security and their peace of mind within their established routine.

Ultimately, the stages of retirement confirm that retirement is a complex, multi-faceted journey, not a singular financial event. For the modern retiree, the financial adviser is far more than a manager of assets; you are a continuous partner in life planning. Your role will dynamically shift across the stages: from the crucial tactical setup of income streams and risk mitigation during the near and honeymoon phases, to acting as a vital sounding board during the potential psychological struggle of disenchantment.

You provide the necessary structure for successful reorientation, helping your clients to define new purpose and recalibrate their expectations. By ensuring that financial stability consistently supports evolving lifestyle choices and personal fulfillment throughout, you can provide your clients with the structure and objective guidance necessary to not just fund their retirement but live it with confidence and meaning.

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Notes:
[1] Robert C. Atchley, Retirement as a Social Institution, Annual Review of Sociology, Vol. 8 (1982)
[2] ABS, Retirement and Retirement Intentions, Australia, 2024-25 financial year, October 2025

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at December 2025 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation, and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

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Get better prepared for conversations with your Gen-X clients about the decumulation phase of retirement.

This year, the first of Gen X will turn 60. Over the coming decade, waves of Gen X Australians will join the baby boomers in enjoying a longer, healthier retirement than their parents and grandparents. Funding those years continues to be a source of concern for many as they approach this new phase of life.

Just in the last month, ASIC has once again criticised superannuation trustees for failing to effectively communicate with members about retirement. The regulator warned that many funds rely on generic, pre-retirement messaging and miss opportunities to provide meaningful support once members retire.

In its review, Report 818 – From superficial to super engaged, ASIC found a widespread lack of urgency in improving retirement communications, leaving many Australians without the information they need to make confident, informed decisions. With 1.5 million people already in retirement holding around $575 billion in super assets – and another 2.5 million expected to retire in the next decade – ASIC has urged trustees to prioritise more targeted, timely and member-focused communication strategies^[1].

When clients retire and their regular employment income ends, in an ideal world they should not have to worry about inflation, market volatility, or how long their savings will last. Nor should they face the fear of outliving their money and having to be reliant solely on the Age Pension to get by.

While super funds may provide foundational communication regarding retirement savings, the complexity and personalisation required during the decumulation phase demand a more tailored approach. You’re positioned to know your client and understand their short, medium and longer-term financial and personal retirement objectives. Given that at 30 June 2025, approximately 25 percent of Australia’s $4.3 trillion superannuation pool were  held in self managed superannuation funds (SMSFs)^[2]., it’s likely that a proportion of your clients are trustees of their own fund and will need even more comprehensive guidance when members reach the pension phase.

‘New era’ retirement income products

The OECD’s biennial report on the pension systems across OECD and G20 countries tells us that Australia has the world’s fourth largest retirement system^[3].. The Reserve Bank of Australia notes that our superannuation system sits at about 150 % of GDP and that projections have put the ratio as high as 244 % of GDP by 2061^[4].

Despite the increasing size of super retirement balances, research consistently shows that money worries are a leading cause of anxiety for older Australians^[5].. The biggest fear expressed by retirees is running out of money; either because they outlive their savings or because it’s eroded by external factors such as market volatility or inflation, both of which have been painfully evident for several years.

When soon-to-be retirees are faced with traditional retirement income products, there are generally tough trade-offs to be made between income certainty and flexibility. Many of those traditional retirement products, based on life expectancy, left nothing for the estate for those who died earlier than expected, or for those who enjoyed longer lives, no income support.

New era retirement income products have addressed these issues. Research has consistently shown that FORO (the fear of running out) is a major concern, but longstanding concerns around complexity, cost, flexibility and growth potential of traditional retirement income products has led Australians to eschew the sector in droves. Failure to utilise retirement income product may result in retirees ‘self-insuring’, living a frugal life to ensure they don’t burn through their retirement savings.

There is a better way, and it is important that advisers (and yes, superannuation funds) highlight both the progress retirement income products have made and the important role they can play in a well-rounded retirement plan. It also highlights the need for clear information and education to help your clients understand and make the most of these products.

New era retirement income solutions – such as guaranteed lifetime income solutions – can provide your clients with greater confidence about their future. Lifetime income streams function as a form of insurance against the financial risks of outliving savings.

By allocating a portion of a client’s portfolio to a new era retirement income solution, particularly one where the amount of income payable is guaranteed, you can provide your clients with the peace of mind that comes from the knowledge that their budgeted essential expenses will be covered regardless of market conditions. Some of these retirement income solutions also provide flexibility that allows for partial or full withdrawals to manage unplanned expenses or a change in circumstances, which importantly, offers adaptability in retirement planning.

Being well-informed is the key to help your clients to overcome misconceptions and foster a deeper understanding of the benefits such products can offer. Let’s address the top five misconceptions.

Misconception: Guaranteed lifetime income products are exceedingly complex

Reality: Advancements in user experience have – and are continuing to – drive simplification

Driven by rapid technological innovation and a stronger focus on user-centric design, today’s retirement income products are evolving towards greater simplicity and accessibility. The era of deciphering dense financial jargon is fading. Instead, new era products embrace intuitive design that makes them easier to use and easier to explain to clients.

Traditional annuities have long been burdened by complexity, but new era solutions prioritise clarity and customer experience. With straightforward features and transparent structures, they eliminate much of the confusion that once left advisers and their clients uncertain.

A key advancement lies in how product features are communicated. Clear explanations, short instructional videos, as well as interactive tools and calculators help demonstrate potential income outcomes. These resources not only enhance your ability to illustrate benefits to your clients but also empower your clients to make more informed decisions about their retirement plans.

The perception that guaranteed lifetime income products are inherently complex is quickly becoming outdated. By placing simplicity and usability at the forefront, modern retirement income solutions are setting a new standard for an intuitive and accessible retirement planning experience.

Misconception: Guaranteed lifetime income products are expensive

Reality: Product innovation, cost efficient structures and economies of scale provide more attractive pricing

The costs of new era guaranteed lifetime income products have steadily declined in recent years, driven by continuous innovation and more efficient product structures. By harnessing advanced technology and sophisticated financial engineering, providers have created solutions that are not only more streamlined and reliable but also significantly more cost-effective to operate.

Digitalisation has been a key catalyst in this transformation. Through the use of technology across product design, delivery and management, providers are achieving economies of scale that were once out of reach.

From automated processes to digital distribution channels, every stage of the product lifecycle has been optimised to reduce overheads and enhance efficiency. As the retirement landscape evolves, your clients can look forward to more affordable and accessible ways to secure the certainty of a dependable lifetime income. 

Misconception: Guaranteed lifetime income products lack flexibility and accessibility

Reality: Traditional annuities may lack flexibility and accessibility; new era products do not

Complexity alone doesn’t explain the historically low take-up of annuities in Australia. Traditional products have also been held back by rigid structures, limited flexibility, high costs and the inability to access capital when needed.

New era lifetime income products have transformed this landscape. They address the shortcomings of traditional retirement income products by combining the certainty of lifetime income with the flexibility to access capital. This offers your clients a compelling balance of security and control.

Unlike traditional annuities, investors no longer face an “all or nothing” decision between guaranteed income and liquidity. These modern solutions provide a dependable income stream in retirement while preserving the ability to draw on capital to meet unexpected expenses.

Flexibility now extends well beyond basic withdrawals. Many products allow your clients to tailor their income streams; to adjust payment frequency, incorporate inflation protection, or customise other features to suit their individual circumstances.

By combining reliability with adaptability, new era retirement income products deliver a powerful solution for clients seeking financial confidence without compromising access to their assets.

Misconception: Guaranteed lifetime income products have limited growth potential

Reality: Retirement income planning should (and can) include growth potential and protection

Retirement planning isn’t only about securing a steady income. It’s also about achieving the right balance between growing assets and protecting against downside risks. As your clients approach retirement, they face the dual challenge of building sufficient wealth to support their lifestyle while guarding against the uncertainties that can erode their savings over time.

Traditionally, investors have relied on growth assets such as equities and managed funds to build their retirement nest egg. While these assets offer strong return potential, they also carry significant market volatility risk, which can pose risks during the drawdown phase and threaten the sustainability of retirement income. Most of your clients will be all too familiar with that in the current environment.

Recognising the need for greater balance, some new era retirement income products integrate growth potential with built-in downside protection. By combining elements of both, they offer your clients the opportunity to benefit from market gains while reducing or even eliminating exposure to downturns.

As part of a diversified portfolio, these products can help clients maintain purchasing power, mitigate the effects of inflation and enjoy a reliable income stream – all with reduced volatility.

Retirement income planning no longer needs to be a trade-off between growth and security. With innovative new era solutions, investors can pursue both and achieve long-term financial confidence without sacrificing protection.

Misconception: Clients aren’t asking for guaranteed lifetime income products

Reality: When presented to clients, or when the question is reframed to specify guaranteed lifetime income, clients do want the features offered

Many of your clients will have a sense of what they want or need from their retirement income solutions, even if they can’t always articulate the specific features or benefits they’re seeking. Clients also tend to have a very clear understanding of their concerns.

A 2025 retirement readiness survey^[6]. identified the three primary factors that impact Australians’ readiness to retire. They are, in order of concern:

1. Inflation
2. The economy
3. Health care expenses

Research has consistently found that Australians favour flexibility in the early years of retirement, balanced by greater security in later years. This aligns closely with the principles of the Retirement Income Covenant, which aims to:

• Maximise expected retirement income
• Manage risks to the sustainability and stability of that income
• Provide flexible access to funds throughout retirement

However, it seems that a gap remains between retirees’ desire for income certainty and the explicit demand from super funds and financial advisers for guaranteed lifetime income products to address that desire.

A range of behavioural factors influence how individuals approach the decumulation phase. Inertia can lead investors to maintain the status quo even when better options exist, while present bias can drive short-term decisions at the expense of long-term security.

Despite these behavioural hurdles, evidence consistently shows that familiarity breeds confidence: as investors, advisers and funds gain a better understanding of the benefits of guaranteed lifetime income, their interest and adoption rates increase.

The key takeout is simple: the better informed your clients are, the more open they will be to solutions that meet their needs, both now and in the future.

Retirement planning can be complex, but challenging outdated perceptions and utilising new era guaranteed lifetime income products can give clients confidence. These products provide a reliable, sustainable income stream to support their desired lifestyle throughout retirement.

New era guaranteed lifetime income products represent a significant opportunity in retirement planning. They combine simplicity, affordability, flexibility and growth potential in a single, comprehensive solution. Advances in technology, innovative product design and a focus on user experience have made these products more accessible and user-friendly than more traditional retirement income solutions.

Not all income is created equal; designing a retirement portfolio requires an understanding of spending hierarchies and income sources, as well as an understanding of structures and solutions to deliver retirement income. These new solutions directly address many of the core challenges of retirement planning. They offer guaranteed lifetime income while providing opportunities for capital growth and protection against market volatility and longevity risk. By balancing growth and security, your clients can build wealth for retirement while mitigating financial uncertainties.

As awareness grows, more Australians are likely to recognise the value of guaranteed lifetime income products as a central component of a robust retirement strategy. With the right strategies in place, you can empower your clients to navigate the complexities of retirement with confidence and clarity.

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Notes:
[1] https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-235mr-asic-sends-clear-message-to-super-trustees-amid-glaring-retirement-communications-gaps/
[2] https://www.apra.gov.au/news-and-publications/apra-releases-superannuation-statistics-for-june-2025
[3] OECD Pensions at a Glance, 2023
[4] The Future Size of the Super Sector, RBA, December 2024
[5] R Dinham, ‘A close look at retiree fears and expectations’, Firstlinks, 3 February 2021
[6]  https://www.ssga.com/au/en_gb/institutional/insights/global-retirement-reality-report/bridging-the-confidence-gap-australia-snapshot

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at October 2025 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation, and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

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Understanding your clients’ investment behaviour in retirement to better target your communications, education and insights.

To best understand how and why clients make financial decisions – particularly during retirement – advisers must look beyond technical strategies and consider investor behaviour. Before addressing product selection or income structures, it is crucial to explore the psychological and emotional factors that underpin financial decision-making.

Human behaviour is inherently shaped by a range of cognitive biases, behavioural ‘blinkers which can distort judgement and lead to suboptimal decisions, especially during periods of transition such as retirement. For advisers, the ability to recognise and pre-empt these biases is essential. Doing so not only enhances the advice relationship but also helps clients build confidence, make clearer decisions and achieve greater financial certainty.

This is where behavioural finance becomes an invaluable lens. It examines how real people make financial choices. It acknowledges that many investors are influenced by emotions, limited self-control and subconscious biases. In retirement, these influences can become even more pronounced. Emotion, rather than logic alone, can drive key decisions: when to retire, how to draw down savings, how much to spend and how to react to market volatility. Left unexamined, behavioural tendencies can erode a retiree’s sense of control, affect their spending or investment decisions, and ultimately impact whether they enjoy lasting financial security or risk outliving their savings.

To help clients navigate this, advisers must not only understand behavioural patterns, but they must also frame their advice through the lived experience of retirement. This involves recognising that retirement isn’t a single event, but a multi-phase journey marked by shifting priorities, needs and emotions.

The six stages of retirement

1. Pre-retirement: This stage is marked by a gradual transition away from work and early planning for the future. Individuals begin envisioning their retirement lifestyle and take steps to ensure financial and emotional readiness. Advisers play a central role in assessing financial readiness, exploring income strategies and addressing lifestyle goals.  A personalised retirement plan that incorporates both financial goals and lifestyle preferences, including healthcare, insurance and leisure, lays the foundation for a successful retirement
2. The big event: Whether planned or unexpected, retirement itself marks a major life transition. Advisers help finalise income streams, manage risks such as inflation and longevity, and provide emotional support — particularly in cases of unplanned retirement due to job loss or health issues.
3. The Honeymoon Period: In the early years of retirement, many clients enjoy newfound freedom. This “honeymoon” phase can last months or years, varying greatly among individuals. While retirees indulge in travel and hobbies, advisers help them create sustainable spending plans and ensure essential expenses are covered. Guidance on managing investments during this time is crucial, especially to protect against early market downturns that could jeopardise long-term financial health.
4. Disenchantment: For some, initial excitement fades and is replaced by uncertainty or dissatisfaction, often related to identity, purpose or finances. Advisers can help by revisiting financial and lifestyle plans, realigning goals, and exploring new avenues for engagement such as part-time work or volunteering. This stage is about helping clients rediscover purpose and adapt to the realities of retired life.
5. Reorientation: This is a time for self-reflection and adjustment and clients begin to redefine what retirement means to them. Advisers assist with recalibrating lifestyle and financial plans to reflect evolving values and aspirations, ensuring alignment with long-term objectives. Regular check-ins ensure plans remain relevant and meaningful as priorities shift.
6. Retirement Routine: Clients settle into a lasting rhythm. This phase, which may last many years, still requires active financial oversight. Advisers continue to review financial strategies, manage health-related needs, and help clients adapt to emerging opportunities or challenges. Adjustments might include changing living arrangements or reallocating funds to match new goals or circumstances.

Behavioural insights

A study by Professor Shlomo Benartzi of UCLA^[1], sponsored by Allianz of America, highlighted key behavioural insights for retirees. Knowing these can help you guide clients past common biases for better outcomes, whatever their stage of retirement.

Behavioural insight one: Framing

Framing refers to the way people interpret information based on how it’s presented, rather than on the objective facts alone. In retirement, as clients shift from growing their wealth to generating income, it becomes essential to reframe financial conversations accordingly.

For example, asking a retiree to calculate the investment return they need to meet annual expenses may feel abstract or disconnected. In contrast, asking how much income they need each month to cover their bills is more tangible and relatable. In this context, how the conversation is framed can significantly influence the client’s understanding, mindset, and decision-making. The right framing can help clients focus on what truly matters: financial stability and confidence in retirement.

Behavioural insight two: Vividness

Imagining life 20 years into the future can be difficult — yet that’s exactly the mindset clients need when making financial decisions about retirement.

A study by Professor Daniel G. Goldstein and the London Business School explored this concept by using virtual reality. Participants viewed an age-morphed version of themselves in a mirror and were then asked to allocate funds between current expenses and a retirement account. Those who saw their future selves were more than twice as likely to contribute to retirement savings than those who saw their present-day reflection.

While advisers don’t need VR technology to create impact, similar outcomes can be achieved through practical tools, scenario-based case studies and real-life comparisons. These methods help clients connect emotionally with their future selves, making it easier to understand how today’s financial choices can directly shape their future lifestyle and sense of security.

Behavioural insight three: Hyper loss aversion

Hyper loss aversion describes the heightened sensitivity to financial loss that often increases with age. While individuals in the accumulation phase typically fear losses about twice as much as they value gains, retirees may fear losses up to ten times more. This amplified fear can significantly distort decision-making, particularly when faced with market volatility or the prospect of negative returns.

For retirees, the emotional weight of potential loss can lead to overly conservative or reactive investment choices, which may jeopardise long-term outcomes. That’s why maintaining a sense of control and flexibility is critical. A well-constructed retirement portfolio should include solutions that offer income with a high degree of certainty, helping clients feel more secure and in control of their financial future.

Importantly, retirement strategies must be designed with behavioural realities in mind. Addressing loss aversion, especially in clients who are hyper-sensitive, requires balancing emotional comfort with protection against retirement-specific risks such as longevity and sequencing risk. By doing so, advisers can help clients make more confident, resilient financial decisions in retirement.

Behavioural insight four: Cognitive impairment

While ageing brings valuable experience and insight, it can also affect cognitive function and decision-making abilities. Research has shown that older adults often experience a decline in analytical cognitive functioning; the capacity to learn, reason, remember and solve problems. The same study also revealed a significant drop in financial literacy, including difficulties with numeracy and interpreting visual data like charts and tables.

For retirees, this decline can make it especially challenging to grasp complex financial concepts such as sequencing risk and its potential impact on their retirement savings. When cognitive ability diminishes, even well-informed individuals may struggle to make sound decisions about managing and protecting their income.

To support clients in maintaining financial security and confidence in retirement, it’s important to encourage early and proactive planning. This can include:

1. Locking in a retirement strategy as early as possible to reduce the need for complex decisions later in life.
2. Considering capital protection measures to safeguard retirement savings from significant losses.
3. Securing a regular income stream, ideally through solutions that offer guaranteed lifetime income.
4. Maintaining access to capital to provide flexibility for unexpected expenses or changing needs.

By taking these steps, advisers can help clients protect their financial wellbeing and reduce the cognitive burden of managing complex decisions later in retirement.

Behavioural insight five: Tangible mental accounts

The fear of outliving retirement savings and experiencing investment losses is very real for retirees who rely on their existing assets to generate regular income. At the same time, they may also require access to capital; for example, for unexpected medical expenses or lifestyle goals such as travel.

A practical way to help clients manage these competing needs is by identifying their specific goals and dividing them into separate ‘buckets’. This mental accounting approach allows clients to clearly see how their money is allocated, making it easier to control spending and tailor investment strategies to match each purpose.

For instance, a bucket designated for essential expenses – such as utilities, medications, and groceries – can be invested conservatively to prioritise stability and security. In contrast, a bucket for discretionary spending – such as holidays or luxury purchases – may be invested with a higher risk tolerance to seek growth.

This can be taken a step further by labelling these buckets with meaningful names (e.g. “Everyday Living,” “Health and Care,” “Travel Dreams”) – this adds a personal and emotional connection. It makes the strategy more relatable, helps reinforce spending discipline and provides a clear framework for ongoing conversations about needs, lifestyle goals, and how to best align investments with both.

Behavioural insight six: Inertia

In behavioural finance, inertia refers to the tendency to stick with the status quo, often driven by fear of making the wrong decision, a sense of being overwhelmed, or simply a preference for the familiar. This resistance to change can lead to inaction or a reluctance to revisit past choices, even when circumstances suggest a different course would be more beneficial.

Inertia can be particularly problematic in retirement planning. It may cause clients to delay important financial decisions, avoid necessary portfolio adjustments or remain in underperforming investments.

However, inertia isn’t always negative. In some cases, it can work in a retiree’s favour. For example, by preventing them from reacting emotionally to short-term market fluctuations and abandoning a sound long-term strategy.

Understanding what’s driving inertia – whether fear, decision fatigue, or a desire for comfort – is key to helping clients move forward. Dislodging these behaviours often requires more than logic; it requires tapping into emotional motivation.

Advisers can turn inertia into a tool by setting up default strategies that support good outcomes. Additionally, breaking major changes into smaller, more manageable steps can reduce resistance. Clients are more likely to accept a series of small adjustments than a single large shift. This approach provides a sense of control and reduces decision anxiety, making it easier for retirees to act, even if that action is simply staying the course on a well-constructed plan.

Behavioural insight seven: Evaluability

Evaluability refers to our natural tendency to prefer making decisions based on simple, like-for-like comparisons. When faced with two options, one easier to understand than the other, people often choose the simpler option, even if it’s not the most suitable for their needs. This bias can lead to decisions based on ease of evaluation rather than actual value or effectiveness.

Professor John Payne of Duke University^[2] highlights that to counter evaluability bias in retirement income planning, advisers should adopt a new approach to communication – one that frames product features and outcomes in measurable, relatable terms. This means avoiding unnecessary complexity or industry jargon and instead presenting clear, quantifiable comparisons that are relevant to each client’s personal circumstances.

Using an “apples-with-apples” comparison approach can help clients better assess options, but it’s equally important to contextualise those options within the client’s broader retirement goals. Without this context, there’s a risk that more complex, yet potentially more suitable, solutions are dismissed simply because they’re harder to evaluate.

In retirement planning, this bias can lead to missed opportunities. To keep things simple, clients may reject sophisticated products that offer better protection, income certainty, or longevity management. As retirement income products continue to evolve, advisers need to help clients see beyond surface-level simplicity.

It is important that you and your clients remain open-minded. Many modern retirement solutions come with inherent complexity, but when evaluated through a structured lens, considering likely benefits, consequences and costs, their value becomes clearer. Interactive tools, scenario simulators or case studies can help translate complex options into relatable, real-world outcomes. This makes it easier for clients to understand and engage with the best strategy for their retirement.

Behavioural insight eight: Money illusion

Most people underestimate the long-term impact of inflation on their retirement savings. They tend to think in nominal dollars – focusing on current prices – rather than adjusting for how inflation erodes purchasing power over time. This can have serious consequences for a retiree’s standard of living and overall quality of life.

The value of a dollar today won’t be the same in 10, 15 or 20 years. Even modest inflation rates can significantly diminish purchasing power. For example, a three percent inflation rate compounded over 10 years reduces purchasing power by around 25 percent. Over 20 years, that same rate can cut it by nearly half. For retirees on a fixed income or drawing from a set pool of savings, this erosion can mean falling short of covering essential expenses like healthcare, housing or everyday living costs.

This disconnect is known as the money illusion – the tendency to focus on nominal dollar amounts rather than real (inflation-adjusted) values. Research has shown that people often base decisions on the face value of money, overlooking how inflation affects its actual worth. For instance, preferences between inflation-indexed and non-indexed income streams can shift dramatically depending on how the risk is framed.

Fortunately, the money illusion can be mitigated. The same study found that when the effects of inflation on real dollars were clearly demonstrated, people were more likely to make informed, rational choices. This highlights the importance of how information is presented.

For advisers, helping clients understand the true, inflation-adjusted value of their future income is essential. Using simple tools or visual aids to show how inflation impacts long-term purchasing power can lead to better decisions – and help ensure clients are financially prepared not just for retirement, but for the decades that follow.

Behavioural finance checklist

Behavioural finance has the potential to reshape the financial lives of retirees and can help add a human dimension to the design of a client’s retirement income strategy. The following checklist^[3] has been designed to provide a practical framework of questions to explore with clients to help overcome these common bias and cognitive behaviours.

The checklist provides a question derived from each of the above insights.

1. Is the retirement income strategy framed in terms of the monthly income a retiree will receive?
2. Are the implications of today’s financial decisions vividly presented so clients see how their future life will be affected?
3. Is the strategy appropriate for retirees who are hyper-sensitive to losses?
4. Are the number and complexity of choices manageable for older individuals?
5. Can retirement income decisions be made before the onset of cognitive impairment?
6. Do your clients’ retirement income strategies offer flexibility for multiple accounts to facilitate different goals, such as paying the rent or spending money on holidays?
7. Are retiree investors, carried by inertia, assigning themselves to the most appropriate investment options?
8. Does the language and context used to describe the retirement income strategy make it easy to evaluate its features as they relate to the client?
9. Does the retirement income strategy provide some inflation protection?

The transformative power of behavioural finance goes far beyond theory – it has real, lasting implications for the financial wellbeing of your clients. By weaving behavioural insights into the advice process, you can strengthen retirement income strategies while addressing the human factors that so often drive decision-making.

Retirement is not a single event, but a dynamic and evolving journey made up of distinct stages, each bringing its own challenges, emotions and financial considerations. Recognising the behavioural biases that can shape your clients’ choices is key to helping them avoid common pitfalls and stay aligned with their long-term goals.

By combining a deep understanding of investor behaviour with a structured approach to the six stages of retirement, advisers can offer more personalised, empathetic and effective guidance. This empowers clients to face both the emotional and financial complexities of retirement with greater clarity and confidence and ultimately support a retirement that is not only financially secure, but personally fulfilling.

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References:
[1] Behavioural Finance and the Post-Retirement Crisis, Shlomo Benartzi, UCLA, 29 April 2010
[2] Simonson, I., Bettman, J. R., Kramer, T., & Payne, J. W. (2013). Comparison selection: An approach to the study of consumer judgment and choice. Journal of Consumer Psychology
[3] Behavioural Finance and the Post-Retirement Crisis. Prepared by Shlomo Benartzi, UCLA. Sponsored and submitted by Allianz of America, 29 April 2010; A Behavioural Finance Checklist for Retirement Income Strategies

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at August 2025 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation, and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

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What are the retirement income strategies available for your clients?

There’s a wide variety of income strategies used across the market, with an equally wide variety of labels attached to these strategies. Each varies in complexity, its ability to mitigate the unique risks of decumulation and the degree of personalisation available.

Ranked in order of complexity and personalisation (lowest to highest), these strategies include:

1. The same strategy and asset allocation as used in accumulation
2. A more conservative allocation
3. Simple bucketing
4. Complex bucketing
5. Income layering

Terms such as ‘layering’ and ‘bucketing’ are frequently heard, although the definitions applying to these terms are not always consistent.

Common retirement income strategies

Bucketing strategies

A bucketing strategy aims to balance the need for ongoing income, capital preservation and capital growth throughout retirement by establishing and maintaining different pools of savings, each with their own purpose and liquidity needs. The central idea is to divide retirement savings into separate “buckets,” each with a specific purpose, time horizon and risk profile. The objective of a bucketing strategy is to ensure that retirees have sufficient liquidity to meet short-term needs, while still allowing a portion of their portfolio to grow over the long term.

A basic bucketing strategy typically consists of three buckets:

1. The short-term bucket: This is the most liquid portion of the portfolio, usually containing cash or cash equivalent investments. Its primary function is to provide stable and reliable income for immediate living expenses and typically covers the next one to three years. Because these funds need to be readily available, this bucket is invested for stability not growth and is therefore generally immune from volatility.
2. The medium-term bucket: This bucket serves as a bridge between short-term needs and long-term growth. It usually includes a more conservative or balanced portfolio, to strike a balance between income stability and some potential for capital appreciation. It typically covers a time horizon of three to seven years and may be used to replenish the short-term bucket as needed.
3. The long-term bucket: Designed for capital growth, this bucket contains higher-risk investments such as equities or growth-oriented managed funds or ETFs. It is intended to fund the later stages of retirement and combat inflation and longevity risk. Because of its longer investment horizon – typically more than seven years – this bucket can ride out market fluctuations, with the understanding that positive returns over time will support future income needs. Positive returns from the long-term bucket can be used to top-up or repair the short-term bucket. If the market falls, the aim is not to sell from this bucket.

When managed properly, this strategy allows retirees to draw income from the short-term bucket while giving the medium- and long-term investments time to recover from market downturns. More sophisticated versions of the strategy may involve additional buckets, each aligned with specific financial goals, and a more dynamic approach to rebalancing and replenishing the buckets based on market conditions and life events.

Layering strategies

Layering is a retirement income strategy that focuses on building financial security through distinct layers of income, each tailored to meet specific types of expenses or financial goals. Unlike bucketing, which is primarily an asset allocation approach based on investment time horizons and liquidity, layering involves aligning different types of financial products with the purpose of generating income to support various lifestyle needs throughout retirement.

Each “layer” corresponds to a different category of retirement spending:

1. The basic layer: This layer covers essential, non-negotiable living expenses such as food, housing, utilities and transportation. These are the costs that must be met consistently, regardless of market conditions or personal circumstances. Income for this layer is ideally sourced from stable, predictable products such as the Age Pension or guaranteed retirement income streams.
2. The contingency layer: This is designed to cover unexpected or irregular expenses, such as emergency medical costs, home repairs or the replacement of major appliances. Flexibility is key here, and funds for this layer often come from more liquid or easily accessible accounts, such as an account-based pension or savings account.
3. The discretionary layer: This layer funds the retirement lifestyle elements, expenses such as travel, hobbies, dining out or gifting. As these are not essential expenses, this layer can generally tolerate more risk and variability in income, although that may be dependent on the client’s retirement objectives. The discretionary layer is often supported by investment income from superannuation or other investments.
4. The legacy layer: For those who wish to leave a financial legacy, this final layer is aimed at estate planning and providing for beneficiaries. This can be achieved through investments, trusts or insurance-based products.

Innovative income stream products and annuities are increasingly being used to support this structured approach. Layering typically provides retirees with a flexible and resilient framework to navigate financial needs as they evolve over time.

Towards more retirement-risk aware strategies

Other common retirement income strategies include:

Protected income approach

The protected income approach focuses on ensuring a stable, predictable income stream to cover essential living expenses, regardless of market conditions or longevity. Central to this approach is the use of annuitisation, both immediate and deferred, to create a reliable income “floor” that safeguards clients against the risk of outliving their savings or experiencing substantial losses during market downturns.

At its core, the protected income approach aims to deliver downside protection in retirement by locking in a guaranteed income stream. This is particularly important for covering non-negotiable expenses such as housing and food. By securing income for these essential needs, your clients can gain peace of mind, knowing that their basic lifestyle is not dependent on market performance.

Total return approach

The total return approach involves drawing income from a diversified investment portfolio, rather than relying on fixed or contractual income sources such as annuities. This strategy is typically suited to individuals who value flexibility, prefer to retain control over their capital, and are comfortable managing a certain level of investment risk in exchange for potentially higher long-term returns.

Under the total return approach, clients would generate income by combining interest, dividends, and capital gains from a well-diversified portfolio. Capital growth helps preserve the portfolio’s longevity, counter the effects of inflation, and provide for future spending needs.

This approach requires careful asset allocation and regular portfolio rebalancing to maintain an appropriate level of risk and return. Typically, portfolios are diversified across a mix of equities, bonds, and alternative assets to balance growth potential with downside protection.

Risk wrap approach

The risk wrap approach is a modern retirement income strategy that aims to combine the growth potential of market-based investments with the security of guaranteed lifetime income. This approach is particularly attractive to clients who want to participate in market growth but also desire the peace of mind that comes with knowing a portion of their income is protected, irrespective of market performance.

At the heart of the risk wrap strategy are annuities and innovative income stream products that come with income guarantees. These products are often referred to as “wrapped” because they wrap a layer of protection – such as a guaranteed income benefit – around an investment portfolio. This allows retirees to remain invested in growth assets while still securing a minimum level of income for life.

For example, a client might invest in a product that tracks the performance of a diversified portfolio but includes a guaranteed minimum income feature. If the investments perform well, the retiree can benefit from upside growth through increased account value or income potential. However, if the market performs poorly, the product still delivers a pre-determined income floor, ensuring that the retiree will not run out of money, no matter how long they live.

This strategy addresses several key retirement risks, including longevity risk and sequencing risk. By blending protection with growth, the risk wrap approach provides a balanced solution that appeals to those who want both control and security.

Retirement Income Styles Assessment

The Retirement Income Style Awareness (RISA)^[1] assessment is a framework developed to help individuals better understand their personal preferences, attitudes and financial goals as they transition into retirement. The outputs from the RISA are based on a broader conceptualisation of risk as it pertains to income preferences and risk tolerance.

RISA identifies key psychological and financial decision-making traits that influence how a client might prefer to generate income in retirement. The goal of the assessment is to match clients with the retirement income strategies most aligned with their values, their comfort with risk, and expectations for security and flexibility.

Mapping individuals along two dimensions (optionality v commitment and safety-first v probability) allows them to be aligned with one of four retirement income strategies (figure one).

The RISA assessment evaluates individuals across two core dimensions. The first is ‘safety first’ versus ‘probability based’. This dimension captures a client’s preference for relying on market-based solutions versus guaranteed income sources.

Clients who identify as safety first generally prioritise guaranteed income and prefer contractual solutions such as guaranteed lifetime income streams.

Those clients who identify as probability based are generally comfortable depending on investment returns and managing portfolio withdrawals to support their retirement income.

The second core dimension is optionality versus commitment. This dimension reflects a client’s desire for flexibility and control versus a willingness to commit assets in exchange for financial certainty.

Those clients who are optionality focused prefer strategies that allow for future adjustments and maintain liquidity. Conversely, commitment focused clients value predictability and are open to locking in financial guarantees.

From these two dimensions, four primary retirement income styles emerge:

The RISA assessment is typically administered as a questionnaire that measures an individual’s preferences across these spectrums. Financial advisers can use the results to tailor retirement income plans that align with the retiree’s psychological comfort and lifestyle goals.

Although the RISA tool was developed in the United States, the theoretical underpinnings are equally applicable in other markets; except for questions relating to US-specific products and legislation, the questions used in the assessment are just as relevant in an Australian context.

Ultimately, the RISA framework can empower clients to make more informed, personalised decisions that increase the likelihood of financial satisfaction and security throughout retirement.

Retirement income product toolkit

Most advisers call on a small core of established, widely available product solutions to support the retirement income strategies they design for clients. Typically, a strategy will involve numerous solutions working in conjunction to deliver different objectives within that strategy (figure two).

The Age Pension can act as a crucial source of income certainty, and maximising pension eligibility is often a key objective for your clients. However, not all clients will be eligible for the Age Pension, and over time it is expected that the proportion of retirees who are entirely self-funded will grow.

Outside the superannuation system, the solutions called on by advisers will typically include those offering liquidity (such as cash and fixed interest) and those offering access to equity markets, including ETFs.

Traditional retirement income solutions

Annuities are used for a variety of purposes, either as de facto term deposits (term annuities), or to create a degree of income certainty (lifetime annuities).

Lifetime annuities are available inside and outside the superannuation system, and this is a class of product getting more sophisticated, with CPI and market-linked solutions available. The lack of flexibility in traditional lifetime annuities can, however, be a barrier for some.

The Account Based Pension (ABP) remains the most common decumulation solution for superannuation savings, offerings that are becoming more sophisticated.

New-era innovative lifetime income streams

New-era lifetime retirement income streams are a new style of retirement income product, designed to provide your clients with greater choice and flexibility when considering their retirement product options, helping them manage the risk of outliving their retirement savings and enhancing their standard of living in retirement. They are designed to overcome some of the common objections that your clients may have to traditional lifetime income stream products.

ABPs alone do not mitigate the key retirement risks

The flexibility of ABPs means they can work very well in conjunction with other solutions, such as the Age Pension and annuities, and subject to mandatory minimums, can be integral to a dynamic drawdown strategy. However, they are not a mitigant against sequencing risk, inflation risk, or longevity risk, and as such cannot offer income certainty to your clients.

Traditional solutions offer flexibility or certainty, not both

Today, more than ever, your clients want the confidence to spend and enjoy the continuity of their lifestyle once retired. For this, they need certainty and flexibility from their investment strategies, as well as solutions to the unpredictable financial outcomes they’ll likely face in retirement.

At one end of the spectrum, ABPs provide flexibility but can leave retirees shouldering significant investment and longevity risk and fail to fully address the financial fears held by retirees.

At the other end, traditional lifetime annuities involve trade-offs between income certainty and flexibility and are often limited in terms of how one can invest, withdraw or use their money.

The Age Pension, upon which many Australians rely on, barely provides enough income to sustain a subsistence level of retirement. As life expectancies increase and living costs rise, the strategies and products previously relied upon are becoming less effective in addressing the need for certainty.

Next-generation retirement income solutions can provide certainty and flexibility

A 2022 Actuaries Institute report^[2] noted that combining traditional products with new-era innovative lifetime income stream solutions could lead to a remarkable 30 percent increase in retirement income.

Further, the report noted that methods, such as using investment-linked lifetime income streams, have been shown to lift retirement income without increasing longevity risk: a win-win outcome that would see Australian retirees benefit from larger payments and a better quality of life without increasing the likelihood of outliving their savings.

The next generation of retirement products must improve on earlier efforts, with outcome-oriented solutions designed around core features, including:

While conventional wisdom suggests starting retirement income planning at least a decade before retirement, many individuals delay these critical conversations until much later. This delay can limit the effectiveness of available strategies. However, the emergence of new-era income solutions offers both an opportunity and a strong incentive to shift this timeline forward. By engaging clients earlier, during the accumulation phase, advisers can help build more robust, flexible retirement income plans that better support long-term financial wellbeing. Starting the conversation sooner is not just beneficial, it’s essential.

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Notes:
[1] Professor Pfau and Alex Murguia, CEO of Retirement Researcher, developed the RISA questionnaire and matrix after surveying scores of retirees about their preferences
[2] https://www.actuaries.asn.au/Library/MediaRelease/2022/TheDialogue.pdf

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at June 2025 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

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