[SPONSORED CONTENT] One of the main worries for Australians approaching retirement is whether they’ll have enough money to comfortably live out the rest of their days.
According to the latest Superannuation & Experience Benchmark, around 16% of retired fund members expressed a Fear of Running Out (FORO) in their golden years.* This very real concern is keeping far too many of us awake at night.
Challenges of retirement
The Australian Bureau of Statistics (ABS)^ estimates there are 4.2 million retirees in Australia – but, according to a Forbes article published in 2023, we’re retiring later than we used to, and it may not be by choice. Financial and lifestyle factors plus the rising cost of living are making the decision to retire more difficult.
Further, the Australian Government’s Retirement Income Review (2020) found that many retirees tend to draw only the minimum amount from their superannuation and pass away with most of their super balance intact.
This cautious approach sacrifices lifestyle for capital preservation, especially in the early years of retirement when retirees are more mobile. But when the ongoing cost of living pressures are reducing the purchasing power of savings, you can understand why retirees fear running out of money.
If this is starting to sound familiar, you’re not alone
Inflation, along with the cost of living, housing, and medical expenses, is a significant concern for many of us.
Higher investment returns can help extend the longevity of retirement savings. However, investments with higher expected returns also come with a higher level of risk.
This risk can be particularly unsettling for retirees, who dislike volatility and significant fluctuations in their savings. With employment income in the rear-view mirror and a greater reliance on your savings to generate income, unpredictable returns can be daunting.
The question then is, how do you find a balance?
It’s clear that retirees are seeking an option that can provide more certainty over their investment returns without compromising their need for stability and growth. That’s why Hostplus, one of Australia’s largest super funds with over $120 billion in assets, created CPIplus. It’s an investment option that can help retirees safeguard against rising inflation while protecting their savings from negative returns.
CPIplus aims to deliver more financial certainty for retirees
CPIplus is an innovative pension investment option, designed to give you peace of mind in your retirement.
CPIplus aims to provide retirees with consistent and reliable returns. These returns are predetermined and set in advance, typically for 12 months, at a rate above the Consumer Price Index (CPI).**
The benefits of CPIplus:
- Returns above inflation: Returns are set in advance at a percentage above the Consumer Price Index – currently 2.5% for the 2024/25 financial year.** This is designed to give you more certainty over your returns in retirement. The option has delivered an average annual return of 7.58% p.a. to members over the past three years.***
- Flexible access: You can access your funds as you need them and can easily switch investment options. You can also combine CPIplus with other Hostplus investment options, allowing you to tailor your retirement portfolio.
- Protection from negative returns: CPIplus has its lower limit for returns set at zero percent. This means you won’t receive a negative return through CPIplus.
CPIplus is designed to be a reliable and secure investment option, aiming to deliver consistent returns above inflation.
It’s never too early to plan for your retirement
Start now. If you’re still working, start planning for your retirement as early as possible. The How Australia Retires research report shows that people with a financial plan are more confident than those without one.
In uncertain times, having confidence in your retirement is a win for you, and your family. If you’re retired or retiring soon, and seeking a low-risk and flexible investment option, consider CPIplus. It could mean greater financial certainty for your retirement – and less FORO.
*CSBA FEAL Superannuation Experience & Engagement Benchmark May 2024.
^ABS: https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release
** Though returns above inflation are predetermined annually, Hostplus can shorten the return period. Hostplus may also adjust the rate of return with at least 30 days’ notice.
*** Average annual return from 1 July 2021 to 30 June 2024. Past performance is not an indication of future returns.
Forbes Advisor, ‘Why Australians Are Working Longer and Retiring Later’, 5 December 2023, available here.
To open a Hostplus Pension account, a minimum of $10,000 must be invested and at least 1% of your balance must be invested in any selected investment option (including CPIplus).
CPIplus is not available for Transition-to-retirement members.
All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
“This information has been prepared by Compare Club Australia Pty Ltd, authorised representative of Alternative Media Pty Ltd, AFS Licence number 486326, www.compareclub.com.au and is financially sponsored by Host-Plus Pty Limited (issuer of CPIplus) ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Superannuation Fund ABN 68 657 495 890, MySuper No 68 657 495 890 198. It is of a general nature only and does not take into account your individual needs, objectives or financial situation. You should consider if this information is appropriate for you in light of your objectives, financial situation and needs before acting on it. Before making a decision about Hostplus, you should consider the Hostplus Pension Product Disclosure Statement (PDS) and Target Market Determination (TMD) available at hostplus.com.au”. To open a Hostplus Pension account, a minimum of $10,000 must be invested and at least 1% of your balance must be invested in any selected investment option (including CPIplus). Past performance is not a reliable indicator of future performance”
