Following the UK’s vaccine approval and other countries following, there is a possibility that once the COVID-19 vaccine is readily available and the associated risks of the disease are no longer top of mind, that South African retirees may revert to pre-pandemic attitudes towards retirement planning. But Deane Moore, CEO of retirement income specialist Just says ‘no’ and recently unpacked the primary reasons why:
The existing retirement risks stay the same
Irrespective of the pandemic, many retirees run the risk of depleting their retirement savings too soon. This risk may have been masked behind rose-tinted expectations of future returns or by not carefully considering financial needs in retirement.
There is less wiggle room
The stark reality is that many retirees are not in a position to take on unnecessary risk due to the financial hardships suffered at the hands of the pandemic. This is unlikely to reverse in the short to medium term.
Increased longevity is sinking in
Retirees are slowly getting to grips with the reality of longevity and its implications for retirement.
Leaving a legacy is becoming less important
The ability to leave retirement capital to dependents was once an important factor for retirees in the argument for living annuity solutions. What is more important is that retirement money should last (at least) as long as they do.
The retirement product market has evolved
Many players in the South African retirement industry have worked together to address the shortcomings in the annuity market and it is refreshing to see other insurance companies prioritise the increasing need for guarantees. The conversation used to be an ‘either-or’ choice between the flexibility provided by living annuities or the security of life annuities. But retirees now have access to new-generation annuity solutions that better suit retirees growing need for security and flexibility.
Related article: Risk aversion in retirees during uncertain times.