Study shows benefits of guaranteed retirement income to wellbeing

A new collaborative study between Challenger Limited and Macquarie University’s School of Psychological Sciences have found clear links between guaranteed retirement income and improved financial security, mental health and wellbeing.

The study of around 1,000 Challenger customers aged over 60 was also compared to Challenger’s first Retirement Happiness Index that was released in April this year, which found Challenger customers with guaranteed income or annuities exceeded Australians over 60 on every metric, including financial security (72 per cent versus 56 per cent), mental health (85 per cent versus 78 per cent) and social connections (79 per cent versus 70 per cent).

“For the first time, we are hearing from real customers about the power of guaranteed regular income. The data clearly indicates that annuities, or some element of guaranteed regular income in retirement can be a gamechanger, and we are seeing this in our broader customer base and increase in annuity take-up,” Challenger Chief Executive, Customer, Mandy Mannix, said.

“When you know a portion of your savings is guaranteed to last a lifetime, it brings an unparalleled sense of security. In fact, 60% of our customers surveyed said they lived comfortably, and majority did not think they would outlive their savings, regardless of household income. This confidence in receiving a stable ‘pay check’ for life allows you to focus on what truly makes you happy.”

The research also indicated that 66 per cent of respondents “proactively” chose to enter retirement and 51 per cent of them had “significantly fewer worries”; this is compared to the remaining one-third that retired out of necessity, and 32 per cent of them with “significantly fewer worries”.

According to Australian Bureau of Statistics (ABS) data, common reasons for Australians to retire included reaching retirement age or the eligible age to access superannuation; sickness, injury and disability; and retrenchment. The Macquarie University research revealed common reasons Challenger customers retire include financial stability, to enjoy retirement while health allows, and eligibility to access super.

“Proactively choosing how and when to retire may be the secret ingredients to wellbeing in our golden years,” lead researcher, Professor Joanne Earl, said.

“The findings demonstrate that feeling empowered to choose when and how you step into this next phase of life results in a healthier transition and greater retirement happiness, retirement adjustment, and satisfaction.

“Pleasingly, research respondents are choosing to enter this next stage of life while their health allows them to truly enjoy themselves and explore their passions and purpose. Of those surveyed, 22% noted the choice to focus on what you want to do rather than what you have to do was the top retirement benefit. This was closely followed by enjoying freedom and flexibility to be spontaneous (20%), family time (17%), and travel (15%).

“Financial security came through strongly as one of the key enablers for Challenger customers to have the peace of mind to take this step with confidence.”