by Tony Vidler.
The Financial Services Council (FSC) has just issued issued a statement summarising some recommendations they were making regarding national retirement savings, following research it had conducted in New Zealand. The link to the full report is at the end of this article.
The report is extremely interesting, though missed the mark in a critical area. There is an inherent assumption that if the right product solution is created (as envisaged by the FSC), then that will address the issue. There is a lack of focus on the benefits of changing consumer behavior through good education and advice.
The focus of the report therefore is about a consumer attaining financial freedom in their golden years. What about the good life along the way?
The report makes a number of very interesting and useful observations, especially in the area of recognizing the extraordinary convergence of issues facing the under 40's. This included the some core retirement planning issues such as:
- They are likely to be living longer than previous generations;
- They are most likely to have less family financial support than prior generations; and;
- They face more uncertainty than prior generations when it comes to government support.
- Less subsidization of health & education costs than previous generations; leading to greater strain on today's resources.
- Prior generations had access to "defined benefit" superannuation schemes which provided great certainty for retirees.
- Higher standard of living expectations from the children of today's under 40's - creating additional financial stress.
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