Financial planners have to look more closely at individual life expectancy when recommending super plans, a Mercer partner said.
Life expectancy is often underestimated when planning for retirement, which means superannuation members could run out of money towards the end of their lives.
Financial planners are partly to blame for this, because they too often use standardised life expectancy charts that don't reflect a person's circumstances, Mercer partner David Knox said during the IFSA annual conference on the Gold Coast on Friday.
"No one is average," Knox said. "We're not all the same and generalisation can lead to some very unfortunate problems."
People underestimate how much capital they need to sustain them in retirement, because of the size of the amounts involved, Knox said. "Half a million dollars is not going to last long if you live until 85," he said.
The problem of people living longer than projected is made worse by the finding that almost 60 per cent of people will run out of money before they reach even their projected age, research by super company Ingevity has found.
A solution to the problem lies in better informing clients about the risks underlying super products, but providers can also address the issue by offering more personalised products.
Currently, there are few products in the Australian market that address the problem of longevity, Knox said. But he expects the industry to follow the example of the US, where super products have a much higher degree of diversification.
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