The risk of outliving our savings is one of the most important issues we need to address as part of our retirement planning checklist. Find out what you can do to ensure your retirement income lasts as long as it can.

The planning challenge

Ensuring our retirement savings last as long as it can is difficult to plan for because of two unknowns. Most of us don’t know how long we’ll live or how our investments will perform over our retirement.

How long is retirement?

According to the Australian Bureau of Statistics*, Australia has the third highest male and female combined life expectancy of the United Nations member states. Only Japan and Switzerland live longer than our average age of 82.5 years.

However, it’s important to remember that statistics are based on historical averages and not your personal circumstances. For example, most women will not live until they're exactly 82.5 years old. Some will have shorter or longer lives.

When you know roughly how long you might live in retirement, you can use the MLC retirement forecaster to work out how long your super could last. Again, this is an average only and a lot will depend on how you invest your pension.

Invest your pension to meet your needs

Two popular retirement income streams for retirees are account-based pensions and annuities. Depending on your financial needs and the type of pension account you choose to transfer your super balance into, it can offer you a flexible way to convert your super into an income stream when you retire, or during transition to retirement.

Account based pensions

Account-based pensions are a popular retirement income product. They fluctuate in value and are linked to the market so your investment, and therefore your long-term income, isn’t guaranteed.

How long an account-based pension lasts will depend on:

  • the amount of initial capital invested
  • the return from the underlying investments
  • the amount of fees charged
  • how much you withdraw as income each year.

The tax benefits of account-based pension are:

  • You don’t pay tax on pension payments from age 60
  • If you’re aged between preservation age and 59, the taxable portion of your pension payments will be taxed at your marginal tax rate less at 15% offset
  • You don’t pay tax on investment earnings.

In some cases, the underlying investments for most pension accounts are chosen to minimise fluctuations but still provide a bit of growth.

Defensive assets

These include cash and fixed income. In general, they're lower risk and provide lower returns over the long term.

Growth assets

These include equities and property. They're usually open to market fluctuation but tend to provide higher returns over the long term.

Generally speaking, defensive assets will provide you with a relatively steady return and, therefore, income. However, some growth assets are usually needed to keep your funds growing during your retirement so they last longer. With an account-based pension, you can mix defensive and growth assets to a ratio that you're comfortable with.


Some annuities could provide you with a regular guaranteed income for either a fixed period of time or for life. They are more secure than account-based pensions as your income is guaranteed regardless of what the share market and interest rates do.

The downside is that you're locked in to the agreed income for the whole term or the rest of your life. If your circumstances change, you generally can't withdraw a lump sum. A lifetime annuity also has no residual capital value, which means you can't leave it to someone in your will.

The best of both systems

Continuing to build your investments, including your super funds, is still crucial in retirement. They need to keep growing to ensure your retirement income lasts as long as possible.

This means it becomes increasingly important to protect your super growth funds from market falls while still allowing them to grow if the market goes up.

Protecting your savings

MLC MasterKey Investment Protection enables you to grow your savings with confidence. It means your savings are protected if the market goes down and your investment still grows when the market goes up.

MLC MasterKey Investment Protection is available on MLC MasterKey Super & Pension Fundamentals and is offered on a range of diversified multi-manager investments. You’ll be eligible for protection if you’re at least 50 years of age and have between $30,000 and $1.5 million to protect (should you have more, please contact us).

You can choose from two types of protection:

Protected capital

With Protected Capital, you’ll know what your minimum Investment Balance will be at the end of a 10- or 20-year term. Your savings are protected from negative investment performance, and growth in your investment can increase the minimum Investment Balance you receive at the end of your term.

Protected income

With Protected Income, you’ll know what your minimum income amount will be each year. You can protect your income for 10 years, 20 years or for life. Your income amount will not be affected by negative investment performance and can increase as a result of investment growth. Protected Income for Life means you can protect against the risk of outliving your savings because you still receive regular payments even if your savings run out.

MLC MasterKey Investment Protection is only available to you through a licensed financial adviser or through their authorised representative.

More information can be found in our Investment Protection Guide.

Request a financial planning consultation

With so many options, it’s a good idea to seek help to ensure you’re investing in a way that suits you. You can talk to your financial consultant or set up an appointment with a financial adviser by calling 1300 558 863 (Mon-Fri, 9am-6pm AEST/ADST).

Important information

*3302.0.55.001 - Life Tables, States, Territories and Australia, 2014-2016. LATEST ISSUE Released at 11:30 AM (CANBERRA TIME) 18/10/2017

This information is provided by National Australia Bank Limited ABN 12 004 937 AFSL No. 230686 (NAB), a member of the National Australia Bank Group of companies. Any advice is general in nature and has been prepared without taking into account your personal objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to those matters. See the NAB Financial Services Guide for details about relationships between NAB and product issuers, and remuneration or benefits that may be received in relation to NAB’s authorised services. NULIS Nominees (Australia) Limited (Trustee) is part of the National Australia Bank (NAB) Group of Companies. MLC Investment Limited (MLCI) is also part of the NAB Group of Companies. An investment with the Trustee or MLCI is not a deposit or MLCI is not a deposit or liability of and is not guaranteed by, or underwritten by ANB.

MLC Investment Protection is a feature of MLC MasterKey Super & Pension Fundamentals, issued by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 RSE L0000741, a member of the National Australia Bank Group of companies. You should consider the Product Disclosure Statement available at and whether this product is appropriate for you. MLC Limited is part of the Nippon Life Insurance Group and not part of the NAB Group of Companies. MLC Limited uses the MLC brand under licence. NAB recommends consulting with a financial or legal adviser before acting on any advice and reading the relevant Product Disclosure Statement available in store or on or terms and conditions before deciding to buy or retain that product.

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