Could a lifetime income product…reduce your retirement regret?

What is the greatest fear for Australians planning for retirement? For many, it’s not simply the worry of running out of money, but the uncertainty of whether they’ll have the freedom to live the life they’ve imagined. Retirement means different things to different people, for some it is travelling, for others it’s helping children or grandchildren, and for many it’s the peace of knowing they have help to cover everyday expenses without anxiety.

The real question isn’t how much should I have saved? But rather “how can I make sure I have a steady, reliable income for as long as I live?” In recent years, new approaches have emerged that go beyond the old model. One such solution, lifetime income products, are designed to provide income guaranteed for life while also offering greater access to social security benefits for eligible retirees. With these products, retirees may find themselves better off, not just financially, but emotionally, enjoying security, confidence and an improved peace of mind. For many, this creates the freedom to make the most of their longer years in retirement, to live the life they ought to  without the unnecessary fear of being unable to fund their life aspirations in retirement.

What is a Lifetime Income Product?

This is a financial product which allows you to purchase a regular income that is guaranteed for as long as you live. In the past, these longevity products were known as lifetime annuities, but the newer versions have many more features and added flexibility. One difference, is that many Lifetime Income Products are now linked to market performance where your money is invested according to your selected risk profile.  This means the income paid from these products can increase over your lifetime even while you are receiving your regular payments, along the lines of a retirement pay cheque.

Does this Life Income Product replace an Age Pension? 

Life Income Products were not intended to replace the Age Pension, but rather to complement it. Their purpose is to work alongside the Age Pension and account-based pensions to provide retirees with a more stable and sufficient income throughout retirement. Statistics show that about 90 percent of those aged at least 65 are receiving a full or part Age Pension.^[1] But pension entitlements are rarely sufficient to achieve the widely desired ‘comfortable retirement’.^[2] This is where income layering can come into play. The majority of retirees will have built some super. In retirement, you can start to draw down on these savings, usually by establishing an Account-Based Pension (a name given to the super account when withdrawals start). So far, so good. 

Income guaranteed for life

This was, if you like, the ‘back story’ to the creation and refinement of a type of income stream that provided regular, reliable payments. Since Lifetime Income Products first came to market, many more features have been added to satisfy the particular needs of retirees, whilst complying with regulatory requirements.           

Such new features for Lifetime Income Products include:

• They traditionally are linked to the Consumer Price Index – the new generation of these products are linked to the performance of market returns.
• Linking Lifetime Income Products to investment markets can enhance the potential for income growth and allow you to  change your risk profile as your circumstances evolve. This provides retirees with the flexibility to tailor  their underlying investment choices to suit their needs at every stage of their retirement journey.
• Your partner can be protected if you nominate them as a Reversionary Beneficiary which means that (if you die first) they will receive payments throughout their lives.
• Payments are made fortnightly or monthly, or they may allow for quarterly, half yearly or annual payments. This flexibility allows retirees to align their Lifetime Income Product to other retirement income streams.
• Lifetime Income Products can be bought by simply allocating a portion of your superannuation savings once a condition of release has been met or investing directly outside of superannuation, such as an inheritance payout.
• They may provide a death benefit payment to nominated beneficiaries and a withdrawal benefit.

How does a Lifetime Income Product combine with super?

Super (and an Account Based Pension) is subject to market fluctuations. Some retirees choose to maximise their regular income by having a mix of:

• Age Pension entitlements
• drawdowns from their Account Based Pension, where minimum withdrawal amounts apply, and
• income guaranteed for life from an investment-linked Lifetime Income Product.
  

The minimum amount payable from an Account Based Pension is reset each year on 1 July and many of the Lifetime Income Products are also subject to market movements and reset income for the following year. Retirees can then adjust excess income they take from the Account Based Pension based on their plans for the year ahead. 

What are the Centrelink rules on Lifetime Income Products?

By holding part of your assets in a Lifetime Income Product, you may qualify for a higher Age Pension entitlement – and potentially sooner – due to the favourable Centrelink treatment applied for these products. A discount varies according to whether it is used for the Assets test (60% of the purchase price is applied, then adjusted to 30% in later life) or the income test (60% is also applied).

In summary, these ‘longevity protection products’ directly address a key concern for retirees – the fear of outliving their savings. As noted by Patrick Clarke, GM, Retirement Solutions at Generation Life, ‘Experiencing retirement regret is easily avoidable if retirees take the time to understand the advantages of income layering in retirement that looks to maximise retirement income using a combination of different sources to allow retirees to live the good life’.

There is no ‘one size fits all’ solution when it comes to funding retirement. But there are new, innovative ways of ensuring you will sleep better at night.

^{[1] Income support for older Australians, 7 September 2023 accessed 1 September 2025.}

^{[2] For those living only on the Aged Pension, they may not be able to afford even a modest retirement: The retirement income dilemma: Is the aged pension enough? 11 April 2024, accessed 1 September 2025.}

^{Disclaimer: Generation Life Limited (Generation Life) AFSL 225408 ABN 68 092 843 902 is the product issuer. This communication is general in nature and does not consider the investment objectives, financial situation or needs of any person, and is not intended to constitute personal financial advice. The product’s Product Disclosure Statement (PDS) and Target Market Determination are available at www.genlife.com.au and should be considered in deciding whether to acquire, hold or dispose of the product. Investments carry risk. Professional financial advice is recommended. Generation Life excludes, to the maximum extent permitted by law, any liability (including negligence) that might arise from this information or any reliance on it. Generation Life does not make any guarantee or representation as to any particular level of investment returns. Past performance is not an indication of future performance. Other than in relation to Generation Life’s product, factual information only is provided and is not intended to imply any recommendation or opinion about superannuation products or superannuation investment.}