How Much Is Your Personal Data Worth in Retirement?
Tailoring your retirement strategy using personal and household financial data could significantly enhance your retirement income—by as much as 50%, according to a new Vanguard study.
Traditionally, many retirees follow a minimum withdrawal strategy, drawing only the legislated minimum from their retirement accounts. While simple, this approach overlooks the broader financial picture and may result in missed opportunities. Vanguard's research reveals that more customised strategies can substantially increase retirement income.
Why Personalisation Matters
Incorporating details such as partner status, Age Pension eligibility, and assets outside of super can lead to much better outcomes. These insights can reshape how you draw income, spend, and plan throughout retirement.
Who Gains the Most?
The more complex your financial situation, the greater the benefit from a tailored strategy. However, while individuals typically know their own finances, many lack the expertise to apply this information effectively. This is where financial advisers can make a significant impact.
Yet, many Australians don’t currently have access to advisers. Super funds, while helpful, often can’t access or use detailed personal data at scale, limiting their ability to deliver truly optimised advice.
Comparing Three Strategies
Vanguard compared three retirement income strategies:
Minimum withdrawal strategy: Withdraws only the legal minimum.
Super fund best efforts strategy: Offers guidance based on partial data—excluding key personal details.
Full information strategy: A comprehensive, data-rich approach using all available personal and household information.
The Results
Super fund best efforts strategy: Improved projected retirement incomes by 3%–34% compared to the minimum withdrawal approach.
Full information strategy: Delivered gains of 3%–51%, especially for those with complex financial scenarios.
Rachel White, Head of Financial Adviser Services at Vanguard Australia, emphasised the power of personalisation:
“The more personal and household information included, the greater the financial benefits. This highlights the critical role of tailored financial advice, especially as financial complexity grows.”
However, she also acknowledged current limitations: “The cost and limited supply of advisers restrict access to comprehensive advice. Yet even partial personalisation, like that offered by super funds, can improve outcomes.”
Looking Ahead
Ms. White calls for policy changes to expand access to both comprehensive and simplified financial guidance:
“There’s a real opportunity to improve outcomes—from full-service advice to basic, personalised tips. Beyond financial gains, having a tailored plan also brings emotional reassurance and confidence.”
Rick maggi CFP, Financial Advisors Perth, Westmount Financial