While some clients assume allocating capital to a lifetime income stream may reduce their estate, the opposite can often be true. By providing a reliable income source that helps meet spending needs throughout retirement, a lifetime income stream can reduce pressure on other portfolio assets, allowing them to remain invested for longer and potentially resulting in higher estate values over time.

More than an income payment

While account-based pensions (ABP) offer flexibility, they also require retirees to draw regularly from their investment capital. During periods of market volatility, this can create a challenging dynamic:

• investment assets can fall in value
• income requirements remain unchanged or even grow with the cost of living
• additional assets must be sold to fund withdrawals;
• less capital remains invested to participate in future market recoveries.

Over a long retirement, this can significantly erode a retiree's capital base. By incorporating a lifetime income stream alongside, or even within an account-based pension, this strategy creates an additional source of retirement cashflow.

As a result, a client may be able to draw less from the growth assets in their investment portfolio, helping preserve more capital over time.

The estate value paradox

With retirement savings having to last a lifetime, many retirees instinctively focus on preserving every dollar of capital.

However, retirement income planning is not simply about preserving assets. It is about determining how best to deploy assets to achieve multiple objectives simultaneously:

• generating sustainable retirement income
• managing longevity risk
• maintaining flexibility; and
• supporting estate planning goals.

A guaranteed lifetime income stream can help achieve these objectives because income payments continue throughout retirement, reducing the need to fund spending solely from investment assets.

In many circumstances, the effect of preserving a higher balance in an account-based pension over time can more than offset the capital allocated to the lifetime income stream.

The result can be a larger total estate than would otherwise have been achieved through an account-based pension-only strategy.

Additional case study assumptions:

•       AGILE Growth Phase – Protected Investment options:

-    50% invested in Australian Equity Index - Partial Protection: Initial 10%; and

-    50% invested in Global Equity Index - Partial Protection: Initial 10%

•      AGILE Investment Value return in Growth Phase equal to Growth return (7.55%) pre-fees and premiums

•       AGILE Investment Value return in Income Phase equal to Defensive return (4.20%) pre-fees and premiums

•       AGILE Product Fee 0.30% pa

•       AGILE Lifetime Income Premium: 1.15% pa up to age 67, 0% thereafter

•       Projection age equates to Life Expectancy is based on the Australian Life Table 2020-22 with 25-year mortality improvement factors

•       Product management fee on rest of portfolio: 0.95%

•       Present dollar values calculated using a discount rate equal to CPI growth of 2.5% p.a.

•       Social security rates and thresholds as at 30 June 2026

•       Super earnings prior to retirement age taxed at 15%

•       Age Pension indexation 3.0% pa

•       Investment return assumptions based on BlackRock’s Capital Market Assumptions for 30-Year Expected Return (as at 31 December 2024).

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at July 2026 unless otherwise specified and is for general information purposes only. This information has been prepared specifically for authorised financial advisers in Australia and is not intended for retail investors. It does not take account of any person’s objectives, financial situation or needs. Before acting on anything contained in this material, you should consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. The returns on the Allianz Guaranteed Income for Life (AGILE) product are subject to a number of variables including investor elections, market performance and other external factors, and may differ from the information contained herein. Past performance is not a reliable indicator of future performance. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material. Use of the word ‘guarantee’ in this material refers to an assurance that certain conditions or contractual promises will be fulfilled by Allianz Retire+ from the available assets of its Statutory Fund No 2, in relation to the product terms. This includes ‘guaranteed’ income payments in the Lifetime Income Phase which will be paid from the available assets of Statutory Fund No 2, noting that Allianz Retire+ may terminate the product in certain limited circumstances as outlined in the Product Disclosure Statement referred below. Allianz Australia Life Insurance Limited is the issuer of Allianz Guaranteed Income for Life (AGILE). Prior to making an investment decision, investors should consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) which are available on our website (www.allianzretireplus.com.au).