Understanding the impact of rate cuts

As we navigate the complexities of the current economic environment, it's crucial to consider how these changes might impact your clients who are approaching retirement. With the recent GDP growth miss and the Reserve Bank of Australia (RBA) potentially making several rate cuts this year, the financial landscape is shifting. This presents both challenges and opportunities for retirement planning.

The prospect of multiple rate cuts raises important questions about the future financial security of your clients retiring in the next 3-5 years. Lower interest rates can affect the returns on traditional fixed-income investments, potentially impacting the stability of retirement portfolios. As advisers, it's essential to proactively address these concerns and explore strategies that can provide certainty and stability.

Locking in rates for long-term security

Allianz Guaranteed Income for Life (AGILE) currently offers an opportunity to lock in lifetime income rates*  providing an income anchor in uncertain times. One of the key benefits of AGILE is its deferred lifetime income component, which can be a valuable addition to your clients' portfolios.

While interest rates are likely to continue falling, AGILE's lifetime income rate increases with each year of deferral. For example, AGILE’s June rates show that the age-based fixed rate for a 55-year-old is currently at 4.80%, with an annual escalator of 30 basis points. In three years, this rate grows to 5.70%, and after ten years of deferral, it becomes 7.80%, guaranteed for the rest of the client's life. Knowing these rates today offers a compelling advantage for long-term planning.

Strategic portfolio considerations

Equities, despite recent rebounds, are expected to remain volatile. This uncertainty highlights the importance of reassessing portfolio strategies for clients, particularly those in the transition zone prior to retirement. Establishing a foundational layer of income now can support your clients' needs well into their retirement years, providing peace of mind amid market fluctuations.

As you assess your clients' financial situations, consider discussing how AGILE might enhance their retirement plans. By integrating a deferred lifetime income component, you can offer a stable income stream that adapts to changing economic conditions. This proactive approach ensures your clients are well-prepared for the future, regardless of interest rate movements.

^{* The lifetime income rate is the percentage of their investment value that an investor will receive each year once they commence their guaranteed Lifetime Income and will vary depending on income commencement date and whether they choose a fixed or rising income option. Their annual income will be determined by multiplying their AGILE investment value at the time they commence drawing lifetime income, by their Lifetime Income Rate. See the AGILE PDS for further details about the guaranteed lifetime income.}

^{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 June 2025 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. 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).}