Life Expectancy : The And Health Subsidies Essay

1205 WordsOct 1, 20165 Pages
1. Introduction During retirement period, the main problem that the elders face is the support gap, which occurs when consumption begins to exceed income on a regular basis. A regular retiree would amass large amount of wealth during their working life to prepare for this period. The role of government is also critical to help minimize this gap through plans like superannuation and health subsidies. Nevertheless, there are many risks that may challenge the continuity of these plans. 2. Personal Risks One of the biggest risks that the elders faced is the longevity risk, which determines the period in which an elder is exposed to the other risks mentioned in this paper. Even with the advancement of science and technology, it is still impossible to accurately predict a person’s time of death. However, life expectancy can be used as a reference that shows the ‘expected’ age of death in a particular region. People often underestimate their lifespan, causing them to run out of money before death. In Australia, the life expectancy for both men and women has increased tremendously over the past century to above 80 years old, increasing the likelihood for an elder to be exposed to these retirement risks. Therefore, a careful retirement plan should be arranged to reduce this risk. Joining social security programs, traditional pensions and payout annuities are ways that can minimize the support gap. For instance, an annuity allows an individual to build their funds during their
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