Interpretation of Results and Conclusions
- The baseline NRSI in 2013 is only 43%, but after incorporating the non-economic factors, it increases to 81%. This means that non-economic factors are capable of raising the retirement standard of living by as much as 33 percentage points.
- The baseline NRSI reflects the economic conditions of the calendar year being modelled and this is similar to current retirement indices. For example, the baseline NRSI for 2008 which is the year of the financial crisis, is only 32%. This means that during the height of the financial crisis, economic assets at retirement could only sustain about 32% of the living standards enjoyed prior to retirement.
- The non-economic drivers of NRSI collectively have a significant impact on the overall NRSI value and are not impacted by the economic conditions of the time. In fact, the impact of different economic conditions starts to diminish once these non-economic factors are considered. For example, for two contrasting economic conditions, 2006 and 2008, there is only a 6% point difference in the final NRSI values, while the corresponding baseline NRSI values differ by almost 14%.
- The above three conclusions lead to the most important message that the NRSI is hoping to convey: Retirement preparedness or sustainability is not a manifest destiny driven entirely by current economic conditions. Instead, it should be viewed as a state of affairs that can be controlled and managed by individual actions, government intervention and the appropriate utilization of retirement products and services offered by financial institutions.
- The non-economic factors demonstrate that retiree adaptability has the greatest NRSI impact. This non-economic driver can be controlled and managed by individual actions. This means that any external or individually generated interventions in education and training during working life can have a profound impact on one’s retirement sustainability.
- Retirement financial planning is the second most important non-economic factor impacting the overall NRSI. For financial institutions that specialize in providing retirement products and services to individuals, this is an important message that should be stressed to their clients.