COVID has had a catastrophic effect on life as we knew it. And with the pandemic well into its third year, it’s become apparent that it has also affected many in subtle, though no less impactful, ways. One of those is your retirement plans.
As many as one in four Australians has delayed a planned retirement date as a direct result of the COVID pandemic, according to research conducted by superannuation manager and financial planning company Equip.
Read: No one-size-fits-all when it comes to retirement income
Equip polled more than 2000 people, and found that 11 per cent of respondents had paused their retirement plans. Those closest to retirement age were the least optimistic their working days were drawing to a close.
Of those aged 55 and over, 15 per cent say they’re pushing back their plans for retirement, with almost half (46 per cent) by four or even five years.
For many, the decision had been triggered by financial uncertainty – on both a small and large scale – triggered by the pandemic.
Read: Data shows size of the hit to your retirement balance
Of those surveyed, 22 per cent reported a drop in their annual income in the past two years, and 25 per cent said they had less disposable income than they did in 2020. Worryingly, this figure jumped to 33 per cent – one in three – for those aged 55 and over.
There may, however, be some good news among all the doom and gloom. There’s a good chance you will not need as much money in retirement as you might think.
The research found that many Australians are overestimating the amount they will need for a comfortable retirement.
And that overestimation is not small. According to Equip, more than a third (36 per cent) of people estimate that a single needs a minimum of $750,000 for a comfortable retired life.
But, Equip says, the reality is very different. According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, a single person will need $545,000 in retirement savings, and a couple will need $640,000.
Read: July changes that will affect your retirement income
Equip CEO Scott Cameron says: “Retirement is one of the most important stages in a person’s life. We all have different ambitions for our retirement, but for most of us, it’s a time to enjoy the simple pleasures in life – quality time with family, travel and pursuing hobbies that full-time work doesn’t usually allow for.”
However, Mr Cameron says many overestimate what they will need to achieve this, adding: “Many Australians are grossly misjudging how much they need in their reserve to retire, which is likely causing additional – and perhaps unnecessary – stress.”
The key, he says, is planning.
“The more you financially plan for your retirement, the better off you’ll be. A financial planner can help you make sure your super is on track to deliver the best retirement possible for you and your family. Small steps now, such as making voluntary contributions into your super if you have disposable income, can have a huge pay-off down the line.”
While the pandemic is causing many to stress about their financial futures, the reality may be a pleasant surprise. A visit to a registered financial adviser might help to lower those anxiety levels and raise hopes that a comfortable retirement is within your grasp.
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