In the wake of this year’s Federal Budget we asked YOURLifeChoices’ 100,000 members their views on retirement, retirement income and retirement affordability. According to nearly 4500 respondents, the outlook is bleak.
The respondents to this survey comprised 56 per cent baby boomers (current age 50-67) and 44 per cent seniors, with 45 per cent fully retired, 20 per cent working unpaid (volunteering), 18 per cent working full time and 17 per cent working part time.
A clear majority (60 per cent) of those who are already retired and on a full Age Pension confirm that the current payment is insufficient to lead a modest lifestyle. This is not an opinion – it is a factual response from people who have tried to live on the pension and found it wanting.
Worse still, when we ask those who are yet to retire (of whom 75 per cent are likely to need a full or part pension), if they know how much the Age Pension pays, 76 per cent say ‘No’ and of the 24 per cent who replied ‘Yes’, a staggering 80 per cent stated the wrong amount. Ignorance is bliss, but not when it comes to your retirement income.
Similarly, when it comes to confidence levels about having sufficient savings to fund a reasonable lifestyle, 62 per cent of our members were not confident at all. When asked why they thought they did not have enough, most felt that they had never earned enough to save the required amount (38 per cent) or had suffered unexpected economic hardship (35 per cent). Despite the introduction of compulsory super more than 20 years ago, the boomer cohort has clearly had insufficient time – and I would argue, government support – to create a reasonable retirement nest egg.
And finally, the Budget. Yes, all those media polls seem to be supported by our survey responses, with 55 per cent agreeing that their retirement plans and lifestyle will be affected by the proposed pension changes. How will our retirees and pre-retirees deal with this? The overwhelming majority of respondents (68 per cent) plan to cut their household costs, while 19 per cent will work longer and 12 per cent hope to increase their income.
So what do these results tell us about the state of retirement in Australia? Sadly, it confirms that 20 years of successive federal governments’ inaction on financial literacy for retirement means that most older Australians are severely underfunded for the extra years they will probably live. Not only do they have insufficient savings, but they also have little idea how to grow their nest eggs and believe cutting spending to be the only solution. Reversing the Future of Financial Advice (FoFA) legislation, to allow commissions for bank staff selling financial products and removing the need for financial planners to act in their customers’ best interests, is the worst policy at the time of greatest need. What we need, instead, is a bi-partisan approach to retirement income and the challenge of helping older Australians to help themselves.
What do you think?
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