According to research by National Australia Bank (NAB) and MLC, almost half of all working Australians are living from payday to payday and have unrealistic expectations about retirement.
The Australia Today report shows that around 48 per cent of the 2000 people surveyed believe they’ll only need $150,000 for a comfortable retirement. The majority of survey participants also feel that having $1 million set aside for retirement doesn’t necessarily mean a person is rich.
As the Federal Government approaches an election later this year, changes to the superannuation system and to the Age Pension remain a hot topic.
And whilst discussing these changes is a dilemma for the Government, it seems to be even more confusing for most Australians.
The NAB/MLC research was commissioned in the hope that some of this confusion could be dispelled, making for a better informed debate about the future of the superannuation system.
“With almost one in two Australians saying they are living ‘pay cheque to pay cheque’, we’ve got to ask ourselves if we’ve got the settings right to achieve that aim,” said MLC Chief Executive Andrew Hagger. “But in order to have a well informed national conversation about our super system, we need to understand how Australians identify themselves and discover their aspirations.
Interestingly, many wealthy Australians actually believe they are in the middle class, many of those feel they fall into an even lower class bracket.
One of the most significant findings of the study, was how people define a “comfortable lifestyle”. Around 75 per cent of respondents agreed that a comfortable lifestyle means “having enough money to do what I want, when I want”, but 46 per cent of those surveyed are living pay cheque to pay cheque to fund it, leaving very little for retirement savings.
With the average household earning $77,676 annually, the research suggests there is a “clear disconnect between the definition of lifestyle and standards of living”.
“While we have changed our spending patterns, have we also changed our savings patterns? Is the current super system helping Australians achieve the standard of living they aspire to in retirement?” said Mr Hagger.
“Super is a long-term product that needs stable policy,” he said. “The stakes are high. When we get super right, it helps Australians in retirement and helps our economy. When we get it wrong, we risk our future prosperity.”
“We do believe a key priority should be to establish a clear objective for our super system – one that all future reforms can be focused on supporting.”
Are you living payday to payday? Do you think that knowing which class bracket you fall into really makes a difference as to how the Government should create future policy? Do you feel confident that you are financially prepared for retirement?