13th Nov 2017

Study reveals baby boomers’ biggest retirement fear

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Study reveals baby boomers’ biggest retirement fear
Leon Della Bosca

While many baby boomers are worried that they won’t have enough money for retirement, there’s something that worries them much more.

According to research released last week by insurance firm Apia, more than 50 per cent of those surveyed say that “sudden or unplanned financial expenses” top their list of retirement fears.

Head of Customer Value at Apia, Geoff Keogh said that these unexpected financial shocks, such as health scares or having to support family members, could easily ruin retirees’ finances.

“There’s an anxiety moving into the retirement phase on the basis of your ability to come back from an unexpected fall,” said Mr Keogh.



“You don’t have the benefits of time and as many options.”

The study also found that around three quarters of those aged 55 and over are already preparing for retirement, with 70 per cent believing they are on track to reach their retirement goals.

However, a senior financial adviser from Planning for Prosperity, Bob Budreika, claims his figures show that only 17 per cent of older Australians are actually ready for retirement.

“The rest are living in pixie-land,” said Mr Budreika.

“Until something serious happens like they run out of money or their investments are lost in a market downturn, there’s utter complacency.”

He went on to say that many retirees think they’ll get by on the Age Pension, but could be in for a rude awakening when they realise the pension will only be paying them half to one third of their pre-retirement income.

“Be realistic about what your living expenses will be – don’t just assume,” said Mr Budreika.

His figures mirror YourLifeChoices’ research, which shows that almost 80 per cent of retirees are worried that they will outlive their savings.

Other key findings of the Apia survey include:

  • 60 per cent of those surveyed said that being debt free is a primary retirement goal
  • 48 per cent were saving for retirement travel
  • one in three want to boost their savings accounts
  • in hindsight almost 40 per cent would have started saving earlier
  • one in three would have made additional superannuation contributions.

 

"Interestingly, one in 10 said they would have postponed their retirement until they were older or transitioned gradually through part-time work, reinforcing the value they place on ensuring they're in a positive retirement position,” said Mr Keogh.

"This trend could also be linked to the health and social benefits of work, with good mental and physical health being the top priority for retirement."

What’s your biggest retirement concern? Do you believe you can get by on the Age Pension? With the benefit of hindsight, would you have put off your retirement a little longer? And, if so, to what age?

Read more at www.apia.com.au

Related articles:
Busting the $1 million super myth
Not enough money for retirement
How much is enough for retirement





COMMENTS

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MICK
13th Nov 2017
10:42am
".......the pension will only be paying them half to one third of their pre-retirement income."

The only people in pixie land are those who believe they cannot live on the pension. Of course owning your own home is an assumption there but living on the pension is simple if retirees are careful how they spend their money. That is where many of us want a bet each way...and then complain when they hit the proverbial brick wall.
TREBOR
13th Nov 2017
11:12am
Bloody leftie (tongue in cheek)...

True enough, Mick, but those big expenses can be a hit to many.
Old Man
13th Nov 2017
12:15pm
Again we agree MICK. As I have said here before, this topic can't be generalised as we all have different needs and those needs will dictate how much money is required. I think that some people confuse needs with wants.
john
13th Nov 2017
3:55pm
Owning your home is almost essential. But the other thing is what is your expectation of retirement if you are just the average couple from a working background, there are lots of over seas trip doing by people. It seems like the fashion. I'm amazed at the the fares, let alone what you spend while away.
I for one am flabbergasted at how some in my family do it, but they do, and reasonably regularly , 1 to 2 yearly I'd say, with retirement closing in on them soon I wonder.I think I'll be sitting on Aussie for ever, and good thing too.
I must have missed the line up when they gave out the golden hand shake.
Old Geezer
14th Nov 2017
2:03pm
Who wants the hassle of owning a house in old age? I certainly don't. Let someone else worry about maintenance etc.
ex PS
14th Nov 2017
9:05pm
What is the average cost of renting a home, how can anyone say that it is more cost effective to spend $300.00 plus a week to rent than to pay for rates, maintenance, insurance and such. Plus the cost of moving if the owner decides to sell, my calculator must be on the blink, to me, once on a fixed income, owning is much better than renting.
What surprises me is the number of people who plan to use their Super to pay of their homes.
George
14th Nov 2017
9:23pm
Agree, TREBOR, MICK has over-reacted to a typical Financial Adviser statement. The key point of the article is "sudden or unplanned financial expenses” top the list of retirement fears" for those on pensions. The Liberal + Greens alliance caused these fears to increase more with their nasty asset test changes from Jan 2017 which strongly encourages part-pensioners to spend rather than save due to OAP cut-backs, with Labor also refusing to wind these changes back.
The SOLUTION is usually missing from such Fin Advisers except by any means they can increase their business. An Universal Pension without Asset or Income tests (for those who paid taxes here for say 20 years) would go a long way to ease such fears and actually encourage people to save, increase prosperity and reduce burdens on Govt in the long term.
Old Geezer
15th Nov 2017
10:01am
People have such a welfare mentality today that it would take a very brave financial advisor to tell them the truth being that they are far better off not being on welfare. It

It was a good move by the government to change the asset test as too many people not needing welfare were getting it as it was just nice to have.
George
16th Nov 2017
1:11pm
Usual rubbish from OG, ignoring the many logical responses already provided by many - clearly a paid Liberal party stooge with sour grapes as additional motivation for missing out himself.
Rainey
18th Nov 2017
8:45am
You are so right, George. And OG couldn't be more WRONG on this issue. The assets test changes deprive people of the nest-egg they put aside for just these emergencies and unexpected expenses. Suddenly, they have to use those funds to live on until they run them down to a low level of savings. It's WRONG and it's economically irresponsible. It discourages building for retirement.

I don't suggest people with vast assets should be draining the public purse, but the current limits are too low given the current average levels of return. And they don't take into account age ($850,000 is a lot more when you are 90 than when you are 65 and it has to last maybe another 30+ years!). The test also fails to properly consider genuine needs (some folk saved because they KNEW they would incur high medical or care costs down the track). And it fails to consider the purpose of the saving. (Why should the guy who cruised the world or gifted a fortune to his kids at age 59 get heaps more from the public purse than the guy who delayed gifting or his holiday to age 70?)

Of course, selfish folk just rant that those with $800,000 and low incomes should invest better. That's thoroughly selfish and arrogant in the extreme. I think an income test is not unreasonable, including deeming at a fair rate given current bank interest rates, but to punish someone whose education and experience DOESN'T position them to know how to achieve high investment returns for having saved is not just unfair, it's downright cruel and both socially and economically harmful.
TREBOR
13th Nov 2017
11:10am
And it's Boomer this and Boomer that, and Boomer git be'ind - but it's please to walk in front, Sir, when there's trouble in the wind.... (apologies to Rudyard Kipling - I posted this elsewhere when some young whipper-snappers were slanging off at Boomers).

Sudden expenses are a worry for most, I think.
Rae
13th Nov 2017
12:28pm
Especially all those who can't see consequences or possibilities and won't save even a small amount each pay for sudden expenses not foreseen.

There are many who just can't delay gratification but then are devastated when the consequences hit hard.

It is sad.
The Black Fox
13th Nov 2017
2:00pm
Trebor, your comment '' sudden expenses are a worry for most'' is spot on - and I love your use of Rudyard Kipling. I would add that sudden expenses can happen not just in retirement but at any time in life and these sudden expenses can cripple for life. They may be for a host of reasons, from a bad seasons in farming, a downturn in the economy, redundancy, a death in the family or crippling illness for you or a family member, and so on.

Some may respond that you can prepare/ insure for these things. Maybe, but not always. What is true is that, for various unforseen reasons, many of us do not start our retirement years as well off as others. We should all have regard for others circumstances as we "'haven't walked in their shoes'. Those making ''I'm alright Jack'' comments or blaming the less fortunate for their circumstances could be a little more circumspect in their opinions.
Rainey
18th Nov 2017
9:06am
Well said, Black Fox! The world needs less OGs and more Black Foxes!
Old Geezer
13th Nov 2017
11:17am
My only regret is that I should have retired a lot earlier with less money.
Tib
13th Nov 2017
11:59am
OG doesn't pay to be the richest guy in the graveyard.
Old Geezer
13th Nov 2017
12:15pm
I don't know anyone who is. Too many vultures to pick the bones clean before one even gets there.
TREBOR
13th Nov 2017
10:13pm
You got that right, Brother....
Charlie
13th Nov 2017
11:56am
Start saving earlier, illness that prevents full time employment can strike 10 years before retirement age, despite delusions the government has about the benefits of people living longer.
Ten years before retirement age people need to have the maximum allowable and still be entitled to the pension. The rest should be stuffed in the mattress.
Rae
13th Nov 2017
12:31pm
Very good advice Charlie but I'd recommend a safe storage box at both the bank and a solicitors office instead of in the mattress.

The banking system is far more fragile than most believe.
KSS
13th Nov 2017
12:47pm
10 years before retirement is a bit late in the day to suddenly start planning for retirement. It needs to start earlier than that!
Charlie
13th Nov 2017
4:29pm
KSS Im saying that 10 years before retirement, people need to have the maximum allowable to still get the pension. Thats about $400,000 and still 10 years to go. Then start hiding the rest.
I had $100,000 super 10years to go and not able to continue work due to illness. The problem with that is, until you reach pension age the government is not as generous with disability benefits, to people who have a lot of money in the bank.
A person at 55 and not able to work anymore can draw their super but as soon as it becomes money in the bank, they want to reduce your disability benefits and erode your savings. So its best in that situation if some arrangement can be made about how much of the super is going to be paid out.
Rosret
13th Nov 2017
12:12pm
Ah - a biased survey.
Let's turn the clock back shall we if you are going to talk what ifs.
Some of the Boomers are lucky enough to be on the old scheme with a guaranteed income indexed to inflation until death to us part. Nice.
The rest are part of the new scheme with no idea what the future would bring.
Historically many people died only a few short years after retirement. Not anymore.
Historically super income streams were not dependent on the stock market fluctuations. Not anymore.
Historically interest rates were higher providing a good return. Not anymore.

I attended the meetings our superannuation provider set up for us and I did the Maths. Even if I put 100% of my salary into their fund I wouldn't make the projected target to live comfortably in retirement Then even on their figures they expected us to go on the pension at 80.

There is a point where saving and squirreling away funds only has a point where there is an achievable goal. When the GFC hit and my super went down substantially I realised it was time to stop putting extra into a Superfund and start taking charge of my own money.
Hindsight is a wonderful thing but I am sure those who invested in real estate are sitting in a much prettier situation today.
Rae
13th Nov 2017
12:38pm
Yes indeed Rosret. Even those in the old schemes paid very large amounts into the funds without tax concessions and they would have bought several houses with that same money plus the negative gearing and rents to help.

So perhaps the old schemes weren't that lucky if the person was a saver and could have had a dozen houses instead.

I'm damned if I can see how anyone earning the median wage or less can save enough over 45 years to last for retirement. They just don't earn enough.
Old Man
13th Nov 2017
12:30pm
Surveys and opinion polls are wholly dependent on the questions being asked. I have never trusted opinion polls because we don't know the questions, which demographic was canvassed nor the number of people invited to respond. This clip from "Yes, Prime Minister" is a great example of how to get the answer that you want.

https://youtu.be/G0ZZJXw4MTA
Old Geezer
13th Nov 2017
12:59pm
Agree nothing positive means no positive questions asked.
Eddy
13th Nov 2017
1:06pm
Or as Mr Bjelke Petersen once remarked, something like, 'you should never hold an inquiry unless you already know the answer'. Same with opinion polls, by asking then right question you can get the result you want.
Rosret
13th Nov 2017
1:34pm
...and this would be a promotion for people to invest more into our Superfunds. However the government doesn't like that idea. - Well not this year anyway.
KSS
13th Nov 2017
12:44pm
I would suggest that these days almost EVERYONE, regardless of age, is concerned about unplanned financial expenses. Nothing special about pensioners there nor very surprising.
Old Geezer
13th Nov 2017
12:58pm
I'm not concerned as that's why you have disaster insurance.
David
13th Nov 2017
2:32pm
Not me either OG.
As an accountant, I thought a lot about the future, even when I started work in 1981.
My grandfather tought me to sav for a rainy day.
Even when I got married in 1987, the banks were pushing us to borrow double what I felt comfortable with. I wanted the bank to assess our capacity to pay on just one of our wages in case of unforseen circumstances such as a loss of job (never happened) or falling pregnant (never happened to me LOL but it happened to my wife 4 times).
We went without a lot and now we are reaping the fruits of our hard earned savings in retirement.
I’ve always believed that I am the master of my own destiny. So if I happened to not have enough funds to finance my retirement, that would have been my choice as it that scenario, it would have been my decision to over-spend during my career, so there is no way I would be blaming the government if I was in that situation.
BTW, I have car and house insurance and have travel insurance when purchasing my trips with my platinum card (you can call that disaster insurance), but for my situation, I didn't feel the need for life insurance as I had a government job with regular income, with heaps of sick leave to fall back on, and my wife’s income to fall back on if that ran out. I’ve saved heaps by not taking it out, but each to his own.
Old Geezer
13th Nov 2017
2:58pm
Check what travel insurance that Platinum card covers. Most do not cover domestic cruises and some don't cover hire car excess. I also found they did not cover me if some over 80 died which was relevant when my parents were alive.

Never had life insurance and have no need for it now as I have no debts and too old anyway to be covered.

As you say you and only you are the master of your own destiny. A major disaster becomes a minor inconvenience if you have the funds to pay for it. Most people today fail to take control of their own mistakes etc and look for someone else to blame. The government seems to be a biggie at present. People don't like dentists as it's a double whammy for them. They experience not only physical pain but a big pain in the back pocket as well.
Rae
13th Nov 2017
5:46pm
No I'm not concerned either. As a widow I raised three young and I did have life insurance. The house insurance saved my home when my husband died.

I've always saved $1 out of every $10 and invested it. I read The Richest Man in Babylon years ago and it made sense.

I still do it. Just 10% of every dollar in and save it first before spending the other 90% ( which I don't but did when the kids were young).

So good to have a stash for a rainy day.

My freedom was the most important thing and being tied up by Centrelink rules would be giving up a to of freedom.

It's great that the OAP is there for those who need it but it comes at a huge loss of freedom in my opinion.
TREBOR
13th Nov 2017
10:16pm
It's a disaster ow to have your fridge pack it in? Gee Zuzchrist....
Old Geezer
14th Nov 2017
11:35am
Easy fixed Trebor. Just buy a new fridge online and have it delivered within the hour. No food spoilage.
bobby
13th Nov 2017
12:57pm
I am 89 and living on the pension and coping. BUT I own my own home. Living on the pension and paying rent will be their biggest problem!
Janran
13th Nov 2017
2:31pm
Yes, you can live cheaply if you own your own home and are not forced to rent. That's why I feel for younger people who will never have the chance to own their own home, especially in places like Sydney and Melbourne that have huge rents.
TREBOR
13th Nov 2017
10:18pm
Spot on janran - my two kids - one is a tradie and earning heaps, the other works in film and gets heaps... neither owns their home or is buying it yet... despite Dad saying many times over to get your own home as the prices keep rising...

I think we spoiled them with the security of always having their own home bought and paid for and knowing they will inherit one day from both Mum and Dad separately.
Raphael
13th Nov 2017
1:20pm
If ther biggest retirement fear is outliving their savings , then they really got nothing to worry about
Once the savings runs about they still have the full OAP to live on , and the older you get , the less if that you will spend
Pamiea
13th Nov 2017
1:54pm
Before one retires buy a new car, buy new white goods and stock up on linen. It all helps
Raphael
13th Nov 2017
2:04pm
And get rid of the wife if you’re atill unlucky enough to have one around
Janran
13th Nov 2017
2:33pm
But Raphael, (you poor thing), who will fetch your slippers?
KB
13th Nov 2017
2:45pm
pamiea. Also ensure that you have your teeth fixed before you retire. Retirement income will not cover dental expenses such as root canal and crowns,
Foxy
13th Nov 2017
2:47pm
.... his dog? ... his "mistress"? :-)
Raphael
13th Nov 2017
3:05pm
Slippers ?

Jesus - I didn’t think you were that old Janran

Don’t wear slippers - House is always warm in winter . Wooden floor helps

Most days I walk around the house naked anyways
TREBOR
13th Nov 2017
10:20pm
Eliza! Where are my slippers?
Bernard Kelly
13th Nov 2017
2:42pm
LACK OF RELEVANCE IS THE REAL ISSUE

Actually, retirees' greatest fear has nothing to do with their finances - notwithstanding what a survey funded by a financial services group would suggest (the fallacy in their approach, which is the cause of their bias, is that they are focused on selling product in the lead up to retirement, not the 20-25 years of actual lifestyle later on).

No- the actual concern is Lack of Relevance.

We are the first cohort going through this experience, and over half of us are going to be living for 20-25 years.

That's a long time to be living without our natural network of family,friends and work colleagues and the solution that we found at www.retirementgazette.com was to create some form of "profitable hobby".

The explanation is that your clients give you Relevance, and your zest for living is enhanced.
Old Geezer
13th Nov 2017
3:09pm
Why would you want a profitable hobby?
Rae
13th Nov 2017
5:51pm
Come now OG trading or investing is profitable and I know you do it. So do I.

I dabble in bringing new product to market as well. Quite an interest.

If you can make money from an interest it's great.
TREBOR
13th Nov 2017
10:21pm
Hmm - wonder if I can make money from my planned home built aircraft...... pretty slippery and god on the controls....
TREBOR
13th Nov 2017
10:22pm
Oh - my daughter looked at the plans one day and said:-

"Daddy - can I have that aeroplane?"

"NO! I'm building it for me!"

"No - I mean - after you die!"

**gloom**
TREBOR
13th Nov 2017
10:23pm
'god on the controls' - a Freudian keyslip..... hmmmmmmm...
Old Geezer
14th Nov 2017
2:05pm
I trade to earn enough money to live day to day. So far my $400,000 has been enough for over 20 years now.
Raphael
14th Nov 2017
3:16pm
$400,000 twenty years ago is equal to around 2 M in today’s dollars OG
No wonder you’re doing ok
You’re one well off sob
Old Geezer
14th Nov 2017
4:05pm
No it's still only worth a bit over $400,000 as I have lived off it's gains for 20 years now. One needs something to live on other than fresh air.
Raphael
14th Nov 2017
5:41pm
And you got rid of the wife too I presume
Makes a big difference
Old Geezer
15th Nov 2017
4:36pm
I was thinking maybe I could now marry the wife.
mike
13th Nov 2017
3:22pm
However many retirees and nearly retired should be warned of Turnbull's CENTRLINK shock. Turnbull announced that those who lose the Pensioner Concession Card due to Hockey's changes to the assets test will have it reinstated. However MANY retirees who believed this are finding out that if they lost the part pension and their PCC AFTER the 1st January 2017, even a day later, THEY DO NOT. Thus this means that a part pensioner who had say $1.15million on first January, and say lived in a Sydney $3million house would have their PCC reinstated. But a part pensioner who maybe lived in a typical country town $200.000 house had say $10.000 under $817.000 and lost the concession, probably due to Hockey's increase to the taper from$1.50 to $3.00 per thousand, in their super, WOULD NOT. Not even if they lost it a few days later. HOW IS THIS FAIR.
Old Geezer
13th Nov 2017
4:14pm
Only those on the full OAP should get this concession card. The sooner they bring that in the better as it's stupid to have millionaires getting concessions when struggling family have to pay extra to makeup for their discounts.
Rae
13th Nov 2017
5:53pm
It's not. The Australian system isn't fair. They keep talking fair but then discriminate and create all sorts of injustice.

Just make your own money and forget about them. They won't ever be fair again.
TREBOR
13th Nov 2017
10:25pm
Frankly, OG - yes while it is stupid that millionaires get the concession card... many who are way below millionaires would lose it under your scheme.

I've said many times the entire retirement packaging system needs a full review and a good solid look.

Kerry Packer probably got a concession card.....
Old Geezer
14th Nov 2017
11:34am
Disagree concession card only for those on full OAP welfare.
Rainey
18th Nov 2017
9:05am
Of course OG can only think of the same idiotic and damaging quick fix ''solutions'' that the idiot politicians come up with. Take everything away from anyone who is not either very wealthy or desperately poor! If you work your guts out to be comfortable, screw you! And then the same idiots wonder why there is a welfare mentality in this country. THEY CREATE IT WITH THEIR DUMB DESIRE TO DEPRIVE PEOPLE OF FAIR REWARD. Keep doing that and there will be a lot more folk giving up and not working and saving!

The system is irreparably broken. It needs throwing out and re-building from the ground up. It's unfair in the extreme, and often cruel in the extreme. It's an administrative nightmare (and getting worse with every idiotic change!). And it fails the genuinely disadvantaged miserably while handsomely rewarding the cheats and manipulators. It's generous to a fault to those who can attain high investment returns on moderate savings, but cruel and unfair on those who saved hard but lack financial education or access to the investments that return well.

Put simply - it's a total disaster! And taking concession cards away from a few strugglers who saved well is going to make it 10,000 times worse. It would be a really STUPID politician who would think such an ill-conceived simplistic move would be of benefit.
HAPPY LOS
14th Nov 2017
7:59pm
We are on the full old age pension, retired two years ago, downsized by building a smaller house, replaced all furniture and electrical goods, bought a new car and left enough in superannuation so we could get the full pension. Life is a breeze, have an overseas holiday each year saved from oap, have not changed our lifestyle at all and have not had to use superannuation at all. Will probably be left to our three children who all have their own homes and good jobs.
Raphael
14th Nov 2017
8:06pm
Just goes to show how good our pension system is

By living solely on the OAP quite comfortably, your super will continue to grow at 8-10% . which can be used for replacing assets , splurging, gifting and leaving to the kids

Well done Happy Los
George
14th Nov 2017
9:39pm
Until you get hit by "sudden or unplanned financial expenses”, Happy Los? Keep your fingers crossed hard!
Old Geezer
15th Nov 2017
9:58am
Only one I can think of that will effect me is winning the lottery.
Rainey
18th Nov 2017
8:55am
These selfish people who consider only their own current situation disgust me!

Sure, life may be a breeze on the pension today. But the article was about the fear many face that TOMORROW will bring a crisis.

Try facing imminent blindness if you can't find $20,000 for surgery that the government deems ''non-essential'' and isn't covered by Medicare. Or having to shell out countless thousands for dental implants. What if your health deteriorated to the point where you needed a paid carer and household help, Happy Los? How well would you cope then?

I know a couple just like Happy Los whose son and daughter-in-law were killed in an accident and suddenly they found themselves having to raise 3 grandchildren. Not much left in the son's estate after the mortgage was discharged and the debts paid, and the life insurance payout wasn't generous. The bills keep skyrocketing as the kids grow, and the available government benefits are way too inadequate.

Another couple I know have a daughter who lives abroad. When she took very ill, they naturally wanted to be there to care for her. Suddenly, all that superannuation saving disappears in one fell swoop and yes, they do live in fear of another crisis now that their savings are gone.

It seems too many of the fortunate just can't help beating their chests and bragging about the good fortune they falsely CLAIM as good management, and - worse - they can't have an ounce of human decency to empathize with those who face genuine hardship. No wonder this country is in a mess with so many self-satisfied, arrogant pigs running around influencing policy with their votes1
ex PS
14th Nov 2017
9:11pm
I retired from payed work at 55, so far I have had no regrets, my only fear is being unable to ensure that I do not have a long miserable death with no control over how I go out.
Raphael
14th Nov 2017
9:28pm
You need a new gun ex PS - problem solved
Old Geezer
15th Nov 2017
9:56am
Talk to your doctor about that one.
ex PS
15th Nov 2017
2:35pm
Every time I decide I have had enough and try to end it, I get drunk take out my trusty pistol and do the deed. I always wake up with a headache and a hole in the ceiling, I now know why, thanks for your astute observation Raphael.
HAPPY LOS
15th Nov 2017
10:26am
Thanks for you comment George, half of our super is in safe investment and other half in diverse investment, can't think of any sudden or unplanned financial expenses, we own our home, should not have any maintenance for the next ten years, have children that would help us out should there be a need, have no debts and are well insured.
Rainey
18th Nov 2017
8:57am
Lucky you! I guess that makes the concerns of those who are not so lucky invalid then? Is it possible that for once you could look beyond YOU and YOUR situation and consider the issues faced by others?


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