New data has revealed what YourLifeChoices has been stating for months – the majority of Australians are concerned that they will not have enough money to retire comfortably.
According to a survey conducted by Mortgage Choice’s Diversified portfolio, three in five Australians feel they will not have enough money to retire.
The survey has revealed that around 54 per cent of Australians do not give retirement savings serious thought until they are 50 or over. An alarming notion when most retirement income projections are based on superannuation savings from a full working lifetime.
“Of course, many don’t realise that 50 is simply too old to start saving and planning for retirement. In reality, people should start their retirement planning much earlier in life,” said Mortgage Choice CEO John Flavell. “People don’t want to give their retirement serious thought when they are younger because it is not something that is going to affect them any time soon.”
Mr Flavell quoted the Association of Superannuation Funds of Australia (ASFA) Retirement Living Standard, which suggests that to live a comfortable retirement, couples should have around $640,000 in retirement savings and singles need approximately $545,000.
“Most people don’t realise that they may head into retirement with debt hanging over their heads, which can have a significant impact on their savings and cash flow,” said Mr Flavell. “Over the coming years, statistics suggest that many Australians will reach retirement age and still have a mortgage. Soaring property prices combined with the fact that people are taking out home loans later in life, will ensure many still have debt in their twilight years.”
Although it may be too late for some, Mr Flavell said Australians need to commence planning for retirement as early as possible.
“Australians should seek out financial advice early on in their financial journey, and put strategies in place today that will help them achieve their financial objectives and lead a comfortable retirement.”
We’ve known for some time that the majority of retirees will not have enough to retire comfortably. Our own research shows that under 27 per cent of respondents will be able to self-fund their retirement, with the remaining 73 per cent relying on a full or part Age Pension. Almost nine in 10 of those who rely on the Age Pension feel it’s not enough to live a comfortable life.
And as far as retirement savings lasting out their retirement? Only one in five say this is feasible.
These are real numbers based on data derived from real Australian retirees.
Yet the financial needs of our ageing population seem only to be addressed on average figures that are simply unattainable. It’s true, most Australians will not have enough money to retire comfortably, but how far they fall short of the suggested ASFA ‘averages’ will shock you.
The most recent Australian Bureau of Statistics (ABS) figures of superannuation balances by age show that the 55–64 age group has, on average, just $323,700 in super, with 65–74 having just $243,900 and 74-plus having only $74,100. Disturbing, yes?
Those are still ‘averages’. But averages can be skewed by the ultra-wealthy. We need to be looking at median figures. And the median amount of superannuation held by retirees? A depressingly low $95,000.
Mr Flavell also suggests that Aussies may head into retirement with debt. We know this is already happening. Aussie households aged 50 to 64 are entering retirement with a $75,000 mortgage, other property loans of $39,000 and $2300 in credit card debt.
The ASFA standard is also based on people owning their home. So, the required amount of money needed for a comfortable retirement is simply not a reality for most Australians. It’s a pipe dream, particularly for the 15 per cent who rent.
Are you as sick and tired of hearing the word ‘average’ as we are? And yet the Government is intent on creating policy based on ASFA recommendations and, you guessed it, ‘averages’.
Policy makers and industry pundits need to address the specific financial needs of today’s retirees.
Maybe it’s time financial institutions stopped assuming how retirement incomes work for so-called ‘average’ Australians and started asking actual retirees – as YourLifeChoices does.
Do you think that policy should be created using averages as a measure? How do you think retirement incomes should be measured? Do you have enough for a comfortable retirement? What would you like to say to our policy makers about this?