Australians with $1m in super less worried about retirement funding

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The majority of superannuation assets may be held by fund members 50 years and over, but that isn’t easing the anxiety of pre-retirees, who are increasingly worried about how they will fund their retirement.

A new report from asset management group Fidelity International, ‘Building better retirement futures’, cited CoreData’s Best Possible Retirement research, which shows that 64.5 per cent of pre-retirees admit to being worried about being able to fund their retirement.

That might be understandable for those with low superannuation balances, but the research also showed that 56.3 per cent of those with superannuation balances of $750,000 to $1 million were still worried about funding their retirement.

According to the report, these worries really only start to recede when an individual has accumulated $1 million or more in their superannuation accounts.

Only 13.7 per cent of pre-retirees believe that they will have adequate financial resources to do everything they want in retirement, while 43.9 per cent of pre-retirees expected a reasonable retirement life, while accepting that some of their wants and desires would go unfulfilled.

Last year, YourLifeChoices surveyed 3000 members for its Financial Security in Retirement survey, which found that people with more savings tended to have more income for retirement and a greater chance of being happy with that income.

That YLC survey also highlighted concerns over losses resulting from the COVID-19 pandemic, with the research showing that people disliked a loss more than twice as much as they liked an equivalent gain.

Fidelity International’s head of retirement, Richard Dinham, said that retirees had good reason to be worried about losses in their retirement savings.

“Retirees still need to take appropriate investment risk to address inflation and longevity risks, but there also needs to be a focus on the impact of market volatility on retirement outcomes,” Mr Dinham said.

“Limiting losses in retirement has a more powerful effect on long-term growth than capturing the full upside of market gains.

“A 10 per cent investment loss requires an 11 per cent gain to simply return to the original point before the loss occurred. A 20 per cent investment loss requires a 25 per cent gain, and so on, to the point where a 50 per cent loss needs a 100 per cent gain to simply return to the original balance.”

Mr Dinham said that while people were aware of the compounding when it came to the positive aspects of saving, few were aware of the negative effects during decumulation.

“The bulk of superannuation assets are now held by fund members aged over 50,” Mr Dinham said.

“As this shift has happened … there is a growing recognition that more thought needs to be given to strategies for drawing down accumulated savings in the form of income over the lifetime of retired investors.”

How much money do you think will be sufficient for a comfortable retirement?

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Written by Ben


Total Comments: 16
  1. 0

    “How much money do you think will be sufficient for a comfortable retirement?”

    Firstly, what is “comfortable”? This is a subjective word that means so much to so many people and one on which we probably can’t agree. We keep reading that we need in excess of $1M in super to retire “comfortably” yet some experts have put that figure for couple at around $300K. With the lesser amount most couples will be eligible for a full age pension and that will give around $1000pw which doesn’t include the rebates on rates, telephone, electricity and in some states, licence and registration.

    There is a constant discussion centred around whether retirees are worried about whether they have enough money to last and a high percentage states that they are concerned. Perhaps a further question to this response should be to ask what level of concern do retirees have ranging from most concerned to slightly concerned. We are concerned that our money may not last but we are only slightly concerned at this stage.

    • 1

      “We keep reading that we need in excess of $1M in super to retire “comfortably””

      The only ones who say that are investment firms looking for more of your money and their figures can often be correct BUT they usually don’t include the Age Pension. The AP is a big part of your retirement income and needs to be accountant for when working out how much you need invested.

  2. 1

    And of course many self funded retires are worse off than couples on full aged pension receiving say $40K per annum aged pension !!

  3. 2

    One problem is that too many try to (or have to) wait until retirement before attacking the bucket list. I have known so many who have waited and then fallen off the perch within 6 months of retirement or finally got to Egypt only to be in too bad shape to enjoy it. My advice is to get out there when you are young and fit and then won’t need so much cash in retirement.

  4. 1

    “How much money do you think will be sufficient for a comfortable retirement?”

    Under the present rules: Zero – but expect them to change if too many
    people latch on to that.

    Instead of endlessly pumping out press releases from vested interests try doing
    some journalism – you don’t even have to leave your desk for this one.

    Work out the capital sum required to buy an annuity for either a single
    or a couple at the point of retirement.

    That’s how much you need to break even with the folk who supposedly have nothing.

    • 1

      Meant to say “Work out the capital sum required to buy an annuity for either a single
      or a couple at the point of retirement equal to a full Centrelink age pension for which many won’t have contributed at all.

  5. 0

    The survey “…….found that people with more savings tended to have more income for retirement and a greater chance of being happy with that income.”

    Well Doh! Really? Who Knew? Talk about researching the b****ing obvious!

    This about the third ‘ article’ in decent weeks on the SAME THING. Is there nothing else to write about?

    • 1

      Yes there is KSS, older people being discriminated when seeking work and women getting paid less than men. The latter is my guess as the former, under a smokescreen, came up last week.

  6. 1

    How long is a piece of string ? How on earth do you work out how much you need in retirement when none of us know how long we will be on this planet ! Better to report how much it costs in retirement per year. Then at least one can estimate the $ required based on an anticipated life expectancy. But if anyone can tell me when I am going to the big banana in the sky, please let me know.

    • 1

      That’s why you use a death age that’s generous like 90/95 instead of say 80/85. Remember when you get to that 90/95 you still get the pension even if you have zero assets and at that age you probably won’t be going on holidays around the world.

  7. 0

    As a self funded retiree who thought he had planned for the future it only takes one partner to get an Alztheimers type disease with a rapid decline requiring Hicare Aged care nursing home admittance at somewhere in the vicinity of $500to 600k with a weekly payment of $1000.00 including a Federal Government means test to destroy your financial strategy.
    So you have to fund your own living and that of your loved one.
    In my case this is impossible and the Governments answer is run down your life savings and go on the pension.
    I am happy to fund my wife but means testing me and applying a penalty is I find unaustralian.

  8. 0

    any home-owning retiree with a million in super and is worried about funding a comfortable retirement should be more concerned with their mental rather than financial challenges.

  9. 0

    $1 million in superannuation. Not necessary as one can also hold assets outside of superannuation – cash, term deposits, etc – property – holiday house etc. Total all of those and if you reach $1m then one is on the right track. Plus property and/or a holiday house could increase in line with, or even above, inflation while it is still being held.

  10. 0

    It is a good question. However, there is not one silver bullet answer for all. If you take the view, superannuation is only a safety net for your retirement, you will have a better chance to live comfortably and survive well in longevity. That means, besides your superannuation, you have savings and investment income to supplement the allocated pension from your superannuation.

    In order to have this portfolio set up, one has to plan for retirement in one’s early work life. Certainly, there would be sacrifices and a lot of compromises, depending on your outlook in life and your family planning. Life is full of choices. Reaching for your superannuation in your early life is not the answer. It is better to struggle for your financial freedom when one is young than to struggle when one is in a retirement age. However, it is a choice in life.



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