Survey shows retirement confidence may be misplaced

How confident are you in your retirement? Do you think your money will last? Have you allowed for any future aged care needs?

Most Australian retirees say that they are indeed confident and that their finances will last their whole lifetime, but is that confidence misplaced?

According to the YourLifeChoices Older Australians Insights Survey, just over 85 per cent of respondents said they consider themselves to be ‘confident retirees’ and were happy with their finances.

Just over 60 per cent say they did not use a financial or retirement planner at any stage of their retirement process and, unsurprisingly, 57.4 per cent believe they are sufficiently financially literate to handle their retirement income needs. The remaining 3 per cent are just flying by the seat of their pants!

Read: Pandemic heightens need for trusted financial advice

But at the same time, more than 60 per cent said they believed a person needed at least $250,000 and up to $1 million for a comfortable retirement and, crucially, more than 50 per cent said they didn’t have the amount they had nominated.

Only 31.83 per cent of respondents said they had prepared for any aged care costs they might be likely to incur and, perhaps even more alarmingly, 32.33 per cent said they hadn’t prepared for aged care costs at all and didn’t intend to.

For many, there seems to a disconnect. Most Australian retirees are confident in managing their income alone, but most also say they don’t have a big enough nest egg to cover those income needs. Some haven’t addressed future aged care costs at all but believe themselves to be financially savvy.

Navigating your financial life after retirement can be complex and there is ample evidence that a financial or retirement planner can help even the most competent budgeter maximise his or her income in retirement.

Read: Your retirement planning starts here

“A financial adviser can help you set financial goals so you feel confident that your future plans are achievable,” says MoneySmart.

“If you’re not on track to achieve your goals, an adviser can help you put the right strategies in place, or set more realistic goals.”

Not all retirement or financial planners are equal, and it pays to do your research before selecting one who understands your goals for the future.

First, you need to make sure your planner is registered with the Australian Securities and Investments Commission (ASIC) and holds an Australian Financial Services Licence (ASFA) is Future of Financial Advice (FoFA) compliant.

Read: Fatal flaw in retirement planning

Second, you want a financial planner who specialises in retirement planning.

“Retirement planning is complicated. Getting help early might be your key to retiring comfortably, but even if you’re older and behind on your savings, a retirement adviser can identify unexpected areas for improvement,” says Investopedia.

Older Australians should also remember that Services Australia offers a number of specialist services you can access for free, including the Financial Information Service (FIS).

The FIS provides free, independent and confidential information, as well as tools and resources to help you make informed decisions about your current and future financial needs. The service is available to everyone, not just people receiving government payments and services.

Did you or will you use a professional adviser when planning your retirement? Did you or will you factor in any aged care costs? Let us know in the comments section below.

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Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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