Despite significant media coverage, survey results released today by Australian Unity show the majority of Australians approaching retirement aren’t aware of or prepared for the government’s recent super changes.
The Australian Unity Empirica Retirement Planning Research1 study released today found that while superannuation is the financial solution for most baby-boomers approaching retirement, an alarming number have insufficient funds put away, little knowledge of the government changes, and even less awareness of the impact the changes will have on their retirement.
Australian Unity Wealth CEO David Bryant, said the nation-wide research explored attitudes and concerns about the future, as well as steps people were taking to prepare for retirement.
“Worryingly, the data shows more than three quarters of 45-64 year olds2 are running blind. They’re neglecting to get advice, not proactive about planning and a good majority have no idea about the recent government changes”, he said.
The results show:
- nearly half of all retirees and those headed for retirement have no investments outside of super3,
- approximately one-in-ten workers over 60 do not know how much they have in super4,
- over 60 per cent of those surveyed were “confused” or completely unaware of the government’s super reforms and what they mean for them5,
- though not having a good understanding of the changes, more than one in two pre-retirees believe they will have to work longer and retire later than planned because of them6,
- only 1 percent of retirees and pre-retirees say they feel “well informed from the government and prepared for the changes”7,
- half of all retirees and pre-retirees do not believe they are using the best investment products and strategies to achieve their retirement goals8.
“What’s clear is that many baby-boomers—though reliant on super for their retirement, don’t understand it, and don’t have a plan for their retirement beyond it”, he said.
“We know that today you need approximately $2 million to fund a comfortable but not extravagant retirement into your 90s9. The research shows us the majority of baby-boomers have around ten percent10 of this”, Mr Bryant said.
Mr Bryant said another concern in the data is the lack of planning and financial literacy amongst many Australian baby-boomers. “The data shows most baby-boomers have little strategy and insufficient funds to provide for the lifestyle they want in retirement”, he said.
“We see in the research that people are relying on government sources and super funds for information but feel unprepared and are “bereft” of outcomes to help them plan for retirement and understand what they need to do”, he said.
The survey results also show more than a third of baby boomers rely on family members for their financial advice, a little more than one in ten regularly meet with a financial adviser and nearly 50 percent say their understanding of the amount of money they need to retire on is based on “a total guess”.11
Commenting on the research Steve Davis CEO of Australian Unity’s Personal Financial Services business said, “while the research indicates that more baby boomers rely on family members for financial advice than a professional adviser, surveys of our own clients consistently indicate that they feel better informed and more optimistic about their current and future financial situation and outlook than non-advised clients do.”
“With all due respect to family members, baby boomers are doing their retirements a significant disservice by relying on family members for advice instead of professional advisers”, he said.
Despite the worrying signs, Mr Bryant said the good news was it’s not too late. “Someone five to ten years off retirement still has time to make the right decisions now to put in place steps to help ensure they are preparing for their future.”
“A good, neutral starting point for many is the ASFA Retirement Standard benchmarks. This looks at the annual budget needed by Australians to fund a comfortable standard of living in the post-work years. It’s updated quarterly to reflect inflation and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle”, he said.
1Australian Unity Empirica Retirement Planning Research Report dated May 2017. 1000 Australians surveyed = 424 pre-retirees and 576 retirees.
2Australian Unity Empirica Retirement Planning Research , P. 18
3Australian Unity Empirica Retirement Planning Research , Pp. 9, 15, 75
4Australian Unity Empirica Retirement Planning Research , Pp. 82-83
5Australian Unity Empirica Retirement Planning Research , Pp.25-26
6Australian Unity Empirica Retirement Planning Research, Pp. 11, 103
7Australian Unity Empirica Retirement Planning Research ,P. 104
8Australian Unity Empirica Retirement Planning Research , P.100
9 http: //www.superguru.com.au:8081/ASFA Retirement Calculator/ui/index.html
10Australian Unity Empirica Retirement Planning Research , Pp. 82-83
11Australian Unity Empirica Retirement Planning Research , Pp. 18, 93