The Ready To Retire Study, commissioned by News Corp Australia and conducted in partnership with Industry SuperFunds, found that 70% of Aussie workers expect to use the Age Pension when they retire.
More alarmingly, over 60% of workers predict that they will continue working into their retirement years.
With regards to the Age Pension:
- Around 1 in 3 Australians expects to draw the full pension when they retire.
- More than 1 in 3 (37%) expect to qualify for a part pension only.
- About 1 in 4 (24%) don’t expect to draw a pension at all, instead relying on their superannuation and savings.
Money Saver HQ Editor Tim McIntyre said the research revealed Australians are concerned about how much savings they’ll need to live stress-free during retirement.
“Many Australian workers are pessimistic about retiring at a time they wish to and expect they will need to continue to have some employment even after they enter official retirement,” McIntyre said.
Huge Lack of Super For Retirees
Many Australians simply do not have enough assets in order to sustain a comfortable lifestyle in retirement.
According to the Ready To Retire Study, the average Australian worker currently has around $144,000 in their superannuation account. That’s less than twice the average Australian annual salary (around $80,000/year). This means that Australians could be retiring with savings of just 2 years’ worth of wages.
Even factoring in significant reductions in spending, such as a lack of dependent children and a paid-off mortgage, many Australians might only be able to live off super for a few years at most before they would need to apply for a pension payment. It was found that the average worker expects to accumulate $200,000 less super than they will need – the average amount desired is $556,000, whereas the average expected is only $350,000.
The reason for this massive super shortfall is high expenses during people’s working lives, which leave many households with little cash left over. The study found that half of all Australians don’t make extra super contributions because they have no money spare, while nearly one-third are too busy paying off their mortgage.
— Nine News Australia (@9NewsAUS) December 31, 2016
Working for too long?
In order to sustain a comfortable lifestyle in retirement, a concerning number of Australians expect to continue working well past the typical retirement age of 65 years old. A whopping 72% of all workers expect to work for longer than they would like to, and most don’t expect to retire until 65.
Most concerning of all are the Aussies who are soon approaching retirement age. More than half (54%) of Baby Boomers in the Ready To Retire Study expect to work past age 65. Of course, retiring later can have some benefits.
But sadly, nearly 1 in 10 Baby Boomers do not think they’ll be able to afford to retire at all.
The alarming proportion of Australians who expect to be in financial stress upon retirement is a pertinent reminder of the importance of a good super fund, according to David Whiteley, Chief Executive of Industry Super Australia.
“People in their 50s and 60s who are worried about how much they will have to retire with can rest assured that there are plenty of ways to boost their super and put themselves on the right retirement track,” Whiteley said.
“It’s a good idea to seek out a trusted financial planner and get some advice that takes your personal situation into account.
“You can also talk to your super fund about the benefits of an income stream product that allows you to access a regular income in retirement while the balance remains invested.”
You can also check out our snapshot of the current market offerings in the comparison table below. Please note that this table has been sorted by our star ratings (highest to lowest), and the products featured are based on a policy holder aged between 50 and 59 years, with a super balance of up to or more than $250,000.