Research published in The Age recently shows a frightening retirement picture for many Australians, and highlights a disconnect between the lifestyle people expect to enjoy in retirement and the lifestyle they will actually be able to afford.
A recent global survey of people’s attitudes to retirement savings shows that while Australians expect to spend 23 years in retirement, their money will run out after only just 10 years, leaving them to rely on the age pension to survive. The funding gap, or shortfall, of 13 years is among the largest gaps of the 15 countries surveyed by HSBC for its Future of Retirement report.
More than 45 per cent of Australian pre-retirees say they cannot afford to prepare adequately for retirement, as they are focused on shorter term debts such as their mortgage.
Other recent research has identified the following statistics and attitudes:
- A disconnect between what baby boomers expect their retirement to be like and what reality has in store.
- 35 per cent of boomers described themselves as “completely unprepared” for retirement, 51 per cent as “somewhat prepared” and only 14 per cent as financially prepared.
- One quarter of over-50s said they had less than $50,000 in super, with a further 12 per cent having $50,000 to $100,000 in super.
- 46% of Australian pre-retirees, and a third of relatively well-off pre-retirees (household income of more than $90,000 a year), are not confident they will maintain a comfortable standard of living once they have stopped working.
- Australian retirees stated they would have done things differently before they retired to improve their standard of living in retirement (eg almost a third said they would have saved more and a similar proportion said they would have started saving at an earlier age.)
These statistics reinforce the need for most people to take a greater interest in their retirement outlook, so they can put plans in place now that will ensure they have a comfortable life after work – and, with enough planning, maintain close to their current working income after they retire.
While life is full of reasons for putting short-term spending before long-term planning, you need to take action and put plans in place now. It’s unclear what the age pension will look like in the future, so you definitely don’t want to rely on that for your quality of life in retirement.
The key is to seek independent advice from an experienced financial planner, so you have a wealth creation / retirement strategy in place while you’re working that enables you to build multiple income streams for when you retire. Importantly, a strategy gives you the clarity and direction to enable you and your family to move forward with confidence.
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