A recent survey of approximately 3,000 Australians over the age of 50 conducted by National Seniors Australia asked about their current and expected financial situations, planning behaviours and strategies for managing financial uncertainty in retirement. In the context of the maturation of the superannuation system, older Australians are changing how they think about generating income in retirement. Super is now Australians’ main expected source of income in retirement. They believe that super will provide them with the income they will need, over and above what government pensions or other allowances might provide.
Those aged between 50 and 64 (mainly pre-retirees) have a greater expectation about income from super than other sources. Older retirees (over 80) are either reliant on the Age Pension or have savings in non-super financial assets to support themselves in retirement. Super was not available to everyone in this cohort and the survey confirms that only a small proportion of older retirees are generating income from super. Although only a small percentage of respondents were currently providing financial support to parents, one-third of those with surviving parents were concerned about the need to provide such support in the future. Combined with the finding that small proportions of respondents were providing financial support to children and grandchildren, it appears as though older Australians face financial uncertainty regarding their ability to provide for family when retired.
Importantly, even though older Australians expect that super will be their income source in retirement, less than half of them are confident that it will be adequate. A majority of respondents under the age of 80 had recently consulted a financial advisor and a majority of all respondents use a budget to manage their finances. A range of strategies were favoured for controlling expenses, suggesting respondents were biased towards preserving capital. Primary among the reasons that older Australians intended to retain a minimum amount of retirement savings were to be able to meet unexpected expenses, three-quarters of respondents citing the unpredictability of their retirement years as a source of this uncertainty.
Some of this could be attributable to the fact that more Australians over 50 are continuing to support other family members. Most support is for children and grandchildren; however a number of older Australians are also supporting their elderly parents. Uncertainty about changing family, health and living arrangement situations appears to be a critical source of insecurity for older Australians when thinking about their retirement income.