A new study reveals retirement fears
Workers expect a retirement savings gap and a poorer lifestyle.
Key points
- Financial wellness research finds an increase in workers’ retirement worries.
- The top concerns are not having enough savings and cost of living.
- Women are significantly more concerned about retirement than men.
Funding the retirement years is not only a worry for the retired. Corporate research finds workers’ confidence in funding retirement has dropped as negative economic times take hold.
The 2022 Financial Wellness research report by AMP found workers are more worried than in the 2020 report:
- Employees today expect to retire half a year later than they did in 2020.
- They expect to retire with $100,000 less in retirement savings – their total expected retirement saving has fallen from $500,000 to $400,000.
- The number who expect a comfortable retirement has fallen by 10 per cent.
Australian workers are worried they will not have enough savings for retirement, with a $200,000 gap between how much they expect to retire with and what they believe they will need.
Most expect to retire with around $400,000 in their nest eggs but believe they will need closer to $600,000.
Concerns about retirement have escalated, with those worried they will not have enough to retire increasing to three in five Australians, up from two in five in 2020.
Over the same two-year period, the number of people who believe they will need to work longer has risen by more than 10 per cent, while one in five do not believe they will achieve their desired standard of living in retirement.
In addition:
- Almost half of Australian workers do not know how much they will have or need at retirement.
- Women are significantly more concerned about retirement than men.
- Two in three aged over 65 are concerned about having too much debt.
- More than one in five do not believe they will achieve their desired standard of living in retirement, with cost-of-living pressures increasing concerns.
Women are significantly more concerned than men about not having enough money, working longer, and not being able to maintain the desired retirement lifestyle.
Seventy per cent of women are concerned they will not have enough to retire, compared with 56 per cent of men.
This reflects a range of factors, including smaller super balances, living longer and their greater likelihood of managing care for older relatives. Single parents and those working in hospitality, health care and social assistance are also most worried about retirement.
Although half of the Australian workforce does not know how much they will have saved for retirement and how much they will need in retirement, the number of people beginning to consider their retirement plans has doubled from two years ago.
Those with no specific retirement goal have dropped from 60 per cent to just around 40 per cent. The goals identified include paying off the mortgage and saving more super.
AMP’s General Manager of Retirement Solutions, Ben Hillier, says Australians worry about running out of money in retirement and leaving their retirement planning too late.
He says the fear stems from a lack of understanding of their finances and the retirement system. The Retirement Income Review revealed that many retirees under-spend, leaving as much as 90 per cent of their super savings untouched.
“The upshot is millions of Australians are unnecessarily compromising quality of life in later years,” Mr Hillier said.
AMP says the key takeaway from the research is to engage more with retirement planning and access resources and help – it is never too early or too late.
Steps to feel more in control of retirement:
- Find your bearings: Start by clarifying where you are financially. Include your current and projected superannuation balance at retirement (provided by some super funds), house value, any other investments and debt.
- Set goals: Take the time to establish what lifestyle you are hoping for in retirement. Access resources such as ASFA’s Retirement Standard to help understand what is broadly achievable with your savings and how long you may need to work.
- Get help from the experts: Retirement can be a complex transition so take advantage of trusted online resources to educate yourself. If you need further assistance, speak to your superannuation fund or a financial adviser.
This article is general information only and does not consider your personal goals, financial situation or needs.
For further reading: AMP
