Seven out of 10 Australians aged over 50 are worried about the potential for another global financial crisis (GFC) and the impact it could have on their retirement savings.
The latest National Seniors Australia (NSA) survey revealed that 10 years on from the GFC, concern among older Australians is still strong.
A quarter of seniors surveyed said they would not be able to tolerate any annual loss to their retirement savings.
More than 90 per cent thought they would not be able to tolerate losses of 20 per cent or more, the equivalent of the average impact on superannuation balances at the time of the GFC.
According to National Seniors’ Interim CEO Professor John McCallum, seniors remain worried about running out of money, with over half concerned about outliving their savings.
“This is a serious concern”, Prof. McCallum said.
“The risk of running out of money increases with age and many of our members report having already exhausted their retirement savings.
“Almost a third of respondents over 80 reported running out of savings, and almost a quarter of those between 75 and 79 had also run out.”
The survey showed six out of 10 older Australians now kept some or all their savings out of the share market to minimise their exposure to a potential collapse.
But despite concerns, half of older Australians were still comfortable with the way they were managing their risk.
Prof. McCallum said the priorities for almost all older Australians remained clear across National Seniors’ annual surveys.
“Seniors want regular and consistent income to last through life,” he said.
“When asked to rank several financial goals, having income that lasted for life was one of the most important, with 80 per cent of seniors rating it ‘very important’. The only goal that rated higher – at 84 per cent - was a desire for regular and constant income.”
Despite this desire, and many older Australians planning for living longer, only just over half (56 per cent) had a financial plan. More people were planning for their health and brain health than for finances.
“When asked what they were doing to prepare for increased longevity, older Australians most commonly said keeping the brain active, staying fit and healthy, making medical plans and staying positive,” Prof. McCallum said.
“The case for better and more accessible retirement income products is supported by a number of factors, including the prevalence of older people running out of money and evidence that living frugally in retirement is to cover essential costs rather than leaving a bequest.
“A substantial proportion of people also say they can’t manage risk, but have major investments in the share market.
“Effective retirement income products have the potential to mitigate these risks.”
The National Seniors survey collected responses from 5,446 Australians aged over 50 to develop the report Once bitten, twice shy? GFC concerns still linger for Australian seniors, which focuses on the preferences and spending patterns of older Australians. Access the full report below.