Cash shortfall in retirement
Australians worry about future
WORRIED Australians fear they will outlive their retirement savings and many regret not stashing more money away, a comprehensive report has found.
The National Seniors Australia’s Feeling Financially Comfortable report surveyed more than 5000 Australians aged 50 and over during the past 14 months and found the following: 53 PER CENT worry they will outlive their retirement savings; 28 PER CENT regret not contributing more money to retirement; and, 31 PER CENT said contributing more was not an option.
Australians are living longer, which means they need more money once they stop work.
Figures from the Australian Institute of Health and Welfare showed Australia has one of the highest life expectancies in the world — in 2015 life expectancy for males and females combined was 82.5 years.
National Seniors Australia chief executive John McCallum said there had been a number of changes impacting retirees’ financial situation that gave them cause for concern.
“The governments in the past 10 years have been making people feel insecure with constant budgetary changes,” Professor McCallum said.
“There’s changes in super, pension means test and the franking credit changes has been floated and it makes people feel very insecure.”
The Association of Superannuation Funds of Australia’s figures suggest to achieve a comfortable retirement a single person requires $540,000 once they finish work and a couple requires $640,000.
This assumes retirees own their home outright and are relatively healthy.
Investment manager company Challenger’s chairman of retirement income Jeremy Cooper said the findings showed more needed to be done to improve the retirement phase of Australia’s super system.
“People have realised we are living so much longer than we were 20 years ago,” Mr Cooper said.
“It’s better to get your money (into retirement) early and let it compound, and it’s even not so bad to be getting it in there in the middle of your savings journey or even at the end.”
He encouraged Australians to salary sacrifice while working into their superannuation, “where you are investing pretax dollars into super”.
“You will get a smaller pay packet because of what is going into super but it’s a tax effective way of doing it,” he said.
Mr McCallum also said “bill shock” was also a concern, particularly once work stopped.
“Suddenly you could get a big power bill and something has gone off and you manage it through your credit card instead of paying it off,” he said.