Australian baby boomers are underestimating how much they will need for a comfortable retirement, even though they have high expectations for their retirement lifestyle, based on a survey conducted by super fund REST Industry Super.
REST Industry Super commissioned the survey that interviewed 1,200 Australians approaching retirement (aged over 50 but not yet retired) to find out more about their financial wealth, plans and expectations.
REST chief executive officer, Damien Hill says, “What we found is some sizeable gap between what baby boomers are envisaging for their retirement and what the reality will be. In order to avoid disappointment for many, the financial services sector will need to work with government to educate and encourage people to plan and prepare far earlier.”
“This poses a significant education challenge for the financial services sector and government to help these people get ready for retirement. Many super funds… provide access to financial advice as a service for members. However, education needs to be targeted and delivered in such a way that all retirees… understand the importance of early planning and seeking advice for a massive life change…,” says Hill.
SuperGuide comment: The more detailed survey results are outlined later in the article but as the co-founder of SuperGuide I wish to differentiate our readership from the participants of this industry survey. Based on our own survey earlier this year and the questions and comments that we receive from readers via our website, our SuperGuide readers are not only thinking about their retirement plans, they are asking the right questions when working towards creating a comfortable retirement. Clearly, our website is specifically about superannuation and retirement so you would obviously expect our audience to have such a high level of engagement with their retirement plans. Perhaps the government, and the financial services sector, should be working with SuperGuide to determine the most effective way to encourage people to educate themselves, and plan and prepare for retirement.
Sandwich generation and part-timers
Two significant findings from the REST survey however, do mirror what seems to be happening with SuperGuide readers, namely, the trend towards easing into retirement with part-time work, and the hefty percentage of middle-aged Australians who remain financially responsible for children while also potentially caring for elderly parents.
In relation to ongoing financial responsibilities, a third of unretired over-50s have financial dependants whose needs will be taken into account when deciding when to retire, or even whether to retire.
In the REST survey, of those respondents expecting to retire, 42% of this group said they would ease into retirement via part-time work, and 26% of this group have already started this transition process. About a third (31%) of respondents had no plans to ease into retirement, that is, they will work full-time one day and be retired the next day. The remaining 28% have not decided how they plan to move into retirement.
A disturbing statistic is that almost half of the respondents over the age of 65 (that is 45 of the 90 surveyed), would have preferred to have retired already. Presumably, the Global Financial Crisis (GFC) and sluggish investment markets have meant an enforced longer working life.
In retirement, I don’t want to give up…
The top 5 items that respondents of the REST survey said they were not prepared to give up were:
- Internet/mobile phone
- Domestic holidays
- International holidays
- Dining out
- Health insurance
Nearly two-thirds (62%) of those surveyed in the REST survey, said they were looking forward to relaxing and enjoying the rewards of a life of working, with more time to travel and participate in recreation activities. On the flipside, 40% have some reservations about finishing work, and 16% said they were not looking forward to retiring at all.
Financial advice not in demand
A whopping 70% of Australians surveyed in the REST survey have not sought financial advice to assist with retirement plans. The main reasons for this lack of enthusiasm for financial advice are:
- No need for financial advice
- Handle their own affairs
- Too expensive
- Not trustworthy
You can access the full REST survey report, ‘The Journey Begins’ by clicking on this link and then clicking on the PDF link at the end of the text