In case you needed further proof of the impact of the
Research firm, CoreData interviewed just over 1000 Australians aged 50 and over and the consensus appears to be that nearly everyone is hurting financially.
Around 90% of self-funded retirees (including those planning to retire within the next five years), have lost wealth. Half of all Australians surveyed have lost at least a quarter of their assets (excluding
So, what are these Australians doing about this unfortunate predicament? According to the CoreData, virtually everyone surveyed had, or was planning to, cut back on their spending as a consequence of the lost wealth.
One in four (25.6%) of those surveyed have returned or plan to return to the workforce as a result of heavy hits to superannuation accounts.
Are baby boomers and retirees changing how they invest?
Some interesting findings from the survey highlight how senior Australians invest and whether the effects of the GFC will change
- Three in 10 haven’t exited the sharemarket in a significant way (CoreData suggests that is perhaps due to not wanting to sell in a deflated priced environment), although any new investment money has not gone into the sharemarket.
- Conversely, three in 10 (28.4%) individuals surveyed have exited the market in a major way over the past four years, and another third (32.5%) took their assets out in a major way in the last half of 2008.
- One in five of those who have been actively transacting have been so more recently, with 21.4% undertaking major selling between January and April 2009. The funds were transferred into either cash (81.6%) or property (13.6%).
- Two-thirds of those surveyed stated they were less willing to take on risk, although those who have remained in the sharemarket in some form have not made their share portfolio more conservative. (Trish’s note: Reducing the proportion of assets invested within a particular asset class is a means of managing risk, even where the specific assets you invest in within that asset class don’t change).
Expectations for retirement
Surprisingly, half of those surveyed stated that expectations for retirement had not changed, which obviously means that the other half have reviewed retirement expectations.
For the half who believed the world had changed for them, nearly 40% were planning for a more modest retirement. Other strategies for coping with a lower standard of living in retirement included delaying retirement, selling the home and buying a cheaper one, and cutting out luxury items.
For the half who believed retirement would still be the same, nearly 60% of this group had enough money so the market downturn wouldn’t affect them. Nearly a quarter (22.7%) believed the market would turn around before they retired, and the remaining 18.2% (of the half) did not invest in the sharemarket.
Others believe that the market will turnaround before their retirement (22.7%) and the rest (18.2%) did not invest in the share market.
Other key findings
- One in ten plan to downsize their home, while one in twenty have already downsized.
- One in ten (11.5%) of all self funded retirees have lost more than half of their invested wealth (excluding unlisted property) over the past two years.
- 2.2% of the total sample lost all of their invested capital!
- Two in every five (42%) Australians surveyed indicated they are less likely to seek/use financial advice, and nearly a quarter of those surveyed had strong views on the issue falling into the ‘much less likely’ category.
- Although nearly 12% of those surveyed stated they are now more likely to seek financial advice.
Source: Findings from CoreData survey, Self Funded Retirees 2009
You state that “One in four (25.6%) of those surveyed have returned or PLAN to return to the workforce as a result of heavy hits to superannuation accounts.”
From across a small ocean, I would like to share the results of a large and recent Employee Benefits Research Institute (EBRI) survey in the U.S. “Over a third of the retirees surveyed (34%) became unexpectedly retired due to a downsizing or business closure.” They added that an additional 22 percent “became retired for work-related reasons.” 13 percent were retired due to outdated skills.
The message? Don’t confuse HOPE with a PLAN. They are two very different four-letter words.
Purposeful planning to all!