In this guide
Life has been somewhat turbulent over the past few years with the pandemic, wars, rising cost of living and decades-high inflation rates, so it’s little wonder we’re all a bit anxious about the future and our finances in particular.
For those yet to reach retirement, there is also the added concern of whether or not you’ve saved enough for retirement and whether what you have saved will last the distance.
While it’s difficult to know the answer to those questions, there are some steps you can take to help reduce your worries and sleep a bit better at night.
Who’s worried about their retirement finances?
Surveys of Australians who are yet to retire have repeatedly found many of us are concerned about both our current finances and having enough when we retire.
A 2023 study for Fidelity and the Financial Planning Association found one in three pre-retirees worry about money daily, while one in two worry at least monthly. They are also the group feeling the least financially capable and much more concerned about running out of money (57%) than those already living in retirement (44%).
These concerns are unsurprising, particularly as we have all been feeling the pinch from the higher cost of living.
A National Seniors Australia (NSA) September 2023 study of almost 6,000 Australians aged 50 and over, found 80% of respondents felt the increased cost of living had impacted their lifestyle, with two-thirds ‘somewhat’ or ‘extremely concerned’ about keeping up with these increases in the long-term.
When it came to worrying about outliving their retirement savings and investments, 53% of respondents felt they were ‘somewhat’ or ‘very likely’ to outlive them.
Younger respondents and those with a lower level of retirement savings were more likely to think they would outlive their savings, with women also more likely to be worried. Those most concerned about the long-term cost of living were more likely to believe they were going to outlive their savings and investments.
Financial preferences among retirees
Unfortunately, our financial worries don’t stop once we retire. The NSA study asked respondents to rate the importance of different financial issues during retirement, finding regular income and affordable care and medical costs rated highest.
Survey respondents rated the following as ‘very important’:
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- Regular income for essentials 91%
- Afford care and medical costs 86%
- Access savings 83%
- Money lasting their lifetime 83%
- Income adjusts to inflation 81%
- Protection from market falls 41%
- Generating income from investments 39%
- Money for the estate 19%
These financial preferences were consistent with a 2018 study by NSA, although the recent cost-of-living concerns appear to have increased the focus on adjusting for inflation. The lowest priority in both studies was leaving money to the next generation.
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