Two-in-three Australians fear they don’t have sufficient financial resources for retirement, with those nearing the life milestone feeling the least confident about their finances.
A new study, commissioned by financial advisory and accounting services company Findex, revealed 52 per cent of baby boomers and 38 per cent of Generation X are “not confident” about having the money needed to retire compared to 31 per cent of millennials.
The cost of living, high interest rates, skyrocketing rental prices and housing costs have taken a toll on the ability to plan for a comfortable retirement.
With the exception of Hobart and Canberra, vacancy rates across the capitals remain near record lows.
Regional rents have increased 2.2 per cent since the final quarter of last year, and are up 4.5 per cent annually.
Housing insecurity is known to disproportionately affect older Australians.
A parliamentary inquiry found late last year the face of homelessness in New South Wales is an older person aged over 55, with women particularly vulnerable to housing insecurity.
Meanwhile, across Australia one-in-seven people experiencing homelessness were aged 55 and over at the time of the last census in 2021, with older women more likely to be affected by the problem than older men.
Affordability is also a key concern for homeowners, who are battling growing mortgage repayments after a string of interest rate rises, all while property prices continue to grow across the country.
Earlier this month it was revealed that one-in-five customers of National Australia Bank are becoming trapped in a “mortgage prison”, meaning they are unable to refinance their loan due to higher interest rates.
With several financial obstacles at play for the average Australian, Findex co-CEO Matt Games said most people have a “kick it down the road mentality” when it comes to retirement planning.
“When the time eventually comes, they’re faced with the reality that their existing savings and superannuation balance are insufficient in this economic climate,” Games said.
According to the Association of Superannuation Funds of Australia Retirement Standard, a retiree today needs upwards of $500,000 in their super balance.
This sits above the national average of $356,000 and $288,000 respectively for men and women in their early 60s.
The study also revealed one in two people surveyed don’t believe they have a good understanding of the financial resources needed for a comfortable retirement.
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Gender disparity was apparent in financial literacy, as 27 per cent of women were more likely to report their financial understanding as poor compared to 15 per cent of men.
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Games said many Australians believe accessing financial advice is too expensive.
Almost 35 per cent of people surveyed said cost is a barrier while 32 per cent of respondents said they don’t earn enough to make it worthwhile and 19 per cent said procrastation affects them.
“The cost of advice is undoubtedly a barrier for some people,” Games said.
“However, our projections demonstrate the value of advice where Aussies stand to gain eight per cent to 29 per cent in benefits depending on the age they start.”
The cost of living is rising and it is expected to continue to trend upwards throughout the year.
The Living Cost Indexes figures demonstrated all households saw increases in annual living costs in the March 2023 quarter.
Increases ranged from 7.1 to 9.6 per cent, all higher than the 7.0 per cent annual increase in the Consumer Price Index (CPI).
The Findex survey of more than 1000 participants, focused on people in the early planning stages of retirement to people retiring across metro and regional areas.
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
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