Retirement planning too expensive for boomers

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Retirement planning too expensive for boomers

Australia’s industry super fund REST commissioned The Journey Begins white paper to capture the attitudes of 1200 Australians approaching retirement. The paper revealed that two thirds of Australians had not sought financial advice regarding retirement, and a third felt completely unprepared.

“While some see no need, or handle their own affairs, many actually consider financial advice to be too expensive or not trustworthy,” said REST CEO Damian Hill.

A main concern from the paper was that respondents were underestimating how much they would need for a comfortable retirement. The average amount nominated for a comfortable retirement was well below the $56,236 ‘comfortable lifestyle’ for a couple and $41,090 budget for single people, estimated by the ASFA Retirement Standard in 2012.

Around 60% of respondents thought they needed less than $49,999, with 20% selecting ‘$30,000-$39,999’ and 17% choosing even less.

Superannuation was nominated as the most common source of retirement income for the majority surveyed, but less than half had a good grasp of how much they had saved in super, and a quarter were “closing their eyes and hoping for the best”.

Hill said, “Despite the fact that many baby boomers are worried they won’t have enough money to fund their retirement and that they are not prepared, it is surprising that so few are starting the planning process early and seem to be in no rush to get any formal advice to help them on their journey.”

He said the Government and financial services sector needed to target education in a way that all retirees could understand the importance of early planning and seeking advice.

Pauline Vamos, CEO of ASFA, said they have also been lobbying government to remove some of the regulatory roadblocks and taxation rulings that make it hard for financial advisers to develop post retirement products. She said it was hard for planners to offer much choice to retirees in terms of products, so they were trying to give them more opportunity.

“There is a proven connection between good financial advice and better outcomes in retirement, but it must be good financial advice. It must be unbiased,” she said.

Key findings included:

  • The top three items people didn’t want to give up were:
    • Internet or mobile phone (62%)
    • Domestic holidays (55%)
    • International holidays (41%)
  • Nearly half (48%) of over 65s had intended to be retired by now
  • Around half the people in the survey started planning for retirement before they reached 55 (49%) and a further 13% (each) said they started this process between 55-59 and 60-64.

How much money per year respondents think they need to lead a comfortable lifestyle:


Less than $10,000


$10,000 – $19,999


$20,000 – $29,999


$30,000 – $39,999


$40,000 – $49,999


$50,000 – $59,999


$60,000 – $69,999


$70,000 – $79,999


$80,000 – $89,999


$90,000 – $99,999


$100,000 or more



More stories:

ASIC zones in on trustees

Gender discrimination rife in financial services

Top financial priorities revealed

  • Stephen Varhegyi on 23/01/2013 11:48:17 AM

    Well, well. What a news flash. I don't think anybody in the financial services industry (who hasn't been living under a rock for the last ten years) is really surprised. Just why do you think many baby boomers are suspicious of advice? It couldn't be the relentless bombardment of negative stereotyping of advisers spewed out by the ISN, could it?As for the high cost of advice, what could possibly be behind that? It couldn't be the mammoth compliance burden placed on the industry by regulators, who are largely detached legal bureaucrats pontificating from on high, with no sense of the real world. People want simple, easy to understand advice not reams of Barbecue fuel, as one of my clients so eloquently put it. ASIC recommended a simple report of 12 to 18 pages, so where is their template? Couldn't be done? Why's that?

  • Adam P on 23/01/2013 11:44:05 AM

    Maybe the government / Billy Shorten need to listen to consumers and streamline the over the top regulation of financial advice rather than the current changes that are bringing in more regulation for mainstream advisers.
    Yet at the same time reducing regulation and costs for Industry Funds /Intra Fund Advice, Online / Phone based Life Insurances and also for Accountants with the proposed Limited AFSL.
    So where is the level playing field Silly Billy - please make it easier for all advisers, not just your Industry fund mates and Accountants.
    Then consumers will not complain about BS SoA's that cost a fortune to prepare and very little real value.
    Lower compliance costs will lead to lower consumer prices.

  • Coastie on 23/01/2013 11:41:49 AM

    Interesting take on the article Rod, but when the ISN has spent so much money advertising against the planning industry, its little wonder that people believe that financial planners are untrustworthy and expensive

  • Stephen on 23/01/2013 11:25:02 AM

    The problem with Baby Boomers is that superannutaion is relatively recent for them. Twenty years of forced meagre savings via super is not really enough to retire on when most lost approximately 27 percent of their investment with the GFC because they followed the herd mentality and sold when they shouldn't have.

    The cost of living in retirement assuming you don't have a mortgage or you are not funding kids through private schools or university is not all that expensive. My parents are relatively happy living on the aged pension (and some savings not big enough to really consider) because they don't have to have the latest gadget and there is no where to put that 55 inch 3D TV.

    The biggest issue is what will the cost of living be in 2032 and beyond? $50k per annum which is what their super might be able to afford now and for the next twenty years could very well be quite difficult to live on then. Your average Baby Boomer couple does not have super amounts high enough to fund $50k today because the SGC has not been around for long enough.

    The problem with Gen X and Y is that they would rather have the money now then in 30 years so they won't consider funding their retirement above the SGC.

    The elephant in the room with super is divorced couples and/or women who have not worked all their life because of child rearing.

  • Rod m on 23/01/2013 11:01:50 AM

    I think it is great to here that Damian Hill is so positive about Baby Boomers seeking advice well prior to retirement, it is a pity that others in the Industry Funds don't have a similar attitude. Something positive in print a nice change from the negative vibes we all have to deal with , well done Damian

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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