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

1.23%

$10,000 – $19,999

4.77%

$20,000 – $29,999

12.10%

$30,000 – $39,999

20.82%

$40,000 – $49,999

20.08%

$50,000 – $59,999

18.44%

$60,000 – $69,999

8.31%

$70,000 – $79,999

4.94%

$80,000 – $89,999

4.12%

$90,000 – $99,999

0.82%

$100,000 or more

4.36%

 

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