Financial planners have been called on to help bridge the retirement savings gap after a major new study found Australians are becoming increasingly concerned about the funds they will have to live on in retirement.
Last week, a study conducted by ANOP Research and commissioned by the Association of Superannuation Funds of Australia (ASFA) found one in three recent retirees were not having their post retirement expectations met.
“The penny has dropped for more people that there is a gap between their expectations and the reality. Although there is still some delusion, with a lot of people identifying their personal home as their primary source of saving. However, at this point in time, when it gets to the reality, few actually sell or downsize,” ASFA chief executive Philippa Smith says.
According to Smith, planners can play a part in assisting consumers to set realistic expectations, and by doing so, helping them “build planks to bridge the [savings] gap”.
“People are increasingly anxious but they don’t know what to do, so individuals, governments, funds and planners all have a role to play in addressing the issue,” Smith says.
The survey found seven in 10 non-retirees estimate they will need a minimum income of at least $30,000 per annum to maintain an adequate lifestyle in retirement.
“This research flags a significant shift in Australians’ attitudes to savings and retirement. People are less under the ‘she’ll be right’ illusion about retirement. They know compulsory super isn’t going to be enough, and they’re apprehensive about how they are going to fund an adequate retirement future.”
In a similar study in 2001, a quarter of respondents identified $20,000 as the minimum level of annual income they believed they would require in retirement, but this time only 13 per cent quoted $20,000 as the minimum level.
“The message about the need to save more for an adequate retirement is starting to get through. The focus now needs to be on how to bridge the savings gap,” Smith says.
The survey polled a random sample of 755 Australians aged between 30-69 years throughout May and June this year.
Seventy per cent believe the Federal Government needs to do more to deal with the ageing population, with encouraging people to save for retirement among the top three suggestions, along with better aged care facilities and improving the health system.
Smith says while there is less delusion this time around in terms of what retirees need to fund a reasonable retirement, this has been replaced by anxiety and agitation.
“The challenge for government, and funds, will be to establish solid policies and mechanisms through which the growing numbers of anxious individuals, and our ageing community, can achieve an adequate retirement income,” Smith says.
Working in retirement was nominated as the best way of bridging the gap, with eight in 10 respondents considering working longer, although they acknowledged it would be difficult to find or keep paid work at that time in their lives.
