Aussies overestimating funds needed for comfortable retirement

retirement retirement savings CFS colonial first state

24 April 2024
| By Jasmine Siljic |
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Colonial First State (CFS) research has highlighted how much advised and unadvised Australians believe they will need to retire comfortably.

The investment firm’s Rethinking Retirement Report 2024, surveying over 2,200 Australians including 430 retirees, revealed how much Australians expect they will need to retire with.

According to the report, $1.6 million was the average amount participants estimated they would need in retirement savings.

For those who had never received financial advice, this estimated figure rose further to $2 million. Meanwhile, advised Australians said they would need $1.3 million, underscoring the impact on financial advice on retirement perceptions.

In comparison, the Association of Superannuation Funds of Australia (ASFA) retirement standard calculated that a super balance of $690,000 for couples and $595,000 for a single person is required for a comfortable and modest retirement.

“While this is symptomatic of concerns prior to retirement, our research found that many of these concerns do not materialise once they retire. Others can be easily overcome where members engage with their super and access readily available tools and resources. These include retirement calculators, retirement planning tools, and digital advice solutions,” CFS wrote.

The research underlined the value of seeking a financial adviser, with unadvised Australians being twice as likely as advised individuals to find retirement harder than expected.

Moreover, the research found that advised Australians are twice as likely as unadvised Australians to retire at a time of their choosing.

Being able to choose when you retire is relatively rare, CFS stated, with just one in three Australians able to stop working when they decide to. The remaining two-thirds retired out of necessity due to health, redundancy and outside factors beyond their control.

Speaking on the findings, CFS superannuation chief executive Kelly Power said: “It is clear that attitudes towards retirement are shifting. Most Australians plan to continue working into their later years. Less than a third plan to stop working completely once they reach the retirement age.”

Traditional understandings of retirement as a specific date or point in time when one stops working is becoming less prevalent, Power added.

“With flexible access to super and flexible employment to play a larger role in people’s retirement plans, the need for financial advice becomes even more important,” she said.

Overall, CFS described the typical experience of Australian retirees as “positive”. Seven in 10 retirees said they are currently enjoying a comfortable retirement, despite previous concerns leading up to retirement.

When broken down between those receiving advice and those who aren’t, 77 per cent of advised retirees are enjoying their retirement, compared to 52 per cent of unadvised retirees feeling content.

Recent research from Challenger echoed these findings, with 77 per cent of Australians indicating that financial education would have a positive impact on their happiness.

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