Over a third plan to seek retirement advice as confidence weakens
Confidence in retirement has weakened in Australia rather than strengthened, according to the latest Global Retirement Reality Report from State Street.
Of the 608 Australian respondents to the Q3 2023 survey, only 20 per cent said they expect to have enough money to retire, 14 per cent can’t imagine ever being financially secure, and 46 per cent are not confident they will be financially prepared for retirement.
The number of people confident they will be able to retire when they want to do so is evenly split at 50 per cent.
All of these measures are worse than survey responses in 2022, State Street said, with the largest percentage move seen in the number of people not confident on the timing of their retirement, which moved from 40 per cent to 50 per cent.
This was most impacted by inflation and the cost-of-living crisis, mortgage debt and housing costs and medical expenses, respondents said.
As to how they will find out how to best access their retirement savings, 40 per cent said they would “figure it out myself” and 37 per cent said they would speak to an adviser. Contrary to plans for super funds to provide advice, few indicated they would speak to their super fund for any active guidance.
Women are more likely to use an adviser than men at 41 per cent versus 33 per cent.
Looking at how they will have to access their retirement savings, 42 per cent said they would like to have flexible access to their savings in their early years, then use the remainder for a stable income in their later years.
Some 30 per cent would like a stable income for life, and 28 per cent would like flexible access throughout retirement. The latter method was the only one to decline over the year, falling from 32 per cent to 28 per cent.
The use of annuities, which companies such as Allianz Retire+, Generation Life and Challenger have begun to promote, saw greater acceptance than in previous years, with 84 per cent saying they represent good value for money and 54 per cent saying they understand how they work, up from 44 per cent a year ago.
“The need for flexibility in early years balanced by security in later years is the model most favoured by respondents, which loosely reflects the principles of the covenant. However, plenty of respondents are attracted to alternate models, and so it is important that trustees keep member involvement at the centre of their retirement incomes strategy.
“Acceptance of some of the stereotypical negative statements about annuities has softened since 2022. It isn’t clear whether this softening is due to higher interest rates, or education or some other factor, but it does augur well for trustees looking to include longevity products in holistic retirement solutions.”
Click here to read Money Management's feature on the future of retirement income products.
AUTHOR
Laura Dew
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