Government support will be needed to finance a 27 per cent increase in potential retirees next year, with 228,000 men and 187,000 citing their plans to call it quits on working life by September 2017, according to research by Roy Morgan.
The findings in Roy Morgan's ‘State of the Nation — Spotlight on Finance Risk' show that the 415,000 Australians intending to retire over the coming year are likely to have inadequate savings and superannuation to be self-funded, meaning the need for government support for the non-working is set to rise substantially.
According to Roy Morgan industry communications director, Norman Morris, changes to superannuation legislation have never been more desperate.
"The low levels of retirement savings will put more pressure on government funding for some time yet unless there are changes to eligibility rules, taxation or superannuation legislation," he said.
"The average level of savings and superannuation for those intending to retire in the next 12 months is well below what is required to be able to lead what ASFA describes as a ‘comfortable lifestyle.'"
According to the report, superannuation was playing a larger role for potential retirees than previously, up 12 per cent since 2008, with average debt sitting around $25,000.
Those intending to retire in 2017 are likely to be relying on government benefits, with the Association of Superannuation Funds of Australia (ASFA) estimating that individuals need $545,000 and a couple needs $640,000 to lead a comfortable post-work life.
Morris said that the key initiative should be to increase financial literacy and improve knowledge of superannuation to ensure more Australians were able to live well after retiring.
"Research is now exploring the long tail of those ‘too poor' to retire without government support," he said.
"Many intending retirees have a substantial proportion of their funds outside of superannuation, which may be due to not understanding the benefits, not qualifying or being unsure about superannuation with all its rule changes."
The saving grace could be housing, with the report finding that owner-occupied homes had higher potential for retirement savings levels. Average homes value has increased by 50 per cent per person over the past eight years, meaning that those who own a home will ultimately be better off in retirement.
"Intending retirees who rent are at a disadvantage as they do not have the tax-exempt status of owner occupiers and as such are likely to find retirement funding options more difficult," Morris said.
"[Those] who own, or are paying off, their home, have a major potential source of retirement funding."