More than half of Australians believe they will have less money than required for their choice of lifestyle during retirement, Mercer research showed.
The online survey of more than 1,500 Australians between 50 and 80 years showed 54 per cent expect a shortfall of almost $500,000, which will be about half the amount they will need to retire comfortably.
The research also showed retirees will probably outlive their savings by more than five years on average, while one in four will outlive their savings by 11 years.
“Australia is facing a very real economic and social dilemma due to a lack of protection against longevity risk,” Mercer managing director and Pacific market leader David Anderson said.
“Life might be simple but comfortable for the first decade or so, but once savings run out the age pension will only provide about half the amount required for a comfortable lifestyle, what happens when medical expenses increase or aged care is required?”
The research also found 10 per cent of the population will live long enough to have to depend only on the age pension for 15 years or more.
Senior actuary and partner at Mercer David Knox said the scale of the super sector must be leveraged to provide longevity risk pooling.
“The sharing of risk will lead to improved outcomes for everyone.”
VicSuper CEO Michael Dundon said an adviser-led, income layering method to create members’ retirement portfolio would be effective.