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Retirement slipping further from our grasp: 1 in 3 Aussies less confident they will be able to retire comfortably at 65

5 min read
4 Dec 2018

04 December 2018

A new study[1] measuring ‘financial consciousness’ revealed a third (29 per cent) of Australians are less confident compared to last year in their ability to retire at 65.

The Financial Consciousness Index (FCI), which was commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3,000 individuals nationally to uncover their ability, willingness and sophistication to make a change to improve their financial wellbeing.

“Confidence in retirement outcomes changes dramatically with age, showing a clear bell curve, with Gen Zs (25 to 34 year olds) and the over-70s most bullish about their golden years. Whereas, Gen Xers – and in particular the 45 to 54 year old age group – most concerned about their retirement, with 40 per cent saying they’re now less confident in their ability to retire at 65 than they were a year ago.

“Gen Xers are feeling pressure to build up their pension pots as retirement is on the horizon. With superannuation contributions only becoming mandatory in 1992[2], it’s no surprise that some Gen Xers worry that their savings look a little slim, especially when we’re told we each need $545,000[3] in order to enjoy a comfortable retirement,” said Rod Attrill, General Manager of Banking at comparethemarket.com.au.

“The Age Pension age is increasing over the next five years from 65 to 67[4] years of age, putting Aussies under further pressure to improve their funding options if they want to enjoy any sort of an ‘early’ retirement. This appears increasingly unachievable given only 13 per cent of respondents said they believe they are in complete control of their retirement outcomes” said Rod.

A comfortable retirement seems even further from grasp for the one fifth (17 per cent) of respondents who said they would have to dip into their superannuation account if they were suddenly unemployed or unable to earn an income for more than three months.

“Some 27 per cent of men and 33 per cent of women reportedly have no superannuation set aside[5]. It is imperative that Australians begin planning ahead and investing in their future, no matter how far away or unobtainable it may seem. Consider consolidating your super funds if you have multiple accounts as not only will it be easier to manage but it also means you will only have to pay one set of fees,” added Rod.

 

Comparethmarket.com.au shares 5 tips to help consumers get the most out of their superannuation and prepare for retirement:

  1. Consolidate your accounts and save: Over time, you may have worked at several different jobs with employers sending your super contributions to various funds that you may have lost track of. Jump on ATO’s myGov or speak to your super provider to consolidate any super accounts into one. This way, you can reduce the fees and charges significantly and not have to worry about keeping on top of many different funds.

 

  1. Decide how much you will contribute into your super: Your employer must contribute 9.5% of your income into your super however, consider whether you can afford to put extra away. Currently your employer and salary sacrificed contributions before-tax can be up to $25,000[6]. Additionally, for low income earners, there is the government co-contribution scheme where you can receive up to $500 into your super fund if you contribute up to $1,000 after-tax[7].

 

  1. Consider making a gradual transition into retirement: Another option is choosing a gradual transition into retirement by winding back your working days in your final years in the workforce. By making a gradual change rather than jumping head first into retirement, this gives you time to adjust to reduced workload (and perhaps income). It can also allow you time to find hobbies you may want to take up during your retirement. From a financial perspective, by hitting pause on full-time retirement you will be able to add more to your nest egg too.

 

  1. Check your eligibility for the Age Pension: Don’t wait until it’s too late to find out if you’re eligible for the Age Pension. There are a number of factors that determine your eligibility for a pension. For example, your income, relationship status, or any property or items you own can affect your eligibility to receive either a part or full pension. Do your research now so you know what you’re entitled to receive.

 

  1. Look into Pension Card discounts: With a Pensioner Concession Health Card, you can have access to cheaper medicine, bulk billed doctor visits and bigger refunds for medical costs[8]. On top of this, you can receive discounts on electricity and gas bills, property and water rates, public transport fares and motor vehicle registrations.

 

 

For interviews with Rod and more information, please contact:

Hannah Twiggs|07 3377 8879 | 0431 511 362 | [email protected] 

About comparethemarket.com.au

Comparethemarket.com.au is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, travel and personal finance products from a wide range of providers. Our easy-to-use comparison tool enables consumers to find products that best suit their needs and back pocket.

 

[1] The Financial Consciousness Index (FCI), which was commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3,000 individuals’ belief in their ability to influence their financial outcomes, as well as their willingness and sophistication to make a change to improve their financial wellbeing.

[2] APH – Chronology of superannuation and retirement income in Australia: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/0910/ChronSuperannuation

[3] The Association of Superannuation Funds of Australia Limited – Superannuation account balances by age and gender, October 2017: https://www.superannuation.asn.au/ArticleDocuments/359/1710_Superannuation_account_balances_by_age_and_gender.pdf.aspx?Embed=Y

[4] Human Services Gov: Age Rules 2017: https://www.humanservices.gov.au/individuals/services/centrelink/age-pension/eligibility/age-rules

[5] The Association of Superannuation Funds of Australia Limited – Superannuation account balances by age and gender, October 2017: https://www.superannuation.asn.au/ArticleDocuments/359/1710_Superannuation_account_balances_by_age_and_gender.pdf.aspx?Embed=Y

[6] Australian Government: Australian Taxation Office – Employee’s tax and contribution caps: https://www.ato.gov.au/Business/Super-for-employers/In-detail/Salary-sacrifice/Salary-sacrificing-super—information-for-employers/?page=5

[7] Australian Government: Australian Taxation Office – Eligibility for the super co-contribution. Subject to availability including lower income thresholds of $36,813 or higher income thresholds of $51,813:

https://www.ato.gov.au/individuals/super/in-detail/growing/super-co-contribution/?page=2

[8] Australian Government: Department of Human Services – Benefits of a Pensioner Concession Card: https://www.humanservices.gov.au/individuals/enablers/benefits-pensioner-concession-card/39031

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Written by Hannah Twiggs

Hannah (or Twiggs as she's known by most of her colleagues) is a non-stop talker, avid snack eater, dog lover and passionate writer. When she's not chatting to journalists or writing up new story angles, Hannah enjoys a good Netflix binge, going away camping with friends and big brunches - preferably with extra bacon.

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