A new report released by Suncorp (ASX: SUN) Superannuation, titled Rise of the Grudge Workforce, revealed that baby boomers are unlikely to retire at the official age of 65.
Surprisingly, “a quarter of Australia’s greying baby boomers expect to work into their eighties because they’re too poor to retire,” according to news.com.au. Many are not able to retire because they haven’t banked enough to be able to afford the life they’d like to live.
The report, which surveyed 2000 Australians, says “This reflects an alarming disconnect between what Australians want in their retirement and what they are actually working towards.” As a result of the superannuation scheme not coming into effect until 1992, under the Keating Labor government, many older Australians simply haven’t had enough time to save.
According to another survey by Suncorp, one-third of baby boomers have less than $100,000 in their retirement nest egg – a far cry from what is required to be financially sound many years into retirement.
We’ve already witnessed increases to the preservation age (the age individuals can access their super funds), contribution levels and the pension age. However a rapid rise in the proportion of Australian’s entering retirement means taxpayers will need to fork out more for retirees in the near future.
Last financial year Australia’s working population paid $36 billion for the pensions of the elderly. This number is only expected to get bigger before more of us start to realise the benefits of the superannuation scheme.
Challenger (ASX: CGF), an annuities and funds management provider, is one company set to benefit from retirees’ reliance on fixed income streams and portfolio management. Despite the difficulties faced by many Baby Boomers, however, the next generation is likely to require less government support because the amount in superannuation is likely to grow significantly.
It is estimated that the total funds in superannuation is set to swell from $1.6 trillion to $6 trillion by 2030. As a result, Australians now have one of the highest amounts of money invested in managed funds per capita in the world. This is music to the ears of big asset managers like AMP (ASX: AMP) and Macquarie Group (ASX: MQG) who stand to benefit from the pooling funds.