Australians think they need more than twice the money in savings and superannuation that is actually recommended under Australia's official Retirement Standard for a comfortable retirement lifestyle.
Colonial First State (CFS) surveyed 2,247 Australians, including 430 retirees, to create its newly released Rethinking Retirement report.
CFS asked respondents to estimate how much money they believed they needed in superannuation or savings for a comfortable retirement and the average amount suggested was $1.6 million.
The report found that Australians who had never received financial advice thought they needed even more. The average amount suggested was $2 million.
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You don't need anywhere near that much, says AFSA
According to the Association of Super Funds of Australia's Retirement Standard, which is endorsed by the Federal Government, couples aged 65 to 84 years only need $690,000 in superannuation by retirement age (that's 67 for anyone born after 1 January 1957), plus a part-pension, to fund a comfortable lifestyle.
In this case, annual living expenses would run to about $72,000 per couple. Single retirees aged 65 to 84 years need $595,000 in superannuation to cover anticipated annual retirement living expenses of $51,000.
AFSA has published a complete breakdown of living expenses in retirement for both a comfortable and modest retirement so you can compare your own expenses to that and come up with your own plan.
AFSA's comfortable retirement standard includes private health insurance, occasional restaurant meals, plenty of recreational activities, an annual holiday in Australia and an overseas trip every seven years.
What do Australians want their retirement to look like?
There were four key findings in the CSF report:
- Australians want flexibility and choice after they stop working
- They benefit from greater engagement with their superannuation and financial advice
- Advised Australians are twice as likely as unadvised Australians to retire at a time of their choosing
- Australians are generally enjoying retirement despite their concerns leading up to it
Among the 430 retirees interviewed, only one in three retired at a time of their choosing. The rest stopped working because of health issues, redundancy and other factors beyond their control.
The research also showed that Australians who had sought financial advice about superannuation and retirement were twice as likely as unadvised Australians to retire at a time of their own choosing.
Getting advice and planning ahead also contributes to happiness, the report found.
Among the retired respondents, 77% of those who had sought financial advice were enjoying their retirement compared to 52% of retirees who had never received professional advice.
CFS Superannuation CEO Kelly Power said less than a third of Australian workers plan to stop working past retirement age, which made seeking advice ahead of time even more important.
Power said:
Those looking to work beyond the age of 67 need to consider the tax implications and how their choices could impact their eligibility for the Age Pension.
Planning early and seeking advice will put you in a better position to retire with confidence.
