What actions are Aussies taking in the lead-up to retirement?

Topping up superannuation is the priority for many pre-retirees.

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A new survey reveals the typical actions taken by Australians prior to commencing their retirement.

According to a survey conducted by life insurer TAL, topping up superannuation was the most popular action (33% of respondents) among pre-retirees.

Last week was the final opportunity for workers to add extra funds to their superannuation before the 2024 financial year ends.

Making personal contributions to your super over and above the Superannuation Guarantee payments made by your employer usually delivers a handsome tax deduction if you keep under the cap.

As we recently reported, superannuation growth funds are on track to deliver a 9% return in FY24.

From Monday, the Superannuation Guarantee will rise from 11% to 11.5%, giving the average Australian wage earner about $370 extra per year.

What other actions did Aussies take in the lead-up to retirement?

The second most popular action taken prior to retirement was reducing working hours (20% of respondents).

Separate research by Colonial First State (CFS) found that less than one-third of Australians plan to stop working completely at their retirement age, which is 67 years.

CFS Superannuation CEO Kelly Power said:

It is … clear that attitudes towards retirement are shifting.

The traditional idea of retirement as a point in time or a specific date when we stop working is becoming less prevalent.

Next on the action list was topping up non-superannuation savings or investments (19% of respondents).

Financial advisory Findex recently published a study showing 85% of Australians are actively investing outside their super.

The most popular investments are bank savings (64%), property (38%), cash (35%), shares (34%), exchange-traded funds (ETFs) (17%), cryptocurrency (17%), and bonds (6%).

The TAL survey also showed that 16% of pre-retirees sold their family homes and downsized before beginning their retirement.

The Federal Government incentivises older Australians to downsize to free up larger homes for young families.

The Downsizer Super Contributions scheme allows homeowners aged 55 years or over who sell a home they've owned for 10 years or more to contribute up to $300,000 from the sale proceeds to super.

The TAL survey also found that 8% of respondents sold other assets, 5% sold shares, 3% changed to a job that they felt they could work in for longer, and 1% changed to a higher-paying job.

What about actions taken after retirement?

The TAL research also showed that upon retiring and gaining access to their superannuation funds, retirees typically took one of five actions.

The most popular action was converting super into a regular income stream via a pension account (34%).

A further 27% left their money in their existing super account. About 15% took a lump sum, and 18% moved some or all of their money into a lifetime retirement income stream, such as an annuity.

The TAL research also revealed a key retirement regret held by 1 in 4 retired Aussies.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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