The 2014 Retirement Income Report – compiled off the back of a survey of almost 7,000 Australians over 40 – found that 44 per cent of retirees expect they will outlive their savings, up from 33 per cent in 2013.
In addition, 51 per cent of accumulators expect the same, with 37 per cent of the general population “concerned” about longevity risk, while only 10 per cent have a plan to address it.
The report suggests that the average retirement savings gap is as much as $150,000, with people underestimating the length of their retirement by up to seven years.
Commenting on the findings, MLC general manager, retirement solutions, Andrew Barnett said the findings are reflective of broader retirement trends.
“With the healthcare and lifestyle choices Australians now have, we are starting to see a pattern of people retiring earlier and living longer than what they did 10 or 20 years ago,” Mr Barnett said.
“What we are not necessarily seeing is retirees address this issue of longevity – and that they may in fact need much more retirement savings than what they initially planned.”
Seventeen per cent of respondents said they would “seek financial advice” as a means of addressing longevity risk, making it the sixth most popular measure following a range of options including working longer (43 per cent), saving more (28 per cent) and “become dependent on the age pension” (44 per cent).
An additional 13 per cent of respondents indicated they “haven’t thought about it”, while 7 per cent said they will opt for a “reverse mortgage”.
The report lists the need for retirement savings to last a lifetime as the “largest unmet advice need”.
Look out for the ifa-MLC Retirement Roundtable addressing longevity risk and financial planning in the April edition of ifa magazine.
If the Government was to allow unemployed/unemployable retirees to save any spare cash then more of us would save towards longevity.