The survey from peak body National Seniors Australia (NSA) and wealth group Challenger has discovered that most older Australians (53 per cent) are worried about outliving their savings, with more women (59 per cent) being concerned than men (47 per cent).
People without super reported the highest levels of worry, with 23 per cent worrying frequently. Many of them are likely to be on the full age pension, with one in three frequently worrying about outliving their savings.
The degree of concern was ruled to be 68 per cent higher in those not already retired – with previous work indicating that people adjust to their circumstances in retirement.
Those with less than $500,000 in savings, below ASFA comfortable standards, were 65 per cent more worried.
System doesn’t account for gender gap: Cooper
Not only were women more concerned, they were more likely to be relying on the age pension as their main source of income.
As pointed to by Natixis, Australian women retire with 47 per cent less super than men, yet they are likely to live for five years longer.
Women are also more likely to have less than $500,000 in retirement savings, the Challenger and NSA report noted.
Divorced women were found to be the most worried about their financial situation in retirement.
Challenger chairman of retirement income, Jeremy Cooper, said disparities in earnings and working patterns have disadvantaged women and their potential to accumulate wealth over their lifetimes.
“Super not only provides a reliable source of income, but also reduces worry for older Australians,” Mr Cooper said.
“On average, women live three years longer than men, but our super system doesn’t cater to this difference in longevity.”
The report has called for two key issues to be addressed: that retirement preparation needs to be started young and sustained through life, and that there has to be some way of ensuring that no one is disadvantaged from taking on caring roles that prevent or limit accumulating retirement savings.
Women tend to bear a greater burden of care, be it for children or for older family members, which combined with factors such as less work opportunities and disadvantages in divorce, can significantly affect their income.
The white paper commented: “Disability insurance is beginning to play a role in supporting caring roles but much more needs to be done to improve women’s financial situation in later life.”
Aussies don’t want to be ‘sorely reliant’ on age pension
Mr Cooper added that the research has also highlighted that people treat the age pension and their own savings differently.
“They fear running out of their own money, even though the safety net of the age pension will be there for them,” he said.
“This sends a strong signal that people worry about being sorely reliant on the age pension. It’s therefore important that super funds explore ways of providing more lifetime income to their members.”
Superannuation trustees were targeted by the report, which urged for a “basic requirement” to provide the right products for people, with good default options for those with limited financial literacy and can’t make active choices.
The research also noted that having a reliable source of income that will last for life is a key factor for worrying less, consistent with earlier NSA research finding 84 per cent of retirees agreeing that regular and consistent income in retirement is very important to them.
It also stated that having a reliable source income that will last for life is a key factor in worrying less, with people having a defined benefit pension or a lifetime annuity reporting the lowest amounts of worry.
However, Challenger saw its Australian annuities revenue dive by 42 per cent year-on-year in the first quarter of financial year 2020. Sales were lifted in Japan as the business expanded there.
People were also found to be most likely to worry less frequently if they had sought financial advice.
National Seniors chief executive Professor John McCallum said the findings demonstrated the extent of anxiety felt by older Australians when it comes to their financial security.
“Australia has one of the best pension systems in the world, yet Australian retirees are still showing high levels of worry that they will outlive their savings,” Professor McCallum said.
“This shows a need for better advice and education to help older Australians manage their savings so they can have the confidence to spend their money and enjoy retirement.”
“People were also found to be most likely to worry less frequently if they had sought financial advice”
Assuming this is backed up by research, should our associations not be shouting this from the rooftops?
To a certain extent the AFA through Phil Ando have but Sadly this does not make the front page of the papers . The other lot are more interested in fringe issues than the elephant in the room
They worry because organisations like the ASFA like to scare them into believing they will have a shit life if they don’t put more into Super.
The fact is most retirees don’t spend any more than about $50-60k a year. A couple with as little as $300k can have an income of $50k for the rest of their life when you factor in the aged pension. For most people, this is all they need.
I have checked your calculations – and they don’t add up.
That just means that its a really good time to make obtaining good advice harder and more expensive!
This is well and truly the Government’s problem in the future. They have systematically dismantled the accessibility of advice industry to the average Australian, unwittingly or not, via legislation and regulatory interpretation.
Financial advisers are becoming fewer in number. The time cost of providing financial advice has increased dramatically, let alone practice overheads. We are busy enough looking after clients that have the capacity to pay fees and value our services.
When a client has insufficient funds for retirement and runs out, (i.e. they cannot meet their goals and objectives) guess who they blame, lodge a complaint with? All downside risk to adviser??
not your problem but maybe your childrens when thier taxes are increasd to pay for the aged pension