Advised Australians more optimistic about retirement prospects

State Street’s 2025 Global Retirement Reality Report found that Australians are more optimistic about being financially prepared at their planned retirement age, jumping from just 22 per cent in May 2020 up to 33 per cent in 2025, hitting a five-year high despite ongoing economic pressures.

However, respondents with a financial adviser were ever more confident, with 64 per cent of advised Australians expecting to be financially prepared for retirement, compared with just one in four (25 per cent) of their non-advised counterparts.

Notably, the report found that women were also more likely to not have a financial adviser, with four in five (82 per cent) women indicating as such, compared with 76 per cent of men.

It found that men were also generally more confident, with 42 per cent of Australian men stating their optimism about being financially prepared for retirement, markedly higher than the 24 per cent of female respondents who indicated the same.

Furthermore, the report found that women were less likely to have investments outside their super – 40 per cent compared with 53 per cent of men.

While Australia’s overall retirement confidence has increased, it is important to recognise that this still doesn’t outweigh those who are not optimistic about their financial retirement preparedness (37 per cent).

Looking at what is feeding this negative outlook, State Street found that Australians were most concerned about not being capable of covering unexpected medical costs in retirement (68 per cent) and not knowing how much savings they will actually need.

On top of this, around two-thirds of Australians said they were worried about not having the ability to generate a consistent income throughout retirement (65 per cent) and the possibility of outliving their savings (64 per cent).

Speaking on the findings, State Street head of Investments for Australia Jonathan Shead noted how alarming it is that more than one in four Australians said they don’t yet have a plan for their retirement savings once they stop working.

“There is also a gender gap, with women less likely to have a plan than men (36 per cent of women versus 18 per cent of men). These findings highlight a clear opportunity for education and tools that will help convert savings into security,” Shead said.

With a wave of retirees on the way, he said this highlights the need for guidance and education in the lead-up to retirement.

Even though there has been a boost in retirement confidence, Shead added that the impact of inflation and the broader economic environment cannot be overlooked as these two factors continue to present a real long-term issue for retirement planning.

“There are still 28 per cent of Australian respondents expecting to partially retire and continue working, while over 10 per cent cannot envision ever being financially secure enough to afford retirement,” he said.

“Complex interactions between the public and private systems, concern about health insurance costs in an inflationary environment, and uncertainty about out-of-pocket costs are likely all detracting for retirement confidence for Australians.

“This highlights the tension between personal financial management and global macroeconomic uncertainty.”