2 in 3 Australians fear their retirement pension will not suffice

06 June 2023 Consultancy.com.au 3 min. read
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Despite the compulsory superannuation guarantee being over 30 years old in Australia, a worrying majority of Australians (2 in 3) fear they will not have sufficient financial resources to retire, according to new research from Findex.

The research by the accounting and advisory firm explored preparedness for retirement and how professional financial advice factors into this. The survey of over 1,000 participants focused on those in the early planning stages of retirement to those in the process of retiring across all corners of Australia.

Around one in two Australians don’t believe they have a good understanding of what financial resources they would need for a comfortable retirement.

2 in 3 Australians fear their retirement pension will not suffice

Men are more likely than women to believe they have a good understanding of what financial resources are needed for retirement (61% compared to women at 44%). Women are more likely to rate their understanding as poor (27% compared to men at 15%).

Gender disparity was additionally apparent in financial literacy where women were more likely to report their financial understanding as ‘poor’ (27%) compared to their male counterparts (15%).

The Findex report also found that the closer Aussies were to retirement, the less confident they were about having the funds required. The majority (52%) of Baby Boomers and 38% of Gen X noted they were ‘not confident’ of having the money needed to retire compared to 31% of Millennials.

2 in 3 Australians fear their retirement pension will not suffice

“This paints the picture that most Aussies have adopted a ‘kick it down the road’ mentality to retirement. But when the time eventually comes, they’re faced with the reality that their existing savings and superannuation balance are insufficient in this economic climate,” said Findex Co-CEO Matt Games.

Financial advice
In a bid to gain better insight into how they can prepare for life after work, the report suggests that people should consider getting professional advice.

However, while 80% believe professional financial advice could benefit them in retirement, only 30% had sought advice, with women (24%) less likely than men (37%) to have received professional advice. Of the barriers stopping Aussies from getting advice, 34% cited the cost of advice, 32% don’t feel they earn enough to make it worthwhile and 19% said procrastination.

2 in 3 Australians fear their retirement pension will not suffice

“It’s very common for us in the industry to hear that cost for advice is the issue. But at Findex, we want to dispel this,” said Matthew Swieconek, Head of Investment Relations at Findex.

Swieconek: “A financial adviser doesn’t only provide guidance on investment strategies that align with your goals and risk tolerance. They provide behavioural coaching, asset allocation research and management and tax savvy planning – areas that DIY investors can often overlook and can add enormous value to wealth creation over time.”

According to research from HR consulting firm Mercer and Monash Business School, Australia has the world’s third best pension system.